Best Expat Forums or Advice on Expat Package?

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Best Expat Forums or Advice on Expat Package?

Post by crazygrow » Thu Feb 02, 2017 7:54 pm

Hi all,

I was approached this week about taking over all of our European businesses within my division (I currently run one division globally but the business is moving more towards regional structures). I live in a MCOL city in the US and this would be a relocation to London, so very different in costs. It is definitely of interest to the wife and I, but need to do some research. Can anyone provide some good expat forums?

Also, there would obviously be some negotiation around a package. I think this would be a 2-5 year assignment. Our biggest concern from a package perspective is education allowance for the kids (I have six ages 10-4) - I'm concerned about everything else but believe my company will already be thinking of being pretty fair with everything else.

Can people provide advice on the actual negotiation around the package? I did find the below list (none of the comments are mine and I think some of it is over the top).

1) Salary - no worries here.
2) COLA - looking for %100
3) 10% exchange rate parity insurance
4) Housing package - requesting 100%
5) Utilities 
5a) Gas (35/month)
5b) Electric (60/month)
5c) Water / sewer ($)
5d) Garbage ($)
6) Expenses general: 
6a) Dry Cleaning (135 / month)
6b) Tesco grocery delivery (235/month?)
6c) British telecom broadband cable (135/month)
6d) T.V. License (11 / month?)
6e) Satellite (not sure if this is TV or something else)
7) Taxes
7a) Council tax
7b) Tax equalization
8) Transportation allowance
9) Visas / Work Permits
10) Vacation days
10a) 2 paid home leave visits (for 2) per year, including Air fare and 1 week per visit.
10b) Paid Time Off (30 days)
11) Experience bonus 10% per assignment year completed
12) Relocation package
12a) Temporary housing (1 month)
12b) Relocation agent expenses
12c) Relocation Consultant
12d) Relocation bonus
12e) Shipment costs (personal artifacts)
13) Repatriation expense package
13a) Shipment costs (personal artifacts)
13b) Repatriation bonus

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Re: Best Expat Forums or Advice on Expat Package?

Post by AlohaJoe » Thu Feb 02, 2017 10:21 pm

I'm not an uber-expert but I do have some experience. (See at the bottom and judge for yourself.) Here are my thoughts:

In general the super-cushy expat packages are based around "hardship" and mostly on the way out. I would not offer or expect much for a posting in London. The only people I know who get the old-style expat packages work for oil companies and get mandatory (i.e. you can quit the company if you don't want to take it) postings to 3rd world countries.

So overall, I wouldn't get your hopes too high. Manage your expectations. That said, you should still negotiate. It is easy for an HR person sitting in headquarters in the US to say, "We want people to be motivated by the adventure and the challenge of the job, not money!" But any move to a foreign country is some amount of dislocation and hardship.

You would definitely want to make sure, when moving to a more expensive location, that your salary is appropriate. This can be difficult to figure out since your style of life might change. Mandating a COLA adjustment in your expat package seems bizarre to me, though. The expat package should be about extra costs/hardships to you due to being an expat. COLA is a tangential issue.

Exchange rate parity is an interesting one. It can work both ways. I know someone who negotiated it and it worked well for them when the Australian dollar crashed. I didn't have it and it created a (small but still lingering) amount of resentment when I essentially took a 20% pay cut over the course of several years. Normally, I'd say it isn't a point worth negotiating over, especially when going to Britain. But I guess maybe Brexit calls into the question the stability of the pound?

Basically what you want to consider is something like: If I get paid in local currency for X years does that price me out of the housing market when I move back to my home country?

In general, I don't think much of housing allowances: your salary should cover the costs of housing. For a ~5 year assignment, to an existing office in a world-class city, I also wouldn't negotiate that hard over this. Maybe for the first 12 months or something similar. Think about it this way: your company almost certainly hires people from overseas, gets them visas, and has them work in the US. Does the company give them a housing allowance? Or does it just give them a salary?

There are also additional complications with housing: the company itself needs to have the lease with the landlord. Some companies (legal & finance) may have a hissy fit about doing that. There may be "fringe benefit taxes" due. Some landlords may not want to do deal with that, if they haven't done it before.

All the expenses: definitely not unless they fall under an all-inclusive housing package. (Think: living in a serviced apartment.)

Taxes: You definitely want the company to pay for a tax preparation service that can handle your US & UK taxes. (Think: one of the big agencies like KPMG or PWC.)

Taxes: Tax equalisation is something to seriously consider. This may get rolled up into your salary, though.

Vacation days: You should get whatever is standard for your office/company. If your office/company lets new hires negotiate different amounts of leave, then feel free to take the opportunity to try to negotiate more as well. But it is unrelated to being an expat. (n.b. in some situations you might negotiation over local/personal holidays & religious observances. Think: a devout Muslim moving to a non-Muslim country.)

Home visits: It is worth asking about but I wouldn't be surprised if the company says no especially when they realise they have to pay for 8 people (2 adults + 6 kids). 2 a year is probably excessive but maybe you start negotiating at 2 and settle for 1. Getting "additional" leave for the home visit also strikes me as excessive. To some extent it depends where in the US is "home". (On a personal note: I think that a foreigner who flies home twice a year is not trying very hard to fit into their new home.)

Experience bonus: No. WTF?

Relocation: yes, within reason. Or pay for storage. Though, in my experience, most people end up putting stuff in storage. And then after 3 or 4 years can't even remember what it all was. They have to spend a week of leave flying back to some random city they no longer call home and throw it all away. Almost universally people wish they had got rid of everything when they moved. And most people wish they had brought fewer things to the new country than they did. After all, the stuff will be on a slow boat. It will arrive 2-3 months after you do. You'll have spent months living without. When it arrives, you'll wonder why you needed it after all.

Repatriation costs: Yes.

Repatriation bonus: This is an interesting one. A lot of expats leave their company when their contract is up. Sometimes they've just fallen in love with their new home. Or they love the freedom working in a satellite office brings. Or they just decide it is time to try something new with a new company. Depending on your company's experience with expats, they may not know about that. Offering some inducement to stay with the company and move back home is not a bad idea. That said, there are lots of ways companies can give you "golden handcuffs" other than a repatriation bonus. (Stock options are a simple one.)

My background: I worked for several years for a company in Australia that had drained the local talent pool and was forced to hire internationally. I mean hundreds of people hired and relocated every year. I was a reasonably highly placed hiring manager so I dealt with offers and packages. I personally hired over 50 people that were relocated from another country in addition to being part of numerous other hiring processes. My company opened a new office in a different country and I was put on an expat package to move over and help bootstrap it. We either hired externally or trying to relocate internally 20-30 people with expat packages. I also know a fair number of people locally who were on expat packages, though I obviously don't know the nitty gritty details of them. I was also part of many discussions about compensation packages for expats both to attract and retain them. I ended up leaving that company and staying in the new country.

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Re: Best Expat Forums or Advice on Expat Package?

Post by rainyday1 » Fri Feb 03, 2017 1:13 am

We are currently on an expat assignment in London. Your estimates are a bit low for most categories. London is crazy expensive - especially with 6 kids.

Your research on the package is good. You have hit most categories. I think the most important for you will be housing, schooling (think $25 - 40k per kid), tax equalization, health care. The rest is expensive but pretty easily absorbed by cost-of-living adjustments. Most companies pay for all of the actual move expenses, so I wouldn't sweat that too much. We are paid in dollars, so with Brexit, we got a huge raise. The Americans paid in pounds here have taken a big hit.

The housing in London is awful unless you have a massive housing allowance, as in GBP 20k per month (which you may get with 6 kids!). You should make sure to negotiate 100% of the housing cost. I can't believe what people live in here, for $15k/month. Landlords hire the cheapest, most incompetent contractor they can find. They make the quickest fix they can, which NEVER solves the real problem. Our company retained the firm that provided our relocation consultant to negotiate with the landlord on our behalf during the duration of our lease. Consider asking for that because with so many absentee, negligent landlords, housing can be a nightmare.

Tip - Ocado is the best for grocery delivery. Food is generally pretty high-quality, and they are much less liberal with their substitutions.

PM me if you have more questions about schools, housing, neighborhoods, etc. Happy to help someone go through this! It's overwhelming.

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Re: Best Expat Forums or Advice on Expat Package?

Post by rcsracing » Fri Feb 03, 2017 3:33 am

Just to give a perspective - I'm an expat in Slovakia for a US based company. The expat package is pretty standard for all employees here, but it has been reduced over the past few years.

1 - Housing - included with TV/phone/other utilities, leased by the company. Furnished, repairs are covered. I handle cleaning.
2 - Vehicle - included, leased by company. I pay for fuel for personal trips (outside of commute to office).
3 - Tax preparation - included, one of the major firms
4 - Tax equalization - included. The firm above prepares a pseudo tax return, as if I was living in the US at my base salary. That's the result to me, lots of foreign/domestic taxes paid by the company.
5 - Relocation - included, but no assistance on house sale in US. Small amount possible for property management if you choose to keep your home there.
6 - Storage - not included.
7 - Bonus - normal pay package, plus a small "assignment" bonus in the single digit %.
8 - Price differential - based on a Goods/Services differential formula they get from an outside firm. Not a ton of impact to me.
9 - Deparature/Resettlement bonus - small bonus on each side of the trip to cover things like passports, driver license fees, etc.
10 - Trips home - 1 per rolling 12 months.
11 - Education - not sure, I'm a single expat. I believe the families here use a combination of US charter school plus local English speaking school.
12 - Residency visa/permits - included.
13 - Vacation - normal allowance. Home leave uses vacation unless I visit my old US office during the trip.
14 - Shipping - included, allowance based on weight/size (air transport) , also depends on family size. 1 extra allowance for move home to US.

Groceries/dry cleaning/internet not included. No temporary housing upon return, as they "expect"(but don't require) you to keep your US residence.

Typical assignment is 3-5 years.

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Re: Best Expat Forums or Advice on Expat Package?

Post by msk » Fri Feb 03, 2017 3:40 am

I worked for a multinational and got posted to various countries. It depends on how multinational your own company is. If it is huge, think Exxon or GE or the US government, you have nil negotiating room. Every little allowance has been studied and fixed with precision for generations of expatriates before you. If expatriation is all very new to your tiny multinational, then you may worry about the allowances and negotiations. Just keep things in perspective. After all, you are going in to "manage" things.

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Re: Best Expat Forums or Advice on Expat Package?

Post by advice789 » Fri Feb 03, 2017 7:47 am

With the prior replies, you received a lot of good tips. A few added thoughts, some of which share common themes with prior posts

1) Housing- Typical package provide employer paid housing with all utilities, and this includes a furniture budget.

2) Compensation- This is often your home base salary adjusted for cost of living for the new city(London). You may want to seek details of the cost of living methodology. I heard but have not seen, that there are multiple approaches to cost of living. Relocation firms provide a few options for cost of living adjustment to employers. Employers than select one of the method. Conceptually, the adjustment should provide for a similar lifestyle as you home base/ home city

3) Education- Many packages are employer paid for tuition. Check if the package includes books, extracurricular activities etc. Also, if any of your kids are preschool/ nursery, does the package include such kids or only cover dependents of elementary + school age. The other aspect is commuting to school. Many Intl schools provides bus services and as such, will you package cover this. Last, assess whether there are open slots at the school. Some cities, finding a top school is a problem as many parents will pay the tuition but seats are limited. More demand for school slots than supply means students may not obtain their first or second choice for schools. How will your company help you in such situations?

4) General information- Encourage you to talk to other expats in the city. The family can share experiences. You can contact the American Chamber in London and ask if any of the expats would be open to talk to you and your wife for a few minutes. Benefit from their experiences. As well, your company may have expats in London or other cities. Expats on assignment or recently returned can share the plus/ minus of the expat package, as well as the experience. Last, during the summer, many families go back to the USA to see relatives and friends while the expat employee continues to work in the host city. So plan for that option and related cost. For such an event, expats will keep their home for the family for summer and holiday trips. All that said, lots of options to travel in Europe with the family as well

5) Taxes- Ensure the tax equalization policy is solid. For example, your tax liability would be the same as if you were still in the US and all other incremental tax costs are paid by the company. This can be a large $ amount. Have seen situations in which the tax protection/ taxes paid by the company for the expat is 30% of the total package. This is due to taxes associated with education, housing etc. paid by the company to keep the expat family is a reasonable lifestyle. A good tax protection plan is a must.

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Re: Best Expat Forums or Advice on Expat Package?

Post by German Expat » Fri Feb 03, 2017 8:10 am

I am curious if you get a full Expat package or not. Those are on the way out and for good reasons. We had a couple expats in Hongkong and with schooling, housing, flights home etc. this more then doubled their salary.
I would expect with 6 kids (soon all school aged) and very expensive housing in London this could already add up to 300k or more per year. Throw in tax equalization for it, potentially a flight home etc. and you are talking 500k per year just for this.
I moved from the US to Switzerland and negotiated for up to 5 years rent and support for our son's school. But I did not get a full expat package and talking to friends there are less and less full packages. My company also used to do it but as described above this can get extremely expensive.
Btw, enjoy Facta and the local banks will not like you.

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Re: Best Expat Forums or Advice on Expat Package?

Post by Random Poster » Fri Feb 03, 2017 10:28 am

I think that most of the basics have been covered.

Regarding FATCA, see if your employer will set up a foreign bank account for you, and give you a subsidized (or free) currency conversion system. Mine set up some sort of Global Executive Banking program at Citibank (I personally never used it), that allegedly made currency conversions cost-free to the expat. Assistance with getting a credit card or the like in the host country would be nice too, as you likely have no credit history in the UK.

Also, determine if you will get paid your salary in USD, but then receive a separate "paycheck' in local currency meant to cover housing and utilities. That's what my employer did, and with some careful housing shopping, we were able to live solely on the housing payment and bank the entire salary during the duration of the assignment. Getting paid in USD also allowed me to keep contributing to the 401k and might have had something to do with social security contributions.

ETA: Regarding housing, given that none of your appliances will likely work in the UK, the housing payment should cover either a fully-furnished residence or you should be given a stipend to buy such appliances. Think waffle maker, coffee maker, iron, etc. Having to essentially set-up a complete residence isn't cheap, and it isn't like you can use that stuff back in the US.

Regarding the move itself, ideally you'd get an air shipment of goods (based on some weight amount--500 pounds or so) that can go with you immediately, with the rest of your goods to be shipped by a shipping container. The allowable size of the container should be larger on the repatriation, as you will likely be bringing stuff back that you picked up during your assignment. Also, there should be a relocation bonus (1 month salary or more), payable upon departure and upon repatriation. Confirm what you are entitled to regarding move benefits if you (i) leave the company before your assignment is over; or (ii) elect not to stay with the company when your assignment is over. Some companies will just cover your flight and shipment of goods back to your original location--others might be more flexible and pay for them to go to a different location.

See how often cost of living adjustments are made--quarterly is pretty standard, but monthly might be better if the host country is experiencing rapid cost increases. Your base salary is likely fixed for a year, but if you get cost-of-living adjustments (payable either in local or home currency), that can help smooth out things quite a bit. I'd also want (and was given) an expat bonus---which was 10% of your base salary, payable with your regular paycheck over the course of the year, as an incentive to take the assignment in the first place. That's not quite like your "Experience Bonus."

Regardless, as others have said, if you are with a big company, there isn't much to negotiate. But, at least in my experience, the money was phenomenal. The one (very significant) downside, in my experience, was that you had very little control over the future and your future plans---you were never entirely sure when you were going to be pulled out and sent back home. The first year is pretty assured (but, even then, some expats didn't last 6 months because the company pulled them out), but by year 3, things started to get pretty iffy and it was hard to plan for much of anything (vacations, family visits to the host country, etc). With kids, that might be even more of an issue, because having to pull up stakes and move back on short notice is no fun.

Lastly, regarding the tax package, if you are granted RSUs or options or the like, you will likely have trailing tax liability for several years to the host country after you repatriate (and presuming that you stay with your employer). Your employer should pick up that trailing tax liability and handle your US/UK tax returns for several years after you return.

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Re: Best Expat Forums or Advice on Expat Package?

Post by Ethelred » Fri Feb 03, 2017 10:35 am

I believe the main forum for US expats in the UK is called UK Yankee. I don't post myself, but have read threads there before because some of the issues for British expats in the US are similar to those for US expats in the UK, especially when it comes to taxes.

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Re: Best Expat Forums or Advice on Expat Package?

Post by Epsilon Delta » Fri Feb 03, 2017 12:58 pm

crazygrow wrote: Also, there would obviously be some negotiation around a package. I think this would be a 2-5 year assignment. Our biggest concern from a package perspective is education allowance for the kids (I have six ages 10-4) - I'm concerned about everything else but believe my company will already be thinking of being pretty fair with everything else.
I'd pay attention to the kids. The rest is just money.

Try to move the kids during summer vacation. Kids are mean, don't make it worse. This may involve negotiating a start date, or getting the company to pay for an extra trip or two for the move.

Where are the kids in school now? There are plenty of state (i.e. US public) schools in London that are just as good as any public school in the US, there are some that are arguably as good as any private school in the US. If you are already paying for private school then what you are looking at is cost of living adjustment and not school fees, per se. I would let the kids go native and not look for a school that caters particularly to Americans. The only possible exception might be the oldest if you are there for five years and she would be there for the first year or two of high school. Even that shouldn't be a problem but when you move back to the US you will encounter particularly bone headed school admins who require the student to take 4 years of required classes in two or three years, since the English teach the wrong type of history, French instead of Spanish, ... . With luck the bone head admins are not the top of the heap and can put aside by a more enlightened higher up.

If you stay much more than 5 years some of the kids might really go native and not come back, but if you stay that long maybe you will too.

Also note that moving from say Houston to London will be more of a difference than moving from Manhattan to London.

Added: also consider your spouse. They may not be able to get a work permit. For a homemaker this may not be a big deal, but if they have a career your employer should either get the work permit or compensate in some other way. If lack of a permit forces a spouse to take career hiatus it might be a good time for further education.

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Re: Best Expat Forums or Advice on Expat Package?

Post by deskjockey » Sat Feb 04, 2017 4:43 pm

I'm an expat in London (moved here last summer), but I'm a Fed, so I'm afraid I can't give you much help in terms of negotiating a package. That said, There are still many commonalities for us expats.

1. Housing--London is insanely expensive when it comes to housing, even after you factor in the 20% decline in the pound since summer. Definitely push to have your employer cover housing and, if possible, the basic utilities. Try to get a place somewhat close to your office AND your kids' school(s), because what seems like a puny distance in the US can take hours here (my 2.5 mile commute takes 30 minutes by tube & walking or 1 hour by bus during rush hour). Be ready to downsize your expectations in terms of house and room size, especially since the Brits generally don't do closets as we know them in America. We purged thoroughly before we came, stored more than half of our stuff and all of our furniture, and we still had a bit of trouble squeezing down from our 2,700 sq. ft. home to our new place. Hopefully you will get storage paid for as part of your package.

2. Schools--as others have mentioned, schools should be high on your list of things to research thoroughly and decide on what is best for your kids. You have three options, speaking broadly: the American School of London (ASL), a British private school, or a British public (state) school. State schools vary in quality and some are very good and, since they are free, quite attractive. There are two major catches, though: they are competitive to get into (i.e., just because you live in the neighborhood doesn't mean your kids will go to the school there--if Jr. doesn't score well, he may end up at a crappy school on the other side of the city) and you can only apply to go there if you are already a resident. That means that you can't apply before you move and will be left picking at scraps if you move in June/July/August. British private schools also are competitive and expensive--forget about the most well-known, as you have to apply years in advance to get in (which you won't). There are many others that are really good schools but don't have the prestige--focus on those, especially those that cater to expats of all nationalities. ASL, for its part, is a very good school, but also is competitive and expensive. That said, if you want your kids to be able to seamlessly readjust to the US education system when you return, ASL can't be beat.

One additional thing to consider when deciding in schools is the difference between the British and US curricula. For preschool and elementary, the British curriculum is very strong and demands a lot from kids. Basically, UK kids are a year or more ahead of their same-grade US counterparts. That means your kids will have some catching up to do and may need summer tutoring before they start school. The plus side is that, once they catch up, they will be racing ahead and, when they return to the US, they will have an advantage. For older kids (middle and high school), the US curriculum is arguably better than the British one.

3. Cost of living--I moved from a HCOL city, so I haven't found London to be that much more expensive. Yes, some things cost more, but others (cable, internet access, cell phone) are cheaper, so I wouldn't bother to negotiate for those types of bills. You will still want a COLA, but don't expect it to fully make you whole, especially since your pattern of expenses will change. If you bring or buy a car, you can save some money by grocery shopping outside of London--it's a bit cheaper. Don't bother trying to negotiate for grocery delivery, dry-cleaning, or your TV license, however--that stuff is peanuts compared to the big stuff above.

4. Taxes--definitely push for tax equalization and preparation (both US and UK). One thing you may be unpleasantly surprised by is that you may pay more in US taxes after you move, in part because you could miss out on deductions like mortgage interest, property taxes, etc., if you rent or sell you current home. Be ready for that.

5. Don't for get that, if you have more that $10,000 USD in an account outside the US at any point during the year, you will have to file an FBAR form with Treasury for that year. A lot of folks get tripped up by this.

Good luck!

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