Offer to work in Germany for 2 years

[randazzm]

Hi all,

I am currently working for a US company that has satellite offices in other countries. Right now I am on a 6 month assignment in Germany and plan to go back to the US in June. It was only supposed to be an exchange program, but they think my performance is good and have asked if I would think about staying for 2 years.

Lot's to think about, let me tell you.

So in this thought process, one of the biggest is compensation. Currently the company is paying for my apartment and vehicle, and adding a COLA to my weekly pay (since I am only here 6 months, so still pay rent and for the car in the US). I am here by myself, so really the only significant thing that can keep me here away from my life at home is monetary compensation. I don't want to come off as greedy, but since I can do very similar work in our office back home, it makes logical sense.

What is the typical form of compensation? Could I expect to temporarily make more money due to my circumstance? Instead of a wage increase, is it fair to ask the company to pay off student loans instead? Is it fair to ask them to continue to pay for my apartment and vehicle (company car) here?

I have never done salary negotiations before, so this makes it extra hard for me. Any and all advice would be tremendously helpful!

[Toon]

Congrats, if you're doing great work then surely you deserve a pay rise, think of it from their point of view, if they had to replace you could they, and if so how long would it take (lost productivity), and how much would it cost them (recruitment companies etc.), not to mention the new salary holder.

I wouldn't look at complicating the matter by asking them to pay off your student loan - what you do with your money is up to you, the only caveat I would say is if it's more tax efficient for them (and you) to do that.

So what I would ask for is everything you have currently - let them continue paying your accom etc. - they're used to it, and a 10% increase in salary (not including the COLA - whatever that is). Don't even think about the car as it's a company owned one - they'll still have to pay for it even if it sits in the lot all day.

Or start at a 20% increase and accept 10%.

Sounds good to me, incidentally, where are you based?

[randazzm]

Thank you for the congrats! I'm honored to receive these praises and offer. A confidence boost never hurts now and again. =)
All jokes aside though, they're a great team to work with.

You have fantastic advice, this is exactly what I was looking for. I want to make sure it is beneficial for both parties involved.

The reason I brought up the student loans is twofold. First, they wouldn't have to increase my wage which would match what others in the same position would make. Second, they could treat it as an engineering tax write off as you had mentioned, saving both parties money.

I need to do some major number crunching. Currently I'm still being paid in the US, and need to factor in the taxes of Germany.
It adds a lot of complication when I think about health insurance, stock options (that I would normally receive in the US) and my company matched retirement account.
In order to work here, I would need to be "terminated" from our home office and "hired" into our German one. I want to make sure I don't lose those benefits in the process.

We are based out of Erlenbach.

[Toon]

Erlenbach - about two hours from me, North East.

Correct me if I'm wrong but don't you, as an American taxpayer, still have to pay some US tax on, I think, earnings above $90,000? I'd check if I were you.

taxes here are around 45% too, so factor that in too.

Good luck.

[twostep]

Do not forget to calculate exchange rate and loss of purchase power.

[randazzm]

@Toon
I believe that is true about the taxes above 90k. "Luckily" I don't make near that much, so I have no worries on my part.

I'm estimating between 25% and 35% for my taxes. (Thus another reason paying for student loans as a bonus is better - less income tax on my regular wage)

@twostep
Certainly exchange rate is the first thing I factored in. That would be such an epic fail if I didn't, ha.

I don't plan on purchasing much over here (beyond the necessary stuff - food, etc...). Another one of my goals is to save as much as possible to hopefully be close to buying a house when I go back to the US.

[Bevdeforges]

Be careful here - there are some major considerations for switching from an "expat payroll" to a "local payroll" as it sounds like you may be doing.

Frankly, the idea for the company to pay off your student loans doesn't save any money for anyone. Nice idea, but anything they pay on the loans has to be considered income to you and declared both for German taxes and for US taxes (i.e. on YOUR income tax declarations). They can write off your salary no matter what, so paying your student loan isn't an advantage to them of any sort.

If you go onto the local payroll, you'll be tapped for health care coverage and national retirement. You normally lose the housing payments and possibly the company car. But any extra payments made on your behalf are considered taxable income to you (for both German and US taxes), including moving expenses. (Moving expenses are, however, deductible on your US income taxes.)

Your earned income falls under the US foreign earned income exclusion up to a bit more than $90K but you still need to file US income taxes and pay tax on any "unearned income" - usually bank interest and such. (See the Expat Tax section here on the forums for more detailed information about that - or just download Publication 54 from the IRS website.)

Ask around to find out what others in your position in Germany are making. Or check with the local union that covers your German employer. Some unions have salary scales for certain levels of employees. (OK, I've been gone from Germany for a few years now and things have changed - this may be one of them, but heck you can always ask.) They can't pay you out of proportion to what they'd pay a German or other European to do the same job, so just converting your US salary isn't going to tell you much.

You might want to see if they'll offer you tax assistance, particularly if the assignment is for a set period of time (say, two or three years). The cost of that will be included in your salary for tax purposes, but it saves trying to figure out how to file two different sets of tax returns on your own.
Cheers,
Bev

[Toon]

Also, if you're here for (I think) less than two years you can claim back the "retirement" and "unemployment" parts of the (crippling) tax we pay here.

At least, that's what my HR bird told me.

[randazzm]

The tax is certainly the most confusing part (as I barely understand tax law in my own country...).

I want to hope my company will be fair in what they offer (that it will be comparable and then some) but you never know. I wanted to make sure I have the right information incase I notice something isn't quite how it should be.

@Bev
I don't understand what you mean about losing the housing payment and car if I go on local payroll. Can you be more specific?

[twostep]

Housing and company car may be part of an expat package only depending on company policy. Clarify this in writing.