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Cost of sending expats to the UK falls for foreign companies

by Ray Clancy on May 25, 2017

The UK is the most expensive place among the world’s tip 40 financial hub companies for companies to send personnel but the cost has fallen due to the Pound’s value decreasing.

Other locations in Europe are also becoming more cost effective in terms of expat packages in US dollar terms, according to the latest research from ECA International.

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The firm’s survey also reveals that highest expat salaries are offered in the Middle East with no personal tax obligation.

The cost of a typical expat package for middle managers in the UK is now £262 900 or US$384,400, down by 11% in the past two years and in local terms, typical middle manager expat salaries have increased by 3% over this period.

However, Steven Kilfedder, ECA International production manager pointed out that the UK still has some of the highest personal tax rates in the world and the second highest cost for typical expatriate benefits.

‘The tax element is the most expensive component of an expat package in the UK by a considerable margin. Once tax is removed, the UK falls out of the global top five most expensive locations in the world. The cost of providing benefits is also considerable, at around double the salary element due to high expatriate rental accommodation prices,’ he said.

He explained that when choosing an expat pay approach, companies need to be clear about the reasons behind the assignment so that their choice reinforces this. ‘This can help organisations to decide whether they wish to create equity among home or host country peer,  something that has become even more complex as companies manage increasingly diverse nationalities in and out of different markets. This will also need to be balanced against benefits and costs to the business,’ he added.

France is sixth in the global rankings this year with a typical middle manager package at €232,000 or US$264,500, down by 16% over two years due to the euro declining against the dollar while Germany has the cheapest in Europe at €177,800 or US$202,800, own 15%.

But the cost of an expat package has increased by 2% in the US to US$257,400 with the costliest element being benefits provision, the fifth highest in the global rankings.

Japan is the most expensive in Asia at US$ 367,500, up 12% in the last year as the yen has strengthened against the dollar. Kilfedder also pointed out that in some locations incentive are needed to attract top staff. In Hong Kong, for example, dangerous levels of air pollution, combined with high international school fees and accommodation costs, mean that companies have traditionally offered generous packages.

However, packages in Hong Kong have fallen to a five year low, down 2% since 2012, but  still the fifth highest in the rankings this year at US$265,500 while in China it is US$282,500.

‘China remains attractive for foreign companies sending expatriates here as although costs are rising in local currency they have fallen in US dollar terms since our previous survey,’ stated Lee Quane, Asia regional director at ECA International.

Countries like Qatar, the United Arab Emirates and Saudi Arabia sit near the bottom of the global rankings. Even though the highest global middle manager expat salaries are found in Saudi Arabia and the UAE, as the employee pays no tax on their salaries or benefits in these countries, the total cost is low by international standards with both sitting in the cheapest six locations in the global rankings.

The values of expat packages in Saudi is US$ 172,800 and in the UAE it is US$188,400 while moving an employee to Qatar will cost foreign companies the least out of all ranked locations at US$160,200 per annum.

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Thumbnail image for British expats with sterling incomes feeling the pinch

British expats with sterling incomes feeling the pinch

January 10, 2017 United Kingdom

British expats with incomes in sterling are feeling the pinch but the weakened pound is good news for those earning in a foreign currency, according to new research. Greater economic uncertainty has contributed to the pound declining in value against the majority of major currencies in the past year with Brexit also affecting its value. […]

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