Expatriation premiums
This premium is to compensate for the harder life conditions in the host country, the distance from the family or from the usual place of work.
This premium is usually calculated as a percentage of the employee's gross compensation or compensation of reference.
The percentage applied varies depending on the host location, and is calculated depending on a couple factors : danger in the host location, political situation, weather, language, culture, distance from the home country, hygiene and health, facilities (schools, hospitals, etc.).
This premium can be paid either as a gross or a net amount depending on the rules applicable in the company and is very rarely applied to assignments within the E.E.E.
Mobility premiums
This is usually a one-time payment paid at the beginning and end of the assignment, in order to motivate the candidate.
Cost of living allowance premiums
It is usually a net premium paid to compensate the living cost differential between the home and host country.
This differential is calculated using an index to be applied on the net salary of the employee.
Home based index : It is applied using the consumer habits of the home location, and is often used for short-term assignments or for countries where the life style is completely different from that of the host country.
Practical expenses index : It is applied using the consumer habits of the home and host location. It can be applied at the human resources' discretion and represents a particular advantage from an HR's perspective in the case of successive expatriations since it is the only index that can be reversed or modified.
Host based index : It is applied using the consumer habits of the host location. It can be used in case of very long assignments not too far geographically or culturally from the home country.
Installation premium "Prime d'installation"
This premium is usually no more than one or two months of the employee's salary, it is usually paid to cover numerous expenses and avoid having to reimburse tons of expenses.
These premiums can all be quantified as a percentage of the net or gross salary or by a fixed amount. They can be paid regularly during the entire assignment, at the beginning or at the end of the assignment. The date of payment of these premiums can have a tax impact since, like benefits-in-kind, most premiums are taxable. Therefore, the employer usually tries to pay them in the country where taxation is lower.
Tax and social security equalization
Social and tax equalization is a “concept” of compensation assuring the employee that during his assignment, he will not pay more or less taxes or social security contributions than he would have, if he had remained in the home location.
At the beginning of the assignment, a tax and social security calculation is done to guarantee the employee a net salary based on the gross compensation of the home country.
In the case tax and social security contributions are higher in the host location, the employer agrees to take at his charge the additional cost. Therefore, the employee is not penalized by his assignment.
In case tax and social security contributions are lower in the host location, the employee pays at least what he would have paid if he had remained in the home location. Therefore, the employee does not benefit from the favorable tax or social security scheme.
This is a system guaranteeing equivalent treatment amongst a large population of assignees abroad. Indeed, an employee going on assignment from a country with low tax rates (i.e. U.A.E) to a country with high tax rates (i.e. Denmark), will not worry about tax and social security costs since this aspect of his assignment has been neutralized.
Some employers do not apply the social equalization and only apply the tax equalization “concept”, but this is most often the case when the employee is seconded from a social security point of view and therefore remains covered by the home mandatory social security scheme.
For French impatriates, foreign employees subject to the French mandatory social security scheme will usually by equalized for social security purposes because of the high cost of French social security contributions. The French impatriate is usually equalized for tax purposes also, allowing the employer to benefit from the French special impatriate regime.
You will find more information on tax and social security optimizations in
our Blog .
Tax and social security protection
Tax and social security protection is a “concept” which guarantees the employee that if tax and social security contributions are higher than the ones he would have paid in the home location, the employer agrees to pay the additional amount. However, in the case there is a tax or social security advantage for the employee, the employee benefits from it.
Moving and storage benefit
Depending on the country and the length of the assignment, the employer can agree either to move some of the employe's furniture or rent a house or an appartment that is already furnished and therefore avoid having to pay for the moving of the employee's furniture.
In the case the move of the furniture is paid by the employer, it is necessary to fix the rules applicable concerning the types of object and furniture to be moved. Since the assignment is normally for a period not exceeding 4 or 5 years, it would appear normal that not all furniture need to be moved. For this reason, employers usually do not agree to be responsible for the move of the following objects :
- art pieces and precious furniture ;
- vehicles (cars, motorcycles, boats, bikes, etc) especially for the car since one is often provided in the host location ;
- electric appliances (i.e. washing or laundry machine, oven, etc) ;
- large volume of books (or precious books) ;
- etc.
You must also be aware of the types of objects that are forbidden in certain countries. For example, it is forbidden to bring a wine collection to the U.A.E. or certain ideological books in China.
Certain employers will also fix the volumes depending on the family size. You will find below a couple of references in volume :
- Between 15 and 20 cubic meters for a single person (1/2 room)
- Between 20 and 30 cubic meters for a couple without children (2/3 rooms)
- Between 30 and 45 cubic meters for a family with two dependent children (3/4 rooms)
You must also try to have a couple different bids from different firms. Indeed, the total cost of the move can be multiplied by twice depending on the firm, the type of services and the insurance.
It is necessary to choose a moving firm that meets all the conditions necessary for an easy move. Do not forget that the move is an international one, that customs have to be cleared, that formalities differ depending on the country and that the exchange rules can be complex. For this reason, it is preferable to choose firms that have international offices everywhere and a long experience in international moves. For these reasons, it is often necessary to change firms depending on the country where your employee is assigned.
If you do not want the employee to move all of his objects, the alternative is either furniture storage or self-storage. The difference between the two is that furniture storage is taken care by a professional team for the moving and storing part, while for self-storage, the employee does everything.
In both cases, the volumes of reference used can be identical to those mentioned above. The cost of storage will also differ depending on the volumes and insurances.
However, note that even if the employer decides to go with furniture storage, the employee will need to bring along a certain number of objects on his assignment. Two solutions are therefore possible, either to accept that the weight limit will be exceeded at the time of departure (prices differ depending on the airline companies), or plan for a small air fret at the moment of departure (i.e. moving companies can provide you with a bid for these types of fret).
Housing/Utilities
Usually, finding an apartment in France requests some “local” assistance. If you already work with a branch of your firm in France, the local Human Resource Director can help you with the different options available in order to find an apartment. If you do not have a French local contact, a good and efficient solution is to call upon a “relocation” company as an intermediary.
These relocation companies can assist in a number of ways throughout the assignment of the expatriates, and particularly at the time of arrival, when the employee is looking for an apartment (i.e. actual assistance in finding the apartment and all its administrative aspects).
Impatriates to France tend to want an apartment that is better than the one they had in their home location. These expectations can easily be met in certain countries, but will often be hard to reach in France. Therefore, it is the responsibility of the employer to set housing conditions based on the impatriation project and the housing options available in France.
What criteria to pay attention to when you are looking for an apartment? You can consider the following : life conditions similar to the home location, safe, international school close by, easily accessible transportation, easily accessible hospitals, budget for the apartment, etc.
In order to properly determine the housing budget available for an employee in France, it is necessary to find information about the city and the neighborhoods where most expatriates like to live. You can find information on the web based real estate agencies. “Cost of living” or “hardship” information can also be found on websites and will provide benchmarks depending on the neighborhood where the employee will be living.
In general, we recommend that the budget be clearly defined and communicated to the employee, prior to the beginning of his search. The easiest approach is to fix the budget, leaving a little extra. For example, a budget for an apartment in Paris for a family with two dependent children should range between 2,000 and 2,500 euros.
Finally, certain employers decide to also cover utilities (i.e. water, electricity, gas, housing insurance, personal telephone, etc). If your firm wishes to do so, we recommend that a budget be fixed prior to the departure of the employee.
Car/Transport
Most expatriates have at their disposal a company car. In general, when the expatriate benefits from a company car, the standards and criteria are the same as those applicable to French local employees.
Before leaving on an assignment, it is necessary to determine the need for an international driving permit. You will find all information pertaining to the international work permit in our section called
Relocation
and
on this website.
Health coverage and insurance
First, it is necessary to make sure that the insurance or health coverage contract signed by the firm takes care of employees while they are abroad. If not, it is necessary to take on some new insurance coverage contracts. We recommend that the following be taken :
- International sickness coverage (family) ;
- Retirement ;
- Unemployment ;
- Emergency repatriation insurance ;
- Life, handicap and death insurance ;
- Daily indemnities ;
- Traveling insurance.
Without these being an additional cost for the employer, it may be good to remind the employee that because of his personal situation, additional insurances can be necessary. Comes to our mind :
- Private insurance ;
- Housing insurance in the home country ;
- Student insurance for employees with children remaining in the home country ;
- Etc.
Other
It is also possible, depending on the type of package and the budget at your disposal, to plan on providing the employee with additional benefits such as :
- Internet and telephone ;
- Membership in sports or social clubs
Children's scholarship
Children's scholarship is one of the most important aspects of the family life in an international assignment. Most employers that send employees abroad pay for children's scholarships, from kinder garden all the way to the end of high school.
The employee can choose to have his/her kids go to a local French school. If this is the case, it is recommended to be extremely careful of the difference in school levels between two countries (i.e. second grade in France might not be the equivalent of a second grade in another country).
For this reason, numerous national schools have been created throughout the world, and employers recommend their employees to send their children to those schools.
You will find
here a description of the French educational system, and a couple of different international schools in France
here.
Assistance to help the spouse find a training/job
We believe that an expatriation is always better if the family joins the employee. The employee will mingle more easily with the host people if his family joins him in his assignment. For this reason, an increasing number of employers are providing assistance to spouses, helping them finding a training / a job during the assignment.
This assistance can be through :
- Paying a head hunter in the host location for the spouse ;
- Agreement between numerous firms that expatriate in the same area to offer some “local” jobs to spouses on a need basis ;
- Provide a budget for some competency test followed by an action plan in the host location ;
- Provide the budget for the spouse to follow a higher learning degree or long distance schooling.
Intercultural training
Intercultural training is one of the essential components for firms that expatriate heavily for a big project or for the opening of a new entity abroad. Intercultural training allows the employee sent abroad to optimize the chances of exchanging professional contacts abroad and integrate in host location.
Managing an international team, working with international partners or doing business internationally are some of the cultural challenges in an impatriation.
For this purpose, some firms have created intercultural training courses dedicated to answering the questions and needs of individuals or firms. These training courses allow the employee to understand the values, beliefs and habits of the French, allowing these expatriates to have the tools necessary to work and be integrated in their new environment.
We recommend that, as part of these intercultural training courses, some classes include the spouse and other family members of the family that will join the employee in his assignment
Language training
Prior to the departure of the employee, the employer can organize language courses, or even subscribe to a language-training program. During the assignment, it is also recommended to provide the family with language courses.
Pre-visit trip
Most employers offer to their expatriates a first trip prior to the begin of the assignment. These trips allow for the employee to have an idea about the place where he will be working, where his family will live, visit schools, hospitals, etc.
It is often after one of these trips that the employee can make a decision about whether or not this assignment abroad will be compatible with his career and personal goals.
