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Expatriate Compensation Package

By Joshua Wood, LPC

Allianz Care
Allianz Care

Summary: A collection of benefits provided to an employee of a company, government or some other organization to facilitate an international relocation for an expatriate assignment.

Expatriate compensation packages are designed to incentivize employees to accept international assignments, and they typically incorporate various elements to cover the potential additional costs, risks, and inconveniences associated with working abroad. These packages can vary based on the company, position, destination country, and the individual's circumstances.

Here's an overview of possible components expats may receive in an international compensation package:

  1. Base Salary: The core salary the expatriate will receive, which might be adjusted based on the cost of living in the host country or the demand of the position.
  2. Cost of Living Allowance (COLA): An allowance (or adjustment) to offset differences in living costs between the home and host country, ensuring the employee maintains their purchasing power.
  3. Housing Allowance: An allowance or provision to cover accommodation costs, which may include rent, utilities, and other related expenses.
  4. Hardship Allowance: An additional payment made to employees who are assigned to locations where living conditions are significantly more challenging than their home country.
  5. Home Leave Allowance: Compensation for trips back to the home country, typically for vacation or family reasons. This can cover flights and other related costs.
  6. Relocation Allowance: A one-time payment or package that covers the costs of moving to and setting up in the host country, including shipping of personal belongings.
  7. Education Allowance: Provision for the education expenses of the expatriate's children, if applicable, especially if international or private schools are attended.
  8. Tax Equalization: Ensuring that the expatriate doesn't face double taxation in both the home and host countries. The company usually covers any additional tax burdens or provides expat tax advice.
  9. Health and Medical Benefits: Comprehensive health insurance, potentially including medical evacuation or special medical services tailored to the needs of expatriates.
  10. Completion Bonus: A bonus paid at the end of the assignment as a reward for fulfilling the term of the contract.
  11. Cultural Training: Cross-Cultural Training Programs or courses to help the expatriate and their family understand and adapt to the culture of the host country.
  12. Language Training: Classes or courses to help the expatriate and their family learn or improve skills in the language of the host country.


Society of Human Resources Managers (SHRM): Designing Global Compensation

FMP GLobal: An Employer’s Guide to Expatriate & Compensation Benefits

Monster Jobs: What's Inside an International Compensation Package?

About the Author

Joshua Wood Joshua Wood, LPC joined Expat Exchange in 2000 and serves as one of its Co-Presidents. He is also one of the Founders of Digital Nomad Exchange. Prior to Expat Exchange, Joshua worked for NBC Cable (MSNBC and CNBC Primetime). Joshua has a BA from Syracuse and a Master's in Clinical and Counseling Psychology from Fairleigh Dickinson University. Mr. Wood is also a licensed counselor and psychotherapist.

Some of Joshua's articles include Pros and Cons of Living in Portugal, 10 Best Places to Live in Ireland and Pros and Cons of Living in Uruguay. Connect with Joshua on LinkedIn.

First Published: Dec 10, 2014

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