Tips for Negotiating Relocation to Yokohama?

[LexLuther]

I am about to negotiate an expatriate package with my company that would relocate myself and family (wife - 2 kids) to the Yokohama area, probably for 3 years or so.

The company is quite interested and has a strong presence in A-Pac, including an office in Yokohama.

Any tips on what I should request as part of the negotiation? I am not looking to to "make a bundle" and then retreat back to the 'States. I welcome the opportunity for myself and family and I believe it will help the company develop key business sectors in the region. Hence, I am basically looking for what is reasonable for both parties.

The family and I have discussed and hope to effectively 'dump' all worldly possessions such that we can travel lightly. We would look for an apartment as close in as we can afford and would use public transportation to commute to work, school, etc.

As far as I can tell, my U.S. salary would need to be roughly doubled if we are to enjoy a similar standard of living (other than housing, which would be down-sized quite a bit.)

If anyone has gone through this and has tips, that would be very helpful.

[larabell]

That depends a lot on your salary and your standard of living, neither of which was clear in the post. If you're coming from a typical high-rent urban area, my guess would be that you can find a place for comparable rents -- but it will be half the total size. The reason is that *everything* is half-size here. The "execs" who insist on living in a 1500-sq-foot apartment with two baths pay through the nose because the only people looking for anything that size are execs with expense accounts. Supply and demand.

If you're stationed in your company's Yokohama office, you're looking to try your hand at living like a typical Japanese family of four would live, and you're not averse to riding 30-45 minutes by train each way, you can probably find something on your current salary if you had to. Yokohama and neighboring Kawasaki are full of areas where typical blue- and white-collar salarymen live.

However, since you have the opportunity to negotiate, see if you can get something like 200-300 thousand yen (2-3 thousand US dollars) per month for rent. Our family of four is living in Nakano for just over 200 thousand yen so it's gotta be possible to get lower than that in Yokohama. If they need someone here, that's probably pocket change for them.

Other than that, there's not much else to ask for. If you're not Japanese-fluent, try to get some language lessons thrown in. Nearly all Japanese salaried workers get their commutation expenses paid. If you're here temporarily, see if you can rent your furniture or, at the very least, get the company to handle that on both ends. It can often cost as much to *get rid* of things here as it did to buy them. And make sure the company will contact the realtor, pay the realty fees, and guarantee the rental. Those are the biggest pains associated with renting, after the rental price itself. And it's almost impossible to find anything reasonable outside of the realty network.

[synthia]

I think they are required to sign you up for medical insurance. Also make sure that they will help you get a bank account, get utilities set up and turned on, and generally be helpful. I'm sure they are planning to do all this, because without a Japanese speaker, all of the above would be very difficult. Oh, and forget any idea of reading everything you sign. You can't.

[LostInTokyo]

make sure your company pays for an international tax firm to do your taxes for both the U.S. and Japan. Also, make sure they have some sort of tax equalization so that you don't end up paying through the nose for taxes.

[synthia]

The first $80,000 of your Japanese earned income will be excluded from US taxes.

The tax situation is complicted, too, by the fact that the Japanese tax year starts with the Japanese year, April 1. So there are no handy-dandy forms sent to you giving you your income information for the US tax year. When I lived in Japan, my employer filed my taxes for me. The office manager asked if I had any additional income, I told her about my part time job, and they filed. I think I got a refund of some sort.

Anyway, definitiely get tax preparation for both countries included in your package.

[larabell]

The tax year for personal income tax runs from 1 January to 31 December. If you're employed as a regular company employee, you should get something called a gensen (the whole name is somewhat more involved but everyone knows what you're talking about if you just say "gensen") that looks a lot like a W-2. I usually just tack that onto my 1040 when I file my US taxes. So far, the IRS has never complained. You can usually use a single average exchange rate to convert everything to dollars.

A regular company employee can have the company do all the paperwork and calculations, which usually results in an adjustment on your December paycheck. But if you have certain types of income (like stock gains) or exceed a maximum salary limit (which is actually fairly high), you have to file the forms yourself. I do it myself anyway because, compared to the US tax forms, the Japanese forms are a breeze. There's even English instructions the government can send you.

For anyone who is getting side-benefits like paid housing or cost-of-living payments, tax equalization is a good idea. But it's complex so you really should get the company's accounting firm to do the grunt-work. Equalization basically says that you pay your company the same amount in tax that you would have paid had you never left Japan and the company pays the *real* tax both in the US and in Japan.

But... for someone coming over with very little benefits other than a job, tax equalization can work against you, too. The reason is like Synthia said... you can lob of about $80K of income from your US tax just for living outside the country. So, in many cases, your combined Japanese and US tax will be lower than your combined US and State taxes (sometimes the State you lived in before will probably try to claim tax jurisdiction over you but, technically, you really don't have to pay tax to a State in which you neither live nor work).

Also... if your long-term plan is to remain in Japan, or if you quit and find a local job while you're here, the tax equalization will make your tax return a miserable mess for the next several years.

There is a much simpler plan than equalization which doesn't require high-priced accountants to figure out. Ask your employer if they can simply do a gross-up. If they're giving you... oh... $2K per month for housing, they'd simply give you an extra $500 or so to cover the tax on the $2k. You can sell that to many medium size companies (who don't already have solid ex-pat policies in place) because: (a) they'd have to pay the $500 anyway, and (b) under tax equalization, they'd end up paying an accountant another $500 to figure out how much they have to pay.

In short, I'd ask for tax preparation (arranged and paid for by the company) but consider either gross-up if you can sell it or paying your own Japanese/US taxes if your benefits are not huge -- rather than equalization.