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What Is an Expatriate?

Understanding expatriates.

• Retiring Abroad

Foreign Earned Income Exclusion

Foreign tax credit, expatriation tax.

• Pros and Cons

The Bottom Line

• Taxpayer Types

Expatriate (Expat): Definition and Pros/Cons of Living Abroad

Julia Kagan is a financial/consumer journalist and former senior editor, personal finance, of Investopedia.

Lea Uradu, J.D. is a Maryland State Registered Tax Preparer, State Certified Notary Public, Certified VITA Tax Preparer, IRS Annual Filing Season Program Participant, and Tax Writer.

Investopedia / Julie Bang

An expatriate or expat is an individual living and/or working in a country other than their country of citizenship. The arrangement is often temporary and for work reasons. An expatriate can also be an individual who has relinquished citizenship in their home country to become a citizen of another.

Key Takeaways

• An expatriate is somebody who has left their country of origin to reside in another country.
• Expats may leave home for work reasons and seek more lucrative employment in other countries.
• Expatriates may live overseas for a while or completely renounce their citizenship in one country in favor of another.
• Retiring abroad has become an increasingly popular option.
• The IRS may impose an expatriation tax on individuals who renounce their citizenship, usually based on the value of a taxpayer's property or income in the United States.

An expatriate is a migrant worker who is a professional or skilled in their profession. The worker takes a position outside their home country, either independently or as a work assignment. The employer assigning the work can be a company, university, government, or non-governmental organization.

You would be considered an expatriate or "expat" after you arrive in Toronto if your employer sends you from your job in its Silicon Valley office to work for an extended period in its Toronto office.

Expats usually earn more than they would at home and more than local employees. Businesses also sometimes give their expatriate employees benefits such as relocation assistance and housing allowances. The expat will have to open a local bank account that will allow them to function in their new home.

Living as an expatriate can be exciting. It can present an excellent opportunity for career advancement and global business exposure but it can also be an emotionally difficult transition. It involves separation from friends and family while adjusting to an unfamiliar culture and work environment. This is typically the reason behind the higher compensation offered to these migrant workers.

Special Considerations: Retiring Abroad

Much expatriation occurs during retirement. Most Americans spend their retirement in the U.S. but a growing number are opting to retire overseas. People are motivated to relocate abroad at an older age for several reasons , including lower cost of living, better climate, access to beaches, or other reasons. But it can be tricky to navigate taxes, long-stay visas, and the language and cultural differences experienced when settling down in other countries.

Popular retirement destinations include countries in Central and South America, the Mediterranean, and parts of Europe.

A common choice a retiree expat must deal with is between permanent residency and dual citizenship. Neither dual citizenship nor residency will get you out of filing a U.S. tax return every year.

It's both surprising and burdensome but Americans still have to pay income taxes wherever they live, and they owe it no matter where their income was earned.

You may also have to file an income tax return in your country of residence although most deduct the amount American residents pay to the U.S. via treaties that minimize double taxation.

You face a tough decision that will require some soul searching and research if you're a retiree or near-retiree who's on the fence. You might consider a trip abroad or maybe several to test the waters before you make a decision. Some Social Security benefits might travel abroad with you but you may have to forego benefits like Supplemental Security Income (SSI).

Complying with United States income tax regulations is an added challenge and financial burden for Americans working abroad as expatriates because the U.S. taxes its citizens on income that's earned abroad. But the U.S. tax code contains provisions that help to reduce tax liability and avoid double taxation . Taxes paid in a foreign country can be used as a tax credit in the U.S. which reduces the expat's tax bill when applied against it.

The Foreign Earned Income Exclusion (FEIE) allows expats to exclude a certain amount of their foreign income from their tax returns. The amount is indexed to inflation. It was $120,000 in 2023 and it increased to $126,500 in 2024. An expat who earns $180,000 in 2024 from their job in a foreign country that's tax-free would only have to pay U.S. federal income tax on $53,500: $180,000 minus $126,500.

The FEIE doesn't apply to rental or investment income. Any income earned from interest or capital gains from investments must be reported to the IRS. The Foreign Tax Credit (FTC) is a provision that ensures that expats aren't double-taxed on their capital gains.

Assume an expat falls in the 35% income tax bracket in the U.S. Their long-term capital gain on any investment is taxed at 15%. The FTC provides a dollar-for-dollar credit against taxes paid to a foreign country so the expat would only have to pay 5% tax to the U.S. if they paid 10% tax to the country where they work. They’d owe the full 15% tax to the U.S. government if they paid no tax to the foreign country.

The expat would forfeit that amount if the income tax paid to a foreign government far exceeds the amount of the credit because the foreign tax rate far exceeded the U.S. rate. The credit can be carried to future years, however.

An individual who has renounced their citizenship in their home country and moved to another is also referred to as an expatriate for tax purposes. They're subject to an exit tax known as an expatriation tax.

The expatriation tax provisions apply to U.S. citizens who have renounced their citizenship and long-term residents who have ended their U.S. residency if one of the principal purposes of the action is the avoidance of U.S. taxes , according to the Internal Revenue Service (IRS).

This emigration tax applies to individuals who:

• Have a net worth of at least $2 million on the date of expatriation or termination of residency
• Have an average annual net income tax liability over the five years ending before the date of expatriation or termination of residency that is more than $190,000 if the expatriation date was in 2023 or $201,000 if the expatriation date is in 2024
• Do not (or cannot) certify five years of U.S. tax compliance for the five years preceding the date of their expatriation or termination of residency

Advantages and Disadvantages of Becoming an Expatriate

Living and working in another country for an extended period can have its benefits. They can range from new experiences and adventure to more practical considerations like a lower cost of living or being closer to extended family abroad. You may also get government perks like free healthcare and education and more favorable taxation depending on where you settle.

There are also some potential drawbacks. You'll still have to file tax returns each year and may have to pay taxes to Uncle Sam even on income earned in your new country unless you fully relinquish your American citizenship.

You might also be a long way from home. This can make seeing friends and family more costly and difficult and time zone differences can also interfere with finding a good time to link up by phone or video chat. Learning a new language and customs can also be difficult for some and certain items or products that you like may not be available in the country to which you move. And not all countries enjoy the same level of political and economic stability that the U.S. does.

New experiences and maybe a better climate

Potentially lower cost of living

Potential access to affordable healthcare

Potential for double taxation

Long way away from friends and family

Language, cultural, political, and economic barriers

Potential challenges in securing the proper visa

What Does It Mean to Become an Expatriate?

An expatriate or "expat" is someone who leaves their country of origin and settles abroad for an extended period, often permanently.

What Is Expat Taxation?

Americans living overseas still have to file U.S. tax returns unless they relinquish their American citizenship. Several international tax treaties exist to help minimize double taxation, however.

What Is an Expat Community?

People often find comfort in seeking out other foreigners when they relocate to a foreign country, especially those from their home country. Expat communities are enclaves of people from a similar national origin, often with their own school and shopping options. English-speaking enclaves are called "Anglo" communities in many countries.

Expats must typically navigate a complex web of tax rules and regulations that can be challenging to understand and comply with. There are retirement considerations to comply with. U.S. Federal taxes are complicated although you can rely on tax credits and income exclusions to receive favorable U.S. tax treatment. Think it all through before you make a decisive move.

The Wall Street Journal. " Americans are Saving Money by Retiring Overseas ." Slide 2.

International Living. " The World’s Best Places to Retire in 2023 ."

World Economic Forum. " The World's Best Retirement Destinations Might Surprise You ."

Internal Revenue Service. " Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad ." Page 3.

Internal Revenue Service. " Tax Treaties ."

Internal Revenue Service. " IRS Provides Tax Inflation Adjustments for Tax Year 2024 ."

Internal Revenue Service. " Foreign Earned Income Exclusion ."

Internal Revenue Service. " Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad ." Page 15-16.

Internal Revenue Service. " Foreign Tax Credit ."

Internal Revenue Service. " Topic No. 409, Capital Gains and Losses ."

Internal Revenue Service. " Foreign Taxes that Qualify for the Foreign Tax Credit ."

Internal Revenue Service. " Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad ." Page 34.

Internal Revenue Service. " Publication 519, U.S. Tax Guide for Aliens ." Pages 23-24.

Internal Revenue Service. " Expatriation Tax ."

Internal Revenue Service. " 26 CFR 601.602: Tax Forms and Instructions; Rev. Proc. 2023-34 ." Page 18.

Internal Revenue Service. " 26 CFR 601.602: Tax Forms and Instructions: Rev. Proc. 2022-38 ." Page 19.

Internal Revenue Service. " Publication 519, U.S. Tax Guide for Aliens ." Page 24.

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What is Expatriate?

Expatriate is a term used to describe an employee who is temporarily or permanently assigned to work in a foreign country. Expatriates may be assigned to work in a foreign country by their company, or they may be sent to work in a foreign country by their government. Expatriates may be assigned to work in a foreign country for a variety of reasons, including to gain experience working in a foreign country, to learn a new language, or to gain knowledge about a foreign culture.

What are the benefits of expatriate assignments?

There are many benefits of expatriate assignments for both the employee and the employer. For the employee, expatriate assignments can offer opportunities for growth and development, as well as new and exciting experiences. They can also provide a chance to learn about a new culture and to improve foreign language skills. Additionally, expatriate assignments can offer a higher salary and a variety of benefits, such as tax breaks and allowances.

For the employer, expatriate assignments offer the chance to send employees to new and challenging assignments, which can help to develop their skills and knowledge. Additionally, expatriate assignments can help to build a global network of contacts, which can be beneficial for the company. Additionally, expatriate assignments can be cost effective, as the employee may be able to claim tax breaks and allowances.

Who uses Expatriate?

Expatriate is used by human resources professionals to describe employees who are temporarily assigned to work in a foreign country. These workers may be sent by their company to work in a new office or to support a project in a foreign country. Expatriates may also be transferred to a new position in a foreign country.

How do you build an expatriate program?

There is no one-size-fits-all answer to this question, as the best way to build an expatriate program will vary depending on the company’s needs and goals. However, some tips on how to build an expatriate program include:

• Establish a clear purpose for the program. Before creating an expatriate program, it is important to establish a clear purpose for it. What are the company’s goals for the program? What do they hope to achieve by sending employees abroad?
• Define the target audience. Who will the program be aimed at? Is it for senior executives only, or will it also include lower-level employees? Defining the target audience will help to determine the specific criteria that employees must meet in order to be eligible for the program.
• Establish eligibility criteria. In order to be eligible for an expatriate program, employees must meet certain criteria. Establishing clear eligibility criteria will help to ensure that only the most qualified employees are chosen for the program.
• Design a comprehensive selection process. The selection process for an expatriate program should be comprehensive and rigorous. It should include a review of the candidates’ skills and experience, as well as their personal and professional goals.
• Create a comprehensive training program. Once employees have been selected for an expatriate program, they need to be properly trained for their new role. The training program should include information on the company’s culture and business practices, as well as on the specific country where the employee will be working.
• Develop a support system. An expatriate program is only successful if there is a strong support system in place. This includes a network of mentors and advisors who can help the employee adjust to their new surroundings.

Why do you need an Expatriate program?

The modern workplace is a global one, and businesses need to be able to operate in multiple countries in order to be successful. In order to do this, they need to have employees who are able to work in different cultures and who have the skills to navigate different business environments. An expatriate program is a way to identify and recruit employees who have the necessary skills and cultural understanding to work in a foreign country. It also provides a way for businesses to support their employees as they move to a new country and help them to adjust to their new surroundings.

Where should you post your expatriate jobs?

There are a few different places to post Expatriate jobs. One popular site is Indeed.com. You can also post directly on company websites or job boards. Another option is to use a staffing agency that specializes in finding candidates for international positions.

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Who is an Expatriate Employee?

Who are expatriate employees and are you considered one.

We’ve all been hearing this term expat employee or expatriate worker. Living abroad and working on expat assignments are part of being an expatriate employee. Sometimes, the assignments are short, and sometimes it takes more than a year. Other times, expat employees travel from one country to another to complete their job tasks. So what exactly does it mean? In this article, we will explore the definition and what exactly it is to be an expatriate employee .

Definition of Expatriate Employees

A person living/working in a country other than his or her country of citizenship is considered an expat. Expatriate employees are often working in another country temporarily. Expatriated employees are usually sent abroad by a multinational employer (profit or non-profit) on a long-term job assignment over a year. Often, the organization has to send a senior manager to oversee the operation abroad or set up a new branch office. Often, there will be local nationals in the office – which would be the employees who are citizens of the country or have been domiciled there for a long period of time.

Woman on beach resting in hammock and working on laptop

Understanding Expat Employees

When it comes to expat workers, they earn more than they would at home and more than local employees. Furthermore, if you’ve chosen to become an expat employee, your company will also give your expat employee benefits such as relocation assistance and housing allowance. Becoming an expatriate has a lot of benefits, from getting opportunities for career advancement and global business exposure to living abroad and exploring exotic cities and cultures.

On the other hand, it can also be a difficult transition emotionally for some expats as they will have to leave their friends and family back home and adjust to a new culture and work environment. It is also one of the main reasons companies offer higher compensation and benefits to expat workers.

Expat Employees are “Special”

Generally, expatriate employees expect and deserve higher levels of pay, international health insurance , benefits and more from global employers for a variety of reasons:

• Expats are often in high demand, and their positions are more often than not senior management level
• They fulfil essential positions abroad that are critical for your organization’s financial success
• International experience is considered to require additional income
• Expats are moving abroad by themselves, especially with their families making a big financial and emotional commitment. Picking up stakes and moving your life abroad to a new country is also a big deal.
• Expat assignments are expensive. Not only do they often get paid more, but you have to factor in costs such as housing , schools, insurance, travel and much more. A failed expat assignment can cost hundreds of thousands.
• Finding the right expat employee can be very expensive, especially if a “head hunter” is used as their fees often range between ten and twenty percent of the annual wage.

Who are Expatriate Employees?

Expat employees are professional or skilled workers in his or her profession. The employer can become an expat employee by taking job opportunities outside of their home country , either independently or through his or her employer. The employer can be a company, university, government, or even non-governmental organization. A simple example is if you are working in the Silicon Valley office, and your employer sends you to work for a year in its Hong Kong office. In the Hong Kong office, you’re an expatriate employee.

Who is NOT considered as Expatriate Employee?

Business traveller.

Business travellers are those who are still employed and have a payroll with their employers in the home country. They can be sent on short-term global mobility assignments, and their place of employment is still in their home country. For example, someone can go overseas on a business trip for a few days or longer, yet it’ll still be a short-term assignment. Most business traveling employees are going on trips in under six months. Companies should make sure they secure a robust business travel plan for their entire company if sending employees abroad for short-term trips.

Accidental expat

An accidental expat is when a business traveler stays overseas for too long, and sometimes with the host country’s law, the place of employment may shift to the host country. They may work for a year, coming home only on the weekends. In such a scenario, business travel risks becoming an accidental expatriate. In other cases, even global nomads who move from one country to another without returning home become accidental expat. The COVID-19 pandemic has certainly added a lot of accidental expats as employees traveling are now stranded in overseas locations.

Foreign hires

Other than business travelers, another type of false expatriate employee is foreign hire. Multinational companies occasionally recruit candidates from one country to work in another country. For example, contractors in the Middle East recruit laborers from Indonesia, Phillippines, and other developing Asian countries.

Another example is giant tech companies in the USA recruiting graduates from top universities in India for jobs in California. Foreign hires also include US multinational companies hiring American security guards to work in the Middle East . All these employees are considered foreign hires and not expatriate employees because their employer is in just one country. However, one may certainly disagree with this description – you might just call these valued hires ex-pats.

Expat Contractors

Some global mobility managers will not consider contractor employees if the person is sent or hired abroad for a short or long-term assignment. They are not on the company payroll and are often considered contractors or consulting employees. However, if that “contractor” is only working for your company and indeed if the contract is extended beyond a year, is he or she really a contractor? If something goes wrong or if there is a sickness or injury, that expat contractor might be seen as an employee by the courts – local or back in the home country.

Duty of Care for Expatriate Employees

We have written some articles on the global mobility manager’s duty of care. It is a hot topic in global mobility circles these days. Suffice it to say it is critical for managers to ensure that expat employees, local nationals, contractors, and business travelers are protected and well-insured. All too often, we see people sent abroad for short and long-term assignments with inadequate global healthcare coverage, disability, evacuation, and life insurance coverage on a group or individual basis.

Many expat employers do not place adequate kidnap and ransom coverage for employees in high-risk locations. This puts employees and employers at risk – either because global mobility managers are not being well-advised or the employer wants to save money. Many countries, including the USA and Canada , have issued guidelines for meeting the duty of care for overseas employees. This can extend to adequate insurance but also health and safety as well. International employers need to take a proactive stance to insure, prepare, and protect their employees everywhere.

As part of TFG Global Insurance Solutions Ltd, we can discuss your organization’s duty of care from an expat insurance specialist perspective. If your organization would like to have us examine your global benefits plan , please feel free to reach out to us today. If possible, you can send us the details on your global health insurance plans, expat census, and contracts. We have often been able to find holes in current insurance coverage that were putting employees and the company at risk.

Our firm hase been able to secure thousands in savings for clients when our firm has been appointed as broker of record for their existing insurance policy, often keeping them with the existing insurer after conducting an expat benefit plan RFP. It really makes sense to work with an expat insurance specialist firm .

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What Are Expatriate Employees? Best Things To Understand

• July 11, 2023

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Expatriate employees, often referred to as expats, are individuals who are sent by their companies to work in a foreign country for a designated period. 

Throughout this article, we will discuss various aspects related to expatriate employees, including their definition, reasons for their hiring, types of expatriate assignments, benefits and challenges they face, best practices for managing them, and the overall impact they have on global business operations. By gaining a deeper understanding of expatriate employees and their role, organizations can better navigate the complexities of international business and optimize their global workforce .

Now, let us delve into the world of expatriate employees and discover the crucial role they play in driving the success of companies in the global marketplace.

Definition of Expatriate Employees

Expatriate employees, commonly known as expats, refer to individuals who are employed by a company in their home country but are assigned to work in a foreign country for a specific period. This assignment may range from a few months to several years , depending on the needs of the company and the nature of the project or role.

Expatriate assignments are typically undertaken by multinational corporations and organizations with global operations. The purpose of these assignments is to leverage the unique skills, knowledge, and experience of employees in a foreign market, ensuring the successful implementation of business strategies and the attainment of organizational goals.

Expatriate employees Vs Local Employees

Expatriate employees possess several key characteristics that set them apart from local employees in foreign countries:

• Nationality and Citizenship: Expatriate employees are citizens of one country but work in a foreign country, often referred to as the host country. They retain their home country citizenship while temporarily residing and working abroad.
• Mobility and International Experience: Unlike local employees who primarily work within their home country, expatriate employees are highly mobile and adaptable. They have experience living and working in different cultural contexts and are accustomed to navigating the challenges and opportunities that come with operating in foreign environments.
• Cultural Adaptation: Expatriates face the unique challenge of adapting to a new cultural and social environment. They must develop cross-cultural competence and navigate differences in language, customs, work practices, and business etiquette. The ability to adapt and bridge cultural gaps is crucial for their success in the host country.
• Specific Expertise: Expatriate employees are selected for their specialized knowledge, skills, and experience that are essential for fulfilling specific roles or projects in the host country. They bring valuable expertise and technical know-how that may be lacking or in high demand in the foreign market.
• Global Mindset: Expatriates possess a global mindset, which means they have an understanding and appreciation of diverse cultures and business practices. They can think and operate beyond the confines of their home country, adapting their approaches to fit the specific requirements of the host country and collaborating effectively with international colleagues.
• Dual Roles: Expatriate employees often have dual roles as representatives of both the parent company and the host country. They act as a link between the headquarters and the local operations, serving as a communication channel and ensuring alignment between the organizational goals and the local context.

Reasons for hiring expatriate employees

Expatriate employees are sought after for their specialized skills and expertise that make them valuable assets in international business operations. Some of the specific skills that expatriates bring to the table include:

• Technical Expertise: Expatriates often possess advanced technical knowledge and specialized skills in areas such as engineering, technology, finance, marketing, or research and development. Their expertise allows them to tackle complex challenges and drive innovation in foreign markets.
• Industry Knowledge: Expatriates bring industry-specific knowledge and experience from their home country, which can be instrumental in navigating local market dynamics, identifying opportunities, and formulating effective business strategies.
• Language Proficiency: Expatriate employees often have language skills that are critical for communicating and conducting business in foreign markets. Their ability to speak the local language or have proficiency in languages of strategic importance can enhance relationships with local stakeholders, customers, and partners.
• Cross-Cultural Competence: Expatriates possess cultural intelligence and a deep understanding of both their home culture and the culture of the host country. This enables them to navigate cultural nuances, build relationships, and adapt business practices to suit local customs. Their cross-cultural competence facilitates smoother interactions and promotes effective collaboration in multicultural work environments.

Advantages of Hiring Expatriates

Hiring expatriate employees offers several advantages in terms of cultural understanding and adaptation.

Expatriates who have spent considerable time in the host country develop an intimate understanding of the local market. They are attuned to consumer preferences, cultural sensitivities, and emerging trends, providing valuable insights that can inform market entry strategies and product localization efforts.

Expatriates, furthermore, can bridge cultural gaps and establish meaningful relationships with local stakeholders, including clients, suppliers, government officials, and business partners. Their understanding of local customs and business etiquette helps build trust, facilitates negotiations, and fosters successful partnerships.

Finally, expats are accustomed to adapting to new environments and are often more flexible in their approach to work. They can assimilate into the local culture, respect local practices, and collaborate effectively with local employees. Their ability to adapt promotes a harmonious work environment and facilitates the integration of global and local perspectives.

Types of Expatriate Assignments

Expatriate assignments can vary in terms of duration, purpose, and structure. Some of the common types of expatriate assignments include:

Short-term Assignments

Short-term assignments typically last anywhere from a few weeks to a few months. They are usually project-based and involve specific tasks, such as conducting market research, managing a temporary project, or providing training and expertise in a specialized area. These assignments aim to address immediate business needs or fill a skills gap.

Short-term assignments serve to meet specific project or expertise requirements in the host country. They are focused on achieving short-term objectives and are characterized by a shorter duration, allowing companies to quickly address immediate needs without committing to a long-term expatriate presence.

Challenges associated with short-term assignments include limited time for cultural adaptation, building relationships, and achieving project objectives. To address these challenges, organizations may provide cultural training and orientation programs to help expatriates quickly adapt to the host country’s business environment. Effective project management and clear objectives are also essential to maximize the impact of short-term assignments.

Long-term Assignments

Long-term assignments typically span several years and involve a more substantial commitment from the expatriate employee. The purpose of long-term assignments is often to establish or manage a subsidiary, lead a foreign office, or oversee strategic initiatives in the host country. These assignments require a deeper integration into the local culture and business environment.

Long-term assignments are more strategic in nature and involve a substantial investment of time and resources. They aim to establish a sustained presence in the host country, develop and maintain local relationships, and drive long-term growth and market expansion. The duration of these assignments allows expatriates to deeply understand the local market dynamics, establish trust with stakeholders, and oversee the implementation of strategic initiatives.

Long-term assignments present challenges such as culture shock, family adjustment, and maintaining motivation over an extended period. Organizations support expatriates by offering cultural training, language support, and assistance with housing, schooling, and healthcare for the expatriate and their family. Regular communication, career development opportunities, and periodic home visits can help expatriates maintain engagement and satisfaction throughout the assignment.

Rotational Assignments

Rotational assignments involve sending employees to work in different locations over a defined period. This allows individuals to gain diverse experiences, exposure to different markets, and a broader understanding of the organization’s global operations. Rotational assignments can be short-term or long-term in nature, depending on the specific rotation schedule.

Rotational assignments provide employees with a diverse range of experiences and skill development opportunities. The duration of these assignments can vary depending on the organization’s rotation program, with individuals typically spending a designated period in each location before moving to the next. The purpose of rotational assignments is to foster global perspectives, transfer knowledge across locations, and groom future leaders with a well-rounded skill set.

Challenges associated with rotational assignments include frequent transitions, adapting to new work cultures, and managing personal and family life during the rotation process. Organizations address these challenges by providing comprehensive pre-departure training, ongoing support throughout the rotation, and resources to manage family logistics and well-being. Structured mentorship programs and knowledge-sharing platforms facilitate a smooth transition between locations and promote effective knowledge transfer.

Benefits of Being an Expatriate Employee

Being an expatriate employee offers both significant benefits and unique challenges. Let’s explore these aspects in detail:

• Career Advancement: Expatriate assignments provide opportunities for career advancement by expanding professional networks, gaining international experience, and developing a global skill set. Working in a different cultural and business environment can enhance leadership capabilities, problem-solving skills, and adaptability, making expatriates more competitive in the job market.
• Personal Growth and Cultural Enrichment: Living and working in a foreign country exposes expatriates to new perspectives, customs, and ways of life. This immersion in a different culture fosters personal growth, broadens horizons, and enhances cultural intelligence. Expatriates often develop greater self-awareness, flexibility, and resilience, which contribute to their personal and professional development.
• Skill Development: Expatriate assignments provide opportunities to acquire new skills and knowledge, such as language proficiency, cross-cultural communication, and global business acumen. Expatriates often gain expertise in areas specific to the host country, allowing them to become valuable resources within their organizations.

Challenges Faced by Expatriates

While there are some nice advantages to being an expat employee, there also comes significant challenges. Cultural adjustment, for example, can be one of the most significant challenges for expatriates. Adapting to a new culture, customs, and work practices may lead to feelings of disorientation, frustration, and isolation. Expatriates may face difficulties in understanding local norms, communication styles, and social expectations.

Language barriers, furthermore, can hinder effective communication and impede integration into the local environment. Expatriates may struggle with language fluency, making it challenging to build relationships, understand business nuances, and navigate daily life in the host country.

Finally, relocating with a family introduces additional challenges. Spouses and children may experience difficulties in adjusting to a new school system, social environment, and lifestyle. Managing the needs and well-being of family members, including spouse employment, childcare, and healthcare, can add complexity to the expatriate experience.

Overcoming Expatriate Employee Challenges

While it is important to keep the challenges of being an expat employee in mind, let’s not forget that there are strategies to overcome them. 

For example, prioritizing cultural awareness and investing time in learning about the host country’s customs, traditions, and work practices can be extremely beneficial. Seek cultural training, language classes, and engage in cultural activities to bridge the gap and foster understanding.

Furthermore, build relationships with local colleagues, other expatriates, and community groups to create a support network. Seek mentorship or buddy programs that can provide guidance and assistance during the transition.

Also, utilize technology tools to bridge geographical and cultural gaps. Video conferencing, instant messaging, and collaboration platforms can facilitate communication with colleagues and loved ones back home.

Best practices for Managing Expatriate Employees

Effective expatriate management is crucial for organizations that deploy expatriate employees. It ensures that the organization maximizes the potential of its global workforce and minimizes risks associated with international assignments. Here are key reasons why effective expatriate management is essential:

• Success of International Operations: Expatriate employees play a significant role in the success of international operations. Effective management ensures that expatriates are well-prepared, supported, and equipped to fulfill their roles and responsibilities, contributing to the achievement of business objectives in the host country.
• Cost Efficiency: Managing expatriate assignments effectively can result in cost savings for organizations. By selecting the right candidates, providing adequate training and support, and facilitating a smooth assignment experience, organizations can minimize assignment failure rates, reduce turnover, and avoid unnecessary expenses associated with premature repatriation or failed international ventures.
• Employee Retention and Engagement: A well-managed expatriate program promotes employee satisfaction, engagement, and retention. Expatriate employees who feel supported and valued are more likely to be motivated, productive, and committed to the organization upon their return, leading to higher employee retention rates and knowledge retention within the organization.

Repatriation Programs

Repatriation programs are crucial for organizations to facilitate the smooth reintegration of expatriate employees back into their home organization. These programs help expatriates navigate the challenges and adjustments that come with returning to their home country after an extended period abroad. A structured approach is essential, with the program being developed well in advance of the expatriate’s return. This ensures that there is ample time for planning, support, and addressing concerns related to repatriation.

One important component of a repatriation program is aligning the expatriate’s career goals, expectations, and opportunities within the home organization. This involves having discussions that assess how the skills, experiences, and growth aspirations of the expatriate align with the strategic needs and future plans of the organization. By understanding the expatriate’s career aspirations, the organization can effectively utilize their talents and provide a sense of value upon their return.

Repatriation programs also need to address the concerns and challenges that expatriates may face during the reintegration process. Reverse culture shock, feelings of disconnection, and difficulty readjusting to the organizational and social dynamics of the home country are common challenges. By creating a platform for expatriates to voice their concerns and offering support resources, counseling, or mentorship, organizations can help expatriates navigate these challenges and facilitate a smoother transition.

Expatriate employees play a vital role in global business operations. They bring specialized skills, cultural understanding, and a global mindset that contribute to the success of companies expanding into foreign markets. Expatriates bridge the gap between headquarters and foreign subsidiaries, facilitating effective communication, knowledge transfer, and the establishment of strong relationships. Their presence is crucial for maintaining consistency in operations, ensuring the implementation of business strategies, and upholding organizational values in diverse cultural contexts.

In this article, we have explored the concept of expatriate employees and their significance in international business operations. We discussed the definition of expatriate employees as individuals who are employed by a company in their home country but work in a foreign country for a designated period. We highlighted the specific skills and expertise that expatriates bring to the table, including technical knowledge, cross-cultural competence, and language proficiency.

By recognizing the importance of expatriate employees, organizations can leverage the full potential of their expatriate workforce and create a competitive advantage in the global business landscape.

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What Is an Expatriate Employee?

• Author Antoine Boquen
• February 8, 2023

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Key Takeaways

1. Expatriate employees (‘expat employees’ ) are sent to work in foreign markets as part of their employer’s international expansion strategy.

2. Successful expat employees possess specialist skill sets that combine management and leadership expertise with cross-cultural skills.

3. Deploying expat employees has its challenges, including; creating expat employee compensation packages; complying with the host country’s immigration procedures and employment legislation; and, managing expat employee welfare.

4. Expat employees take on challenging roles that involve a considerable emotional commitment. As such, managing expat employees is a challenging task that requires a sophisticated HR infrastructure that coordinates between professionals in the home and host countries. Horizons can advise on how best to deal with these types of challenges, amongst others, such as whether or not a tripartite agreement is required.

What are Expatriate Employees?

An expatriate is an individual living or working in a foreign country where they do not hold citizenship. From a business and international expansion standpoint, expat employees are those who are sent abroad to work in a host country where their employer has established operations.

In defining expat employees, it helps to understand the circumstances where an individual is not considered an expat employee:

Business Travelers

Where the expat employee settles down to work in a foreign country (usually for a period lasting longer than 12 months), business travelers are engaged in temporary, short-term assignments (usually for a period lasting less than 6 months). One difference, therefore, relates to the time horizon: business travelers know they will be returning to their place of work in their home country; expat employees understand their place of work is in the host country.

Foreign Hires

Expat vs. immigrant: the key difference.

The words expatriate and immigrant are often used interchangeably. There are a number of similarities between the two: both terms describe individuals who have left their native country to live and/or to work in a foreign country. Indeed, expatriates are a form of immigrant however the key difference between an expat and an immigrant revolves around permanence .

Expats move to foreign countries to work, sometimes settling over the medium to long term with their families in tow, whereas immigrants are those seeking to relocate to another country on a permanent basis. Where expats go through the immigration process as it relates to obtaining the relevant visas and permits, immigrants are likely to be those applying for citizenship.

What are the Benefits of Using Expat Employees?

Businesses that utilize expat employees as part of their global mobility strategy choose to do so for a variety of reasons. As you’ll see, speed (time to market), competence and reliability are key factors.

Company-specific Knowledge and Expertise

Expat employees tend to hold senior managerial roles. The expat employee might have a rare skill set or company-specific knowledge that would require extensive training. Using an expat employee, that’s hired internally, negates the need to engage in a complex executive search, interview process and training program which can reduce the time to market.

Reliability

As well as suitability, such as knowledge of the host country’s work culture, reliability is an important characteristic to look for when identifying suitable expat employees. Keep in mind that expat employees will often serve as the bridge between the executive team and the foreign operation.

Most businesses have secrets or some intellectual property they’d like to protect. It could be a process, a license agreement or anything that contributes towards making the company unique. Protecting this uniqueness becomes especially important when entering new markets and attempting to build a competitive advantage.

The Challenges of Using Expat Employees

Using expat employees has its challenges, particularly in terms of employee management and compliance.

Compensation

• The cost-of-living (housing, schooling costs) in the host country (keeping in mind that many employees seek to benefit from global labor arbitrage);
• Relocation packages (travel compensation, house sale and moving assistance, costs of immigration/visas etc);
• Potential promotions and pay raises associated with new foreign roles.

Navigating Shadow Payroll

Shadow payroll is a critical component of global payroll implementation. Unfortunately, the process is inherently complex. Also known as expat payroll, shadow payroll is a mechanism that ensures compliance with the employment taxes (including payroll tax) of the host country, whilst keeping the expat employee on their home country’s payroll system.

Whilst compensation is processed via the home country’s payroll system, the payroll system in the host country “shadows” what is being reported in the home country. This allows companies to manage their liability for payroll contributions, like income tax and healthcare contributions, in both legal jurisdictions. For an in-depth explanation, see our guide to managing shadow payroll . Additional reading of interest to execs and global mobility teams is our explainer article on Tripartite Agreements .

Administrative Work: Visas/Permits

Visa, work and residence permit requirements differ significantly between countries. The administrative work involved in preparing expat employees for their move requires input from HR and legal professionals.

Many companies choose to work with a global mobility partner that can assist with securing all necessary visas and permits, ensuring a smooth transfer of expat employees to their new location.

Managing Employee Welfare

• Identify candidates whose technical and leadership abilities are matched by their suitability for foreign assignments. For example, employees who have previous cross-cultural experience or have demonstrated an interest in a particular foreign culture.
• Create a plan for repatriation and ensure expat employees have access to career guidance whilst abroad. HR and managers must ensure expat employees maintain a sense of connection and that their international experience can be utilized when they are repatriated.

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Frequently asked questions.

Expatriate employees, or ‘expat employees’, are those employees who are sent by their employer to work in a foreign country, usually as part of an international expansion strategy.

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Back to Glossary

What Expat Management?

Expat Management refers to the suite of processes and policies designed to support employees who are assigned to work in a foreign country, commonly known as expatriates or expats.

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Effective expat management includes everything from pre-assignment planning, visa and immigration support, to housing and schooling assistance, and even repatriation programs. It is crucial for businesses with international operations to ensure their expat employees are well-supported throughout their assignments to maximize productivity and employee satisfaction.

How Does Expat Management Work?

Expat management involves a series of coordinated efforts to facilitate the relocation and integration of employees into their new roles and environments abroad. This process typically includes:

• Assignment Planning: Defining the scope, duration, and objectives of the expat assignment.
• Relocation Support: Providing assistance with moving, housing, and settling into the new country.
• Compliance Management: Ensuring adherence to immigration, tax, and employment laws in both home and host countries.
• Cultural and Language Training: Offering resources to help expats and their families adjust to new cultures and languages.
• Ongoing Support: Continuously supporting expats during their assignment with HR services and repatriation planning for their return.

The Role of HR Outsourcing in Expat Management

HR outsourcing solutions, particularly those offering Employer of Record (EOR) services like Playroll, significantly enhance expat management by providing comprehensive support for international assignments. These solutions can help businesses:

• Navigate Legal Compliance: Expertise in immigration, tax, and employment regulations across different countries.
• Simplify Relocation Processes: Coordination of logistics, housing, and other essential relocation services.
• Support Expat Welfare: Programs and support systems designed to improve expat and family well-being and adjustment.
• Manage International Payroll and Benefits: Ensuring expats receive accurate and timely compensation and benefits aligned with global standards.

Importance of Expat Management in Global HR Strategy

Incorporating effective expat management into a global HR strategy is vital for companies looking to expand their international presence. It not only enhances the company’s ability to attract and retain talent for global assignments but also ensures that expat employees can contribute effectively to their new roles, driving international business success.

Expat Management in a Nutshell

Effective expat management is essential for businesses that operate on a global scale, requiring detailed planning and ongoing support for expatriate employees. It encompasses legal compliance, relocation assistance, and cultural integration to ensure a smooth transition and successful assignment abroad.

By leveraging Playroll’s HR outsourcing and EOR services , companies can offer comprehensive support to their expat employees, from pre-assignment preparation to repatriation, ensuring a seamless experience for both the employee and the organization.

Expat Management FAQs

Why is expat management important?

‍ It ensures the success of international assignments by supporting expat employees' adjustment and compliance with global regulations, enhancing overall business operations.

How do HR outsourcing solutions assist with expat management?

‍ HR outsourcing solutions provide expertise in legal compliance, relocation logistics, and ongoing expat support, simplifying global mobility programs for businesses.

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HR Glossary

Today when about 80% of large and midsize companies currently send their employees abroad, and 45% plan to increase the number they have on an assignment .

You might have a lot of questions related to expatriates. Like “What are expatriates? Is having them in your company expensive? What are its pros and cons? What are the taxes on ex-pats?”. 

So, let’s get to them.

What is an Expatriate?  

An expatriate (also known as an ex-pat) is an employee who is sent to a foreign country for a long-term work assignment by their employers. The work assignments usually include setting up, managing, or populate a new branch.

These employees usually receive additional benefits such as car and driver allowance, cost of living, relocating allowance, etc.

What are the pros and cons of having an expatriate?  

Some of the allowances given to expatriate

Foreign Service Premiums

Given to the employee so that they can move their family to a new country. It usually lies between 10 to 25% of the base salary.

Hardship Allowance

Hardship allowances are higher when an expatriate is sent to a place with poor living conditions, health care, etc.

Cost of Living Allowances

It gives expatriates access to maintain their standard of living. 

Utility Allowances

It is given to an expatriate to pay their utility bills.

Furnishing Allowances

Some companies give the expatriate’s furnishings by sometimes paying the shipping costs or a fixed amount to buy furnishings.

Education Allowances

Companies usually pay the full cost of tuition, books, and supplies for their expatriate’s kids.

Home Leave Allowances

Companies provide expatriates and their families with the fare for a round-trip cost at least once a year.

Relocation Allowances

It is given to makes up for the mistakes, if any, made in any of the other allowances for unexpected complications.

Medical Allowances

Companies pay for all medical expenses like they do for any other employee.

Car and Driver Allowances

This allows the expatriate to buy or rent a car in the relocated country. 

Taxation of ex-pat

The taxation of ex-pat is quite complex as it is different for different countries and requires you to clearly understand them. You must know about terms like Double Taxation Avoidance Agreement, Certificate of Coverage, etc.

If we take an example of Indian ex-pats, it is quite simple since they don’t need to pay taxes in India for their overseas income. But in the case of a foreign expatriate working in India, they need to pay for the services rendered in India under Section 9(1)(ii) of the Income Tax Act .

We hope this article helped you. For more interesting articles;

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The Pros and Cons of Hiring Expats

If you are planning on opening an international office or relocating members of your team to run your company’s operations in a foreign country, there are a few things you should know. Yes, sending expats overseas is expensive as you will need to take into account immigration requirements, tax equalizations, allowances, insurance and other payments, but, most of the times, it is worth the investment.

Want to know more about the hiring of locals over expats?  Click here .

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What are the Pros of Hiring Expats for your International Business ?

1. quality over quantity.

From my experience, hiring locals can be extremely difficult, especially if you are trying to open an international office. That is because most local candidates will not understand your company’s practices. On the other hand, sending someone who knows the ropes of your company will make it easier to train local workers.

This means that one talented & hard-working individual may actually be worth three newcomers to the practices of the trade. Hiring locals may seem like a cheaper short-term solution, but the initial savings may be undermined by poor results on the long-term.

Of course, this decision may vary from one situation to another. For example, some companies work with a combination of expats and local workers.

2. The Target Country has a Limited Local Talent Pool

Another reason to invest in expats would be a limited local talent pool in your industry . In this scenario, the costs of hiring knowledgeable local employees can be prohibitively high. Bear in mind that the ability to work with certain software or computerized technologies specific to your industry is a vital skillset possessed by very few individuals.

3. Your Operation Must Conform to the Standards of your Home Market

This is one of the situations when sending in a team of expats makes the most sense. Many manufacturing companies choose bright individuals to represent their international operation and train local employees. He/she will act as GM, oversee operations and ensure that all business efforts are compliant with the regulations of your domestic office.

Cons of Hiring Expats for your International Business

There are many cons of hiring expats. Here are some of the most common ones:

1. Expats are Expensive & Problematic

The expats themselves are not problematic, but making sure that all travel expenses, visa issues, host or home-country tax differentials and relocation allowances are covered will be. You should expect to pay two to five times more on an expat than you would on a local employee. In any case, you have to decide if this significantly higher cost is worth it.

2. High Burnout Rate

Studies have shown that expats, especially those performing extremely demanding jobs, have a high burnout rate. It seems that 25% of them are called home early because they take on too much stress . This problem is the result of several factors including language barriers, being away from friends and family, having to deal with an entirely new culture, and the feeling of isolation.

3. Legal Risks

Some companies ended up being fined or barred from operating in a certain country because they did not respect its immigration requirements and permit obligations. For the expat the situation can become even more sever. For example, continuing work in a country passed your permit’s expiration date may lead to imprisonment. A Global Mobility Effectiveness Study concluded that roughly 64% of international businesses suffered avoidable non-compliance penalties when sending expats.

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Wrapping up…

If you are still struggling to decide whether or not to send expats to oversee your international operations, you should consider the following pointers:

Exceptional employees, with company knowledge and superior management skills, who can also work well with limited resources are worth their weight in gold.

Never make a decision without fully understanding all the underlying costs, regulations and implications of assigning an expat overseas. I’m talking about housing, moving, expat packages, tax & social security obligations, and support programs for families.

The expat will need some time and training to become adjusted with a whole new culture and language, so do not expect everything to work-out overnight.

[Based on my (Martin P. Laird) experience of working in South Africa]

NEXT:  Who Is and Is Not an Expatriate

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Working abroad?

• Global Guide
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Expatriate Benefits: Perks of an Expat Job

• How to Benefit from Your Expat Status

In our articles on moving abroad we talk at length about the mental and emotional implication of an expatriate assignment. However, there is also a lot to say about the professional implications of becoming an expatriate and spending some time abroad. Whether it’s on an assignment of a few months or a few years, expats benefit from what they learn abroad.

Of course, you need to play your cards right. Your boss may not offer you any expatriate benefits unless you ask for it. The same applies to discussing your position within your company. An expatriate assignment may qualify you for a promotion upon your return. However, this could be up to your negotiation skills.

Improve Your Language Skills

One of the less tangible expatriate benefits is the fact that an assignment will improve some skills you might need in the workplace. For example, you often learn a new language and perhaps even become fluent in it. Once you return to your company’s headquarters, this may make you a top-notch candidate for a new position higher up the management ladder.

If you should decide to change employers, an additional foreign language – especially a less common one – looks very good on your CV. Even if you are self-employed, this knowledge might help you acquire new clients or different projects.

Earn a Promotion

Sergej (43) profited greatly from his three-year expatriate assignment in Tokyo. He found out that he was a candidate for a promotion after his return – one of the major expatriate benefits of his time abroad. In the regional office of his employer, a Russian agribusiness, Sergej was the only one with the language proficiency necessary to communicate with their Japanese clients.

“Barely anyone spoke Japanese or was familiar with the Japanese way of doing business. Before, I was just one guy in sales promotion,” he remembers. “Then – bam! All of a sudden, I was in charge of a whole team since Russian trading companies are seeking to increase foodstuff shipments to the Asian markets.”

But even those former expatriates who return back home and have to start all over again will soon notice how their career benefits from their time abroad. Their language proficiency significantly improves their chances of finding a well-paid job. Companies that operate internationally can always benefit from an employee with fluency in one or even more foreign languages. 

 “Update” Your CV

During your assignment abroad, you will most likely acquire new professional qualifications as well. Your time as an expatriate can give you the chance of working in a field or on a project you wouldn’t have been able to explore in your home country.

Whatever your reasons for moving overseas may be, you should also spend this time abroad to learn as much in your new workplace as you can. An expatriate benefits from the additional experience he or she gains in their chosen field, providing them with a new focus and more relevant details to add to their CV.

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Structuring Expatriate Postings

Multinationals inevitably post expatriates abroad. But in setting up expat postings, employers too often either ignore the question of how best to structure the expat assignment or else they struggle with the expat structuring issue. The reflexive or default approach to structuring expat assignments is simply to grab whatever expat assignment package got used for the last expat posting, change the names, make some tweaks and move on. But this approach is dangerous. When posting an expatriate, focus instead on the most ideal structure for the particular assignment.

Expatriate assignments traditionally came about when a multinational tapped an employee and assigned him to go off to work abroad for one of three reasons: to support a foreign affiliate, as a broadening assignment, or to serve as a “foreign correspondent” performing tasks overseas for the benefit of the home-country employer. But multinationals these days increasingly see these traditional expatriate assignments as less effective.

The wider range of expat postings we see today raises ever more questions of expatriate assignment structure. How best to structure a given expatriate assignment requires addressing four topics:

• Who is, and is not, an expatriate?
• Understanding the four expatriate structures.
• Selecting among the four expatriate structures.
• Expatriate agreements.

Who Is, and Is Not, an Expatriate?

It is always dangerous, and almost always needlessly expensive, to structure a nonexpatriate’s employment as if he were an expatriate. Before structuring any expatriate assignment, first verify whether the candidate really is a business expatriate.

Broadly speaking, an “expatriate” is anyone who lives in a foreign (non-native) country. Relevant for our purposes, a business expatriate is an employee originally hired by and working for a multinational in one country whom that employer now reassigns to work temporarily abroad in a new overseas place of employment. A business expatriate always expects to return home—to be “repatriated”—at the end of the assignment. An overseas assignee with no expectation to repatriate is a “permanent transferee,” not a business expatriate.

Watch out for false expats—internationally mobile employees who are not genuine business expats and who should therefore not get structured as expats. For example, some short foreign postings and assignments get staffed by business travelers who, as mere travelers, are not genuine expats. A business traveler remains employed and payrolled by his home-country employer entity, and his place of employment remains his home country. The traveler goes abroad to render services, sometimes on a “posting” or “assignment” of several months that requires a visa or work permit. But his time working abroad is short enough that the host country never becomes his place of employment, not even temporarily.

When a business traveler stays overseas long enough, as a matter of host-country law his place of employment shifts at some point to the host country. He then becomes a so-called “stealth expat” or “accidental expat.” Stealth/accidental expat status is an internal misclassification that triggers legal problems under host-country immigration, payroll and employment laws, as well as “permanent establishment” issues. Multinationals should of course be careful to classify stealth/ accidental expats as actual business expatriates. On the other hand, multinationals should also be careful not to classify mere business travelers as business expatriates.

Another example of a false expatriate is the foreign hire. Multinationals often recruit candidates in one country for jobs in another country. For example, American multinationals recruit security guards and technicians in the United States to work jobs overseas on compounds in the Middle East or oil fields in Africa. And Silicon Valley tech companies recruit graduates from universities in India to come stateside to work jobs in California. These are foreign hires, not business expats—these employees may be emigrants and they may need visas to work in their places of employment, but they are not business expatriates because all their work for the employer is performed at one place of employment in one country. Some foreign hires get to participate in rich company expat benefits plans, but—contrary to a widespread misunderstanding among human resources professionals—eligibility under a company’s expat benefits program does not convert a foreign hire into a business expatriate.

Always clarify internally who is, and is not, a genuine business expatriate. Never structure nonexpats (like business travelers and foreign hires) as expats, even if they get to participate in an expensive expat benefits program.

Understanding the Four Expatriate Structures

Only genuine business expatriates should get structured as expats, but how best to structure an expat assignment? There is no one single best way to structure an intracompany business expatriate posting because there are four viable types of expat structures. Different circumstances point multinationals to select various options among these four. And yet in one way or another, all business expatriates end up falling into one of these four categories: direct foreign posting, secondment, temporary transfer/localized, and dual-/co-/joint-employment.

Direct foreign posting. In a direct foreign posting, a business expatriate remains employed and payrolled by the home-country employer entity but his place of employment shifts to a new foreign host country. The expat renders services directly for the home-country entity, not for a local host-country affiliate. Direct foreign postings are easy and attractive to set up, but compliant ones are rare, because host-country immigration and payroll laws make this a fragile status tough to structure legally.

Secondment. “Secondment” means “employee loan.” Not all secondees (lent-out employees) are expatriates, and not all expatriates are secondees. In an expatriate secondment, the expat remains employed by his home-country employer entity. He moves abroad to a new host-country place of employment and starts rendering services for a new host-country employer entity, usually an affiliate or joint venture partner of his home-country employer. The secondee might be payrolled by either the home or host-country entities, or by both (via a split payroll). Some secondees stay on the home-country payroll while the host-country entity issues a “shadow payroll” to comply with local payroll laws.

Temporary transferee/localized. An expatriate transferee, also called a “localized” expat, moves abroad and gets both hired and payrolled by a new host-country employer, often an affiliate or joint venture partner of the home-country employer. The transferee resigns from his home-country employer and simultaneously signs on with the host-country entity, which usually extends retroactive service/seniority credit. While working in the new host-country place of employment, the transferee renders services exclusively for the new employer without retaining any lingering employment relationship with the old home-country employer, other than perhaps a side-letter or e-mail addressing post-assignment repatriation expectations. Yet an expat transferee’s localization is temporary; he expects some day to repatriate and get relocalized at his original home-country employer location.

Dual-/co-/joint-employee. A dual-/co-/joint-employee expatriate is an expat who simultaneously serves two masters, the home and host-country entities, essentially on a moonlighting basis—one employee simultaneously working two jobs, or working one job actively while retaining status as “on leave” from another employer entity. A dual-/co-/ joint-employee expat may be payrolled by either or both employer entities via a split payroll.

Selecting Among the Four Expatriate Structures

With these four distinct expat structures, the question becomes: Which of the structures is most appropriate for a given expat assignment? Answering this is a lot like selecting among business entity structures—sole proprietorship, closely held company, publicly traded company, limited liability company or partnership. We actively select the best business entity structure each time based on specific needs—not on how we may have structured some other entity at some time in the past.

So with expat assignments, always select the most appropriate of the four expat structures for the particular assignment, without regard for whatever may have been the best selection last time. Your last expat may have gone off to a country where you have an already-operating host-country entity affiliate, whereas this current expat may be off to a place where you have no on-the-ground infrastructure. Or your last expat may have participated in your company expat benefits program, whereas this current expat may be transferring abroad for personal reasons that render him ineligible for a company package. Or your last expat may have gone abroad to serve an overseas affiliate, whereas this current expat may be off to work as a foreign correspondent directly for the home-country entity. In posting a given expat abroad and selecting among the four expat structures, factor in three sets of variables: immigration laws, payroll law compliance and corporate tax presence. How these three variables play out as to any given expat posting will point to the structure most appropriate for the particular expat assignment.

Expatriate Agreements

Having selected the most appropriate of the four types of expatriate structures for a given expat assignment, a multinational next needs to decide how best to memorialize (document) its expat assignment. There are two very different kinds of expat agreements: an expat assignment agreement between the expat and the employer and an inter-affiliate assignment agreement between a home-country employer entity and a host-country affiliate entity, to which the expat is not a party. Document an expat assignment using one or both agreements, as appropriate.

Donald C. Dowling is a partner in the New York office of White & Case.

Republished with permission. © 2013 White & Case. All rights reserved.

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Meaning and Definition of Expatriate

Why does a person want to become an expat, why would you require an expatriate program, what are the types of expatriates, the foreign assignee, the explorer, the optimizer, the travelling spouse, the romantic, conditions for becoming an expatriate, understanding expat taxation, how can you do expatriate management in hrm, selection and recruitment, pre-departure expatriate training, compensation and other benefits, on-premises support, performance supervision, what are the types of expatriate training in hrm, cultural awareness training, language training, preparation for pragmatic matters, compliance and law training, role-specific training, virtual training, psychological and mental preparation, benefits of becoming an expat, disadvantages of becoming an expat, how can you create an expat program, how can hr professionals help expatriates, why do some employers prefer to expatriate their employees, how long is an expatriate employee's duration, where should you advertise your expat jobs, do expatriates pay taxes, what is an expatriate salary, what constitutes an expatriate assignment, what's the distinction between an immigrant and an expat.

Let’s understand the meaning of expatriate. In Human Resource Management (HRM), an expatriate is an employee sent by his or her organization to work in another country for a prolonged period. Emigrants can originate from any business level and be moved abroad for various reasons, including skill transfer, subsidiary management, or gaining foreign experience.

Expat assignments are widely seen as high-cost and high-risk ventures for organizations, mainly if the expatriates are not well prepared for the transition or if the mission fails to accomplish its objectives. Many people confuse expatriates and migrants, but they are very different. According to an article by BBC, there are differences between expatriates and migrants.

This article will discuss expat meaning and related concepts in detail.

Expatriates are temporary or permanently assigned employees who work in a foreign country. They may be sent abroad by their employer or government to gain job experience, learn a new language, or immerse themselves in a foreign culture.

Expats typically make more than local workers and more than people at home. In addition to compensation, organizations may provide expat staff with advantages such as relocation aid and housing allowance. The expat must create a local bank account in their new residence.

Living as an expat can be exciting and provide tremendous opportunities for career progress and worldwide business exposure. Still, it can also be an emotionally challenging shift that entails leaving friends and family and adjusting to a new culture and work environment. This is why migrant workers get paid more.

While numerous reasons exist to become an Expatriate, some are particularly drawn to making money through economic arbitrage.

Employers frequently pay expatriates higher wages than they would if they stayed home. They'll often be able to save more money for retirement or earn more money than locals, resulting in a very comfortable existence. Emigrants may also discover that their new location has a lower cost of living than their previous home, delivering a good lifestyle or savings boost.

Some countries have easier access to beaches, skiing, hiking, and other outdoor activities that may appeal to expats. Some have lower-cost or more accessible healthcare systems. Sometimes, people just want to enjoy living in another country’s culture.

To be successful in today's global workplace, organizations must be able to function in different nations. To accomplish this, they must have workers who can work in multiple cultures and traverse various business situations. An expatriate program identifies and recruits employees with the essential abilities and cultural knowledge to work in a foreign country. It also allows firms to support their employees when they relocate to a new country and help them acclimate to their new environment.

The following can be the types of expats commonly seen:

These people move abroad at the request of their existing employer, frequently for professional growth or specialized job assignments. The majority are males in committed partnerships.

Driven by the temptation of living in different nations and seeking new adventures and challenges, this group has a balanced gender distribution and few children.

Those who relocate to foreign countries for a better quality of life, lower living costs, or for reasons related to politics, religion, or safety.

A group of people who accompany their partners to new host countries, primarily women.

Those who relocate to their partner's native land are primarily women in committed relationships with many men.

It is critical to note that each type of expat has unique objectives and aspirations, as well as benefits and cons.

There are a few requirements for becoming an expatriate. The first need is that the individual be a citizen of at least one country other than their home country. One can accomplish this by being born in another nation, registering in another country, or marrying a citizen of a different country.

The second requirement is that the individual resides in a country other than their own for at least one year. This is typically for employment, although it can also be for retirement, schooling, or immigration.

The final criterion is that the person intends to stay in their host country for a period exceeding one year. If an individual does not match all three criteria, they are not called expatriates.

Emigrants frequently confront numerous problems when they initially relocate to a new nation. They may not know the language, the customs, or anyone in their new home. This might make it challenging to find work, develop relationships, or even do simple tasks like grocery shopping. Fortunately, numerous options are available to help those living abroad adapt to their new life.

Numerous groups and organizations for expatriates can offer assistance and advice.

Individuals who have abandoned their citizenship to live in another nation are subject to the expatriate tax. This tax form is typically larger than taxes placed on resident citizens and can be applied retrospectively.

This is one of several financial factors to consider when becoming an expat. Other expenses related to expatriation may include transportation expenses, visa fees, and the cost of establishing a new home in a different nation.

Individuals considering relinquishing their citizenship should speak with a tax professional. They will assist in determining if they are responsible for expatriation tax. In some situations, tax treaties or other laws may allow you to reduce or avoid paying this tax.

Someone migrating from a high-tax country to a low-tax country may discover they can keep a significant portion of their earnings. However, they may have to resign from their citizenship because many countries will tax citizens based on their total income rather than granting credit for foreign taxes paid.

For example, the United States excludes foreign-earned income from its overseas citizens. The law permits US expats to deduct a specific amount of income from their US taxable income if they meet specific residence requirements. This can give them huge tax benefits.

The United States also provides a foreign tax credit, which can be used to offset US taxes. Although the credit cannot marginalize foreign-earned income, it saves citizens from paying taxes twice on the same income.

Managing expatriates is a complex undertaking that includes a variety of functions ranging from selection and recruiting to training, compensation, and return. Here's the breakdown:

The first stage in expat management is identifying the best candidate for the abroad assignment. In India, HR professionals frequently seek individuals with the necessary skill set, cultural flexibility, emotional intelligence, and the capacity to deal with stress.

Once chosen, the individual may get pre-departure training, including cultural awareness, language training, and other skill-building exercises.

An emigrant compensation package is a complex combination that comprises basic salary pay, other allowances (such as housing, travel, etc.), and additional benefits (which include insurance, retirement, etc.).

Once on assignment, relocating abroad frequently requires continuous assistance, such as career development guidance, mentorship, and feedback systems.

The international employees' performance should be carefully reviewed to satisfy the assignment's objectives.

This is the process of sending the expat back to their home country once the assignment is finished. Unhappiness and attrition might result from poorly managed repatriation.

Training is an essential component of expatriate management. The following are some common types of expat training in the Indian HR context:

This comprises educating the expat about the host country's cultural norms, beliefs, and traditions. This is especially crucial in a country as diverse as India.

While English is commonly spoken in the Indian corporate sector, learning a local language might help communication in everyday situations.

This includes learning about the mechanics of migrating, from finding a place to live to comprehend how regional amenities like healthcare and banking work.

International assignees are educated on their legal obligations and rights in the host country. This is critical to ensuring compliance with home and host country rules.

it focuses on the specific abilities required to execute their profession in a new setting that may differ significantly from their native country.

This type of training is commonly utilized for teams scattered across multiple locations and time zones. It is gaining popularity due to technological advancements and the global epidemic.

Preparing expats for the psychological aspects of settling in a new country can help reduce culture shock and stress.

When most people think of expatriates, they envision affluent individuals living in opulent apartments in distant countries.

While some people meet that description, the vast majority of overseas assignees are ordinary folks. They've simply decided to live overseas. There are several reasons why someone may become an expat. Some see it as a means to escape the rat race and live a simpler life.

Others view it as an opportunity to immerse oneself in a new culture or learn a new language. Many people simply want to be closer to family or friends who live overseas. There are several advantages to becoming an expat in terms of taxation. In some situations, relocating to a nation with more straightforward tax rules may allow you to decrease your tax liabilities. You can benefit from special tax treaties between specific countries in other circumstances.

So, if you're considering moving abroad, here are a few things to consider. But don't be intimidated by the possibility of becoming a foreign worker. With some forethought and preparation, it can be a gratifying experience.

Certain drawbacks to becoming an expat exist. First, you may need to give up the right to reside in your country. This can be a difficult decision, and you might not be able to return to your native nation as readily as in the past. You may also have to deal with cultural and language hurdles. These can be difficult to overcome and may require some time to adapt.

Finally, you may face some discrimination or hostility in your new country. This is particularly true if you relocate to a country with a different culture or religion. It is critical to plan for this and have a support structure.

There is no one-size-fits-all answer to this topic because the ideal technique to design an expat program will differ according to the company's objectives and goals. However, some tips for developing an expat program include:

• Create a clear goal for the program. Before launching an expat program, it is critical to define a precise aim. What are the company's objectives for the program? What do they intend to achieve by moving personnel abroad?
• Define your target audience. Who will this initiative be directed at? Is it solely for senior executives, or will it involve lower-level employees? Defining the target audience will assist in determining the particular criteria that employees must meet to be considered for the program.
• Establish eligibility requirements. Employees must meet specific criteria before being eligible for an expat program. Establishing explicit eligibility criteria will help to ensure that only the best candidates are chosen for the program.
• Create an integrated selection process. The selection process for an expat program should be comprehensive. It should include evaluating the candidate's skills, experiences, and personal and professional goals.
• Create a comprehensive training program. Employees chosen for an expat program must receive enough training for their new roles. The training program should include information on the organization's culture, business practices, and the country where the employee will work.
• Develop a help group. A strong support network is essential for a successful expat program. This includes a network of mentors and advisers that may help the individual adjust to their new environment.

Human resources (HR) executives can help expatriates transition to a new nation and culture. Because they communicate with employees daily, they are well-positioned to offer assistance and support. This includes assisting personnel in navigating their international assignments' social, economic, and legal aspects.

• Educating them about the local economy, such as the cost of living.
• Explaining local regulations that apply to expatriate personnel, such as tax and labor legislation.
• Explaining how to move from one location to another via public transportation.

When knowing who is an expatriate it is a person who resides in a different country than their own. The term can also apply to someone who gives up their citizenship to live elsewhere.

Expatriates typically relocate to another country for employment or educational purposes. Some people, however, want to retire abroad. Many variables can influence the decision to become an expat, but it all boils down to a desire for change or adventure.

Some advantages to the expat lifestyle include tax breaks, but there may also be disadvantages. These include culture shock, isolation, and difficulty adapting to a new way of life

Whether the experience is favorable or adverse, expats typically find living abroad transformational. It broadens their horizons and teaches them fresh information about themselves and everything around them.

People also search for

• Johari Window
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Expats have moved abroad for various reasons, including firm closures, profit reduction, and restructuring. In such circumstances, firms are forced to relocate their staff overseas. In other instances, a person may request a transfer because they believe working abroad will advance their career. Sometimes it is a combination of both sides agreeing that the new modification will assist them in bettering their standing within their company.

An expatriate employee's tenure might be as long as the organization requires. While the average duration of an overseas assignee’s stay in another country is three years, some employees want to stay longer. Several factors can influence the length of the term, including if the individual has family back home and how well they adjust to their new circumstances. If a corporation decides not to extend an employee's contract, it must find a new one to replace him.

There are several places to list expat jobs. You can also publish directly to company websites or employment boards. Another alternative is hiring a hiring firm specializing in locating individuals for foreign jobs. You can also choose your existing employees for expat jobs.

Yes, expats must pay taxes in the country they live in. However, they may be qualified for some tax breaks. For example, consider the Foreign Earned Income Exclusion. This exemption permits them to exclude a portion of their income from US taxes.

Expatriate pay refers to the income and benefits that an employer offers to an employee who lives in a foreign nation. The wage may be more than what the person would receive in their own country to assist cover the costs of living in a foreign country. Benefits may include accommodation, transportation, and health insurance.

An expatriate assignment requires an employee to reside in a foreign country. Company-assigned expats may be required to work in the country for a set time or indefinitely.

An immigrant is forced to leave their native nation for political, economic, or social reasons. An expatriate is someone who has willingly decided to leave their own country. There are numerous motivations for ex-pats. However, it is most commonly used for work or study. Others do it for love, retirement, or to avoid harsh political or economic circumstances at home.

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All you need to know about expatriation assignment

Last week, one of your favorite colleagues left for Paris to live there for the next three years. Yes, Paris, the same beautiful city you spent your honeymoon five years ago.

With an increasing globalization , easy transportation , powerful and fast communication , the world seems smaller and smaller and global mobility more and more common .

Going to work abroad which might have seemed a distant fantasy is now a real option even for someone who is not extremely adventurous.

Of course, becoming an expatriate employee can be such a different experience depending on where you will work (Dubai? London? New Delhi?) and what you will do (Collecting data? Managing a team? Opening a new factory?)

Here are a few things to keep in mind if you consider taking this exciting turn in your life.

On a professional level: Does the job description fit my profile?

Of course if everything goes well with your expatriate assignment, adding an international slot to your resume will upgrade your professional profile with extensive skills, stronger network, more field experience, etc.

Obviously there is nothing wrong with taking up a challenge, but you must be very honest with yourself and make sure the task to achieve is not oversized for instance.

You might gain expertise in the process but do you have the necessary knowledge to begin with?

So you should totally consider some room for progress but not to the extent where the gap between what you are doing now and what you will be doing then is so wide that it becomes impossible to fill in.

You don’t usually get to be a Jon Snow or an Ethan Hunt behind a desktop! But you may eventually get to drown… So be confident and ambitious but in a rational and objective way insofar as possible.

Don’t forget as well that being in a foreign country will make everything more complicated or testing at least in the beginning.

Your boss thinks you are the right person for the job? Great! But what do you think? Let’s not pretend to live in la-la land: the stakes are high.

If you end up not being able to fulfill your mission, your company might blame you for the failure and it might weaken your personal and professional relationships back home. So think it through.

On a personal level: Will I enjoy myself?

Nothing’s perfect and there will be bad and good days (and we are not just talking about the weather) but you want to make sure there are enough excitement and enthusiasm looking forward for you AND your family to get on board with this journey.

Again it might sound easy but a big part of answering this question will lie on thoroughly collecting info and preparing a list of more questions, including pros and cons:

• Does the country I will be living in correspond to my personal values ?
• Where will I precisely live ?
• Is my family ready to move with me ?
• Will my partner be OK with leaving behind his/her career?
• How easy/difficult will it be to make new friends ?
• Will my kids adjust to a new school ?
• How difficult will it be to learn /speak a new language ?
• Will we like the food over there?
• Will the kids be able to continue practicing their favorite sport ?
• How is the cost of living there?
• How is the healthcare system ?

Your spouse, your children, even your parents (if they are getting old for instance) need to be included in the decision process.

Your professional project must become a family project so everybody plays his/her part and stick together.

On a professional level, how do I prepare myself to such an experience?

Depending on the position you will take, an international assignation might be quite a challenge . For instance if you are sent to support an affiliate going through a rough time or if you are sent in a country to start everything almost from scratch.

You need to understand very clearly the situation you will be facing there (colleagues, hierarchy, cash flow, means, confidence level, forecast report, market, etc.) and the exact expectations from your employer .

Also find out who will support you (locals and HQ) and how.

In the meanwhile don’t hesitate to list and negotiate your tasks, your objectives, your KPI’s and the room for maneuver (budget, decision process) that you will be given to achieve them.

If you can, try to go there a couple of times to see for yourself, meet future coworkers and evaluate the situation.

On a personal level, how do I prepare myself and my family to live abroad?

You must take everything into consideration to make your moving as painless as possible and your situation once settled as comfortable as possible.

Almost everything is open to negotiation with your company from hiring an agency to find your new home sweet home to allocate an amount for the whole family to take language classes.

Whatever you obtain will have direct consequences on your family’s peace of mind and experience abroad . Try to shape up the best memory in the making possible!

Talk to your HR department and discuss each and every detail of your assignment contract . Don’t be afraid to seem fussy or demanding or even greedy!

Remember that this is normal business for your employer. Play it calm and friendly.

As an expat candidate, you can negotiate practical aspects and financial package that include:

• All legal key elements of the contract (length, suitable jurisdiction, etc.)
• Promotion (salary increase)
• Days off, holidays.
• Local assistance (to move, find housing, school, get paperwork, etc.)
• Company car
• Financial support (also called lump sum in the US) for renting, school fees, moving…
• Financial compensation based on the cost of living index, tax equalization…
• Social insurance and healthcare plan.
• Plane tickets to return home during holidays
• Language classes for the whole family

And don’t forget to negotiate as well some of the details of your return home once your expatriate assignment is finished!

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Expat Package (What Do Employees Expect?)

Anne morris.

• 1 August 2024

IN THIS SECTION

The success or failure of an overseas assignment can often be impacted by the quality of the expat package provided to assignees when asked to work overseas.

A competitive compensation package will not only help to attract the best available candidates for the job from within your organisation or when recruiting externally, it will also ensure that your overseas assignees feel fully supported financially throughout the lifecycle of their assignment.

The following guide provides an overview of what employers should be looking to include in a comprehensive expat package to maximise the prospects of a successful assignment outcome for both the assignee and for your business.

What is in an expat package?

The expat package is the combination of basic salary plus benefits in kind offered to a prospective assignee to undertake an overseas assignment. This can be made up of all different types of benefits, from additional living and housing costs to healthcare cover and international schooling fees for dependants.

Traditional expat packages are becoming rare these days, where employers are often able to recruit staff locally, and where unable to source local talent are seeking only single expats to avoid expensive relocation costs for entire families.

However, in circumstances where you need to incentivise a key candidate in your home country, especially for an important long-term assignment, you will need to remunerate accordingly. Below we consider some of the main aspects of a comprehensive expat package, although this list is by no means exhaustive.

Expat salary

The starting point of any expat package is the assignee’s salary. This will depend on the industry, the role and level of responsibility that the assignee will hold.

However their overseas salary should at least match, if not exceed, the typical salary an employee would get paid in their home country for doing the same job.

In some cases, you may be looking to reduce the gross salary to account for generous tax policies in the host destination, although this could negatively impact an assignee’s perception of their value as a prospective assignee.

The individual assignee will still want to feel their sacrifice of working away from home or relocating is being adequately compensated, regardless of any individual gains from the whole travel experience.

Depending on the nature of the host destination, the salary could also include a location or hardship premium for taking the assignment in the first place. This type of additional payment can be commonplace where an assignee is asked to work in a high-risk destination or hostile environment, for example, where living conditions are sub-standard, the climate inhospitable or the infrastructure poor.

Cost of living allowance (COLA)

A cost of living allowance is in addition to an assignee’s salary and is designed to reflect any additional daily expenditure in the host destination. Cost of living adjustments are based on the difference in the cost of necessary goods and services on a day-to-day basis between the host and home locations.

By way of example, where an individual’s net spendable home income is £40,000, ie; what they would be expected to spend to maintain their current standard of living, and it would cost 30% more to live in the host location, the salary would need to be adjusted by an additional £12,000 (30% of £40,000). This may also need to be readjusted throughout the course of the assignment to reflect any fluctuations in currency exchange rates and inflation.

The cost of living allowance is to ensure that an assignee is no better or worse off financially when living overseas at any given time. However, where the host location is less expensive to live, most employers will not require a reduction in salary, thereby effectively increasing the assignee’s standard of living for the duration of the overseas assignment.

Relocation costs

For commuter and short-term assignments, assignee relocation costs will not be necessary, but for long-term assignments and permanent relocations these costs should form an integral part of the expat package.

Relocation costs can include removal or storage expenses, depending on whether or not an assignee is looking to have all their furniture and personal belongings shipped overseas. This will also include flights costs for the assignee and any immediate family members relocating with them.

Another important component of relocation is the cost of any home visits throughout the lifecycle of the assignment, and possibly even a pre-assignment trip to enable the assignee and their relatives to familiarise themselves with their foreign surroundings prior to starting their new life overseas.

Housing costs

Housing, either in part or in full, can provide a huge incentive for assignees to relocate.

The cost of housing will be determined by the availability of suitable housing in the host destination, ideally in areas where an assignee can live near other expats and have a relatively short commute to their new workplace, as well as being close to international schools if they are relocating with dependants.

These types of property can often be in high demand so can be more costly than other accommodation in less appealing areas of a host region, but good quality housing in a decent neighbourhood is likely to be high on an assignee’s requirements when moving abroad with their family on a long-term assignment.

Schooling costs

For an assignee moving with their family they will need to cover the cost of schooling for any children. As with good housing in expat areas overseas, international schools that offer a high standard of education can be expensive, but may well be a deal breaker for the assignee with dependants.

This can be particularly important if an international school presents the only viable option in the host destination, especially where there would be language or cultural barriers for their children to be schooled locally within a foreign education institution. An international school will also ensure that the assignee’s children can continue with the same curriculum.

Travel costs

The offer of a company car for overseas assignees is less common these days, although you may still want to include a travel allowance to help offset motoring and maintenance expenses or to cover public transport costs.

In some parts of the world, depending on the host destination, it may also be better for an assignee to hire a driver rather than purchase their own car or rely on public transport, where the cost of this will need to be included in the expat package or in some way compensated for where necessary.

Healthcare costs

The provision of quality healthcare or international health insurance should be a mandatory element of any expat package. As an employer you have a legal duty to ensure the health and safety of your employees, so providing access to proper healthcare is imperative in discharging that duty. It is also an important aspect of showing your employees that you value their health and wellbeing.

Ideally, any healthcare plan should include access to a 24-hour helpline that assignee’s can use to have any medical or security questions answered, or to facilitate the provision of emergency assistance, at a time when an assignee’s usual points of contact would not be available.

Provider costs

The expat package is not just about providing financial incentives for the assignee. A comprehensive package should also include a range of support services that may be offered both prior to deployment and during the lifecycle of the assignment to help the assignee integrate into their host destination.

This could include a pre-deployment programme of cross-cultural training and education for overseas assignees and their families. You may also want to offer intensive language classes to ensure a more positive employee experience and, in turn, a more successful assignment outcome.

The provision of an ongoing benefit and support program while the assignee is overseas could be outsourced to a local specialist who can help novice expats to settle into their new surroundings and signpost them to different services. You should also provide key HR contacts back home to address any personal or professional problems during the course of the assignment.

Repatriation costs

Often overlooked, the provision of an adequate repatriation package can help you retain key talent within your organisation at the end of an assignment. This should include the assignee’s relocation costs back to their home country. This should also include a suitably senior role to return to home to, or at least the potential for career progression matched to the assignee’s industry experience.

It is important to remember here that expatriates can become an extremely valuable commodity given their overseas experience. To avoid wasted expenditure in an overseas assignment and the potential loss of global talent from within your organisation, you should ensure that your assignee is keen to return home to work for you and the incentives are there to do so.

Expat package essentials

The extent of any expat package will often be determined by the duration of the assignment, the host destination, the assignee profile and their personal family circumstances. Depending on the context, the assignee may also be more or less demanding, while considering the opportunities for career progression that an overseas experience may offer them.

For commuter and short-term assignments, relocation costs will not be needed, while for long-term assignments and permanent relocations, the costs can quickly start to stack up. In most cases, however, prospective assignees may be looking for an expat package that can either offset or completely cover normal living expenses, making the overseas experience financially profitable for them.

For many, especially for veteran assignees and for whom global travel in itself may offer little incentive, a generous expat package may be the price you will have to pay to persuade them to take on new assignments abroad. That said, a cost effective balance must still be struck between adequate compensation for the expat and the likely net revenue this will return for your business.

Explaining the link to assignees between the different elements in the expat package can help to justify the total value of the package, as well as show how one allowance could compensate for another one that is perceived as low by the assignee. In particular, tax considerations should be fully explained in how certain allowances and benefits are delivered, where in some host destinations the provision of benefits in kind can reduce or eliminate the tax liability for assignees, thereby making the overall expat package more attractive.

By articulating a clear Employee Value Proposition (EVP) for assignees, a proposition that is not limited to the allowances and benefits in the remuneration package but can include things like career progression, assignees are more likely to see the true benefits of the expat package on offer.

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DavidsonMorris are employer solutions lawyers with specialist experience in global mobility  consultancy and supporting businesses with their international workforce needs. For advice and support with developing an expat package solution that suits your requirements and budget while appealing to key talent,  speak to us .

Expat package FAQs

What is a full expat benefits package?

There is no definitive list as to what a full expat benefits package should contain where much will depend on the nature of the overseas assignment, the host destination and the assignee’s personal circumstances, including whether the assignee’s family are relocating with them. However, a typical expat package should fully compensate an assignee for working overseas, from cost of living and relocation costs to repatriation costs at the end of the assignment.

What does an expat package include?

An expat package can include a number of different benefits and allowances to compensate an overseas assignee for working abroad. In addition to a salary that at least matches the typical salary an employee would get paid in their home country for doing the same job, the package may include relocation costs, housing costs, healthcare costs, travel costs, schooling costs for dependants and any additional cost of living in the host destination.

What does equalisation mean?

In the context of an overseas assignment, equalisation refers to the way in which allowances and benefits in kind are delivered to ensure that the assignee is no worse off financially in the host location than their home location. The cost of living allowance is the most obvious example, where a high cost of living allowance in a more expensive host location will ensure the assignee’s purchasing power for goods and services remains broadly the same.

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Making Your Expat Assignment Easier on Your Family

by Katia Vlachos

Summary .   

Where do expats go wrong? About 80% move with a partner or family, and it’s often the inability of those people to acclimate to the new environment that causes assignments to fail. Before accepting a temporary reassignment to another country, involve your partner or family in the decision and anticipate the changes it will mean. Prepare for the move well in advance, and discuss the tradeoffs of the choices you’ll need to make. Be particularly sensitive to the possibility that your transition experience may differ from theirs.

As companies expand globally, executives are increasingly being tapped for expatriate assignments. The idea is to spread talent, expertise, and knowledge from headquarters to foreign offices, and vice versa. But these are costly moves — $311,000 per year, according to a  report by PwC and the Cranfield School of Management — and many fail to generate a return on investment. Studies show that an estimated 6%–10% of such assignments are terminated early, while an unknown but sizable percentage involve unnecessary struggle and underperformance.

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