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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
 

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@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?
What twostep said, but just to clarify a bit: An expat pay package normally includes a number of "perks" that relate to the fact that the employee will be returning to their home country. Paying a housing allowance and providing a car are two very common ones.

On the local payroll, it's more like being back home in the States. The company doesn't pay your rent or give you a car to use (unless it's essential to the job), but rather they expect you to pay for those things out of your salary.

In essence a six-month assignment is treated (by many companies and by the IRS) like a long business trip. When you're on a business trip, the company pays for all your meals, for your lodging and for many of the incidental expenses of living away from home. On the local payroll, you're not on a business trip and expected to pay for "living expenses" on your own.
Cheers,
Bev
 
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