expatriate assignment bedeutung

• Search Search Please fill out this field.

What Is an Expatriate?

Understanding expatriates.

• Retiring Abroad

Foreign Earned Income Exclusion

Foreign tax credit, expatriation tax.

• Pros and Cons

The Bottom Line

• Taxpayer Types

Expatriate (Expat): Definition and Pros/Cons of Living Abroad

Julia Kagan is a financial/consumer journalist and former senior editor, personal finance, of Investopedia.

Lea Uradu, J.D. is a Maryland State Registered Tax Preparer, State Certified Notary Public, Certified VITA Tax Preparer, IRS Annual Filing Season Program Participant, and Tax Writer.

Investopedia / Julie Bang

An expatriate or expat is an individual living and/or working in a country other than their country of citizenship. The arrangement is often temporary and for work reasons. An expatriate can also be an individual who has relinquished citizenship in their home country to become a citizen of another.

Key Takeaways

• An expatriate is somebody who has left their country of origin to reside in another country.
• Expats may leave home for work reasons and seek more lucrative employment in other countries.
• Expatriates may live overseas for a while or completely renounce their citizenship in one country in favor of another.
• Retiring abroad has become an increasingly popular option.
• The IRS may impose an expatriation tax on individuals who renounce their citizenship, usually based on the value of a taxpayer's property or income in the United States.

An expatriate is a migrant worker who is a professional or skilled in their profession. The worker takes a position outside their home country, either independently or as a work assignment. The employer assigning the work can be a company, university, government, or non-governmental organization.

You would be considered an expatriate or "expat" after you arrive in Toronto if your employer sends you from your job in its Silicon Valley office to work for an extended period in its Toronto office.

Expats usually earn more than they would at home and more than local employees. Businesses also sometimes give their expatriate employees benefits such as relocation assistance and housing allowances. The expat will have to open a local bank account that will allow them to function in their new home.

Living as an expatriate can be exciting. It can present an excellent opportunity for career advancement and global business exposure but it can also be an emotionally difficult transition. It involves separation from friends and family while adjusting to an unfamiliar culture and work environment. This is typically the reason behind the higher compensation offered to these migrant workers.

Special Considerations: Retiring Abroad

Much expatriation occurs during retirement. Most Americans spend their retirement in the U.S. but a growing number are opting to retire overseas. People are motivated to relocate abroad at an older age for several reasons , including lower cost of living, better climate, access to beaches, or other reasons. But it can be tricky to navigate taxes, long-stay visas, and the language and cultural differences experienced when settling down in other countries.

Popular retirement destinations include countries in Central and South America, the Mediterranean, and parts of Europe.

A common choice a retiree expat must deal with is between permanent residency and dual citizenship. Neither dual citizenship nor residency will get you out of filing a U.S. tax return every year.

It's both surprising and burdensome but Americans still have to pay income taxes wherever they live, and they owe it no matter where their income was earned.

You may also have to file an income tax return in your country of residence although most deduct the amount American residents pay to the U.S. via treaties that minimize double taxation.

You face a tough decision that will require some soul searching and research if you're a retiree or near-retiree who's on the fence. You might consider a trip abroad or maybe several to test the waters before you make a decision. Some Social Security benefits might travel abroad with you but you may have to forego benefits like Supplemental Security Income (SSI).

Complying with United States income tax regulations is an added challenge and financial burden for Americans working abroad as expatriates because the U.S. taxes its citizens on income that's earned abroad. But the U.S. tax code contains provisions that help to reduce tax liability and avoid double taxation . Taxes paid in a foreign country can be used as a tax credit in the U.S. which reduces the expat's tax bill when applied against it.

The Foreign Earned Income Exclusion (FEIE) allows expats to exclude a certain amount of their foreign income from their tax returns. The amount is indexed to inflation. It was $120,000 in 2023 and it increased to $126,500 in 2024. An expat who earns $180,000 in 2024 from their job in a foreign country that's tax-free would only have to pay U.S. federal income tax on $53,500: $180,000 minus $126,500.

The FEIE doesn't apply to rental or investment income. Any income earned from interest or capital gains from investments must be reported to the IRS. The Foreign Tax Credit (FTC) is a provision that ensures that expats aren't double-taxed on their capital gains.

Assume an expat falls in the 35% income tax bracket in the U.S. Their long-term capital gain on any investment is taxed at 15%. The FTC provides a dollar-for-dollar credit against taxes paid to a foreign country so the expat would only have to pay 5% tax to the U.S. if they paid 10% tax to the country where they work. They’d owe the full 15% tax to the U.S. government if they paid no tax to the foreign country.

The expat would forfeit that amount if the income tax paid to a foreign government far exceeds the amount of the credit because the foreign tax rate far exceeded the U.S. rate. The credit can be carried to future years, however.

An individual who has renounced their citizenship in their home country and moved to another is also referred to as an expatriate for tax purposes. They're subject to an exit tax known as an expatriation tax.

The expatriation tax provisions apply to U.S. citizens who have renounced their citizenship and long-term residents who have ended their U.S. residency if one of the principal purposes of the action is the avoidance of U.S. taxes , according to the Internal Revenue Service (IRS).

This emigration tax applies to individuals who:

• Have a net worth of at least $2 million on the date of expatriation or termination of residency
• Have an average annual net income tax liability over the five years ending before the date of expatriation or termination of residency that is more than $190,000 if the expatriation date was in 2023 or $201,000 if the expatriation date is in 2024
• Do not (or cannot) certify five years of U.S. tax compliance for the five years preceding the date of their expatriation or termination of residency

Advantages and Disadvantages of Becoming an Expatriate

Living and working in another country for an extended period can have its benefits. They can range from new experiences and adventure to more practical considerations like a lower cost of living or being closer to extended family abroad. You may also get government perks like free healthcare and education and more favorable taxation depending on where you settle.

There are also some potential drawbacks. You'll still have to file tax returns each year and may have to pay taxes to Uncle Sam even on income earned in your new country unless you fully relinquish your American citizenship.

You might also be a long way from home. This can make seeing friends and family more costly and difficult and time zone differences can also interfere with finding a good time to link up by phone or video chat. Learning a new language and customs can also be difficult for some and certain items or products that you like may not be available in the country to which you move. And not all countries enjoy the same level of political and economic stability that the U.S. does.

New experiences and maybe a better climate

Potentially lower cost of living

Potential access to affordable healthcare

Potential for double taxation

Long way away from friends and family

Language, cultural, political, and economic barriers

Potential challenges in securing the proper visa

What Does It Mean to Become an Expatriate?

An expatriate or "expat" is someone who leaves their country of origin and settles abroad for an extended period, often permanently.

What Is Expat Taxation?

Americans living overseas still have to file U.S. tax returns unless they relinquish their American citizenship. Several international tax treaties exist to help minimize double taxation, however.

What Is an Expat Community?

People often find comfort in seeking out other foreigners when they relocate to a foreign country, especially those from their home country. Expat communities are enclaves of people from a similar national origin, often with their own school and shopping options. English-speaking enclaves are called "Anglo" communities in many countries.

Expats must typically navigate a complex web of tax rules and regulations that can be challenging to understand and comply with. There are retirement considerations to comply with. U.S. Federal taxes are complicated although you can rely on tax credits and income exclusions to receive favorable U.S. tax treatment. Think it all through before you make a decisive move.

The Wall Street Journal. " Americans are Saving Money by Retiring Overseas ." Slide 2.

International Living. " The World’s Best Places to Retire in 2023 ."

World Economic Forum. " The World's Best Retirement Destinations Might Surprise You ."

Internal Revenue Service. " Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad ." Page 3.

Internal Revenue Service. " Tax Treaties ."

Internal Revenue Service. " IRS Provides Tax Inflation Adjustments for Tax Year 2024 ."

Internal Revenue Service. " Foreign Earned Income Exclusion ."

Internal Revenue Service. " Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad ." Page 15-16.

Internal Revenue Service. " Foreign Tax Credit ."

Internal Revenue Service. " Topic No. 409, Capital Gains and Losses ."

Internal Revenue Service. " Foreign Taxes that Qualify for the Foreign Tax Credit ."

Internal Revenue Service. " Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad ." Page 34.

Internal Revenue Service. " Publication 519, U.S. Tax Guide for Aliens ." Pages 23-24.

Internal Revenue Service. " Expatriation Tax ."

Internal Revenue Service. " 26 CFR 601.602: Tax Forms and Instructions; Rev. Proc. 2023-34 ." Page 18.

Internal Revenue Service. " 26 CFR 601.602: Tax Forms and Instructions: Rev. Proc. 2022-38 ." Page 19.

Internal Revenue Service. " Publication 519, U.S. Tax Guide for Aliens ." Page 24.

• Terms of Service
• Editorial Policy
• Privacy Policy
• Your Privacy Choices

What Are Expatriate Employees? Best Things To Understand

• July 11, 2023

Share This Post

Expatriate employees, often referred to as expats, are individuals who are sent by their companies to work in a foreign country for a designated period. 

Throughout this article, we will discuss various aspects related to expatriate employees, including their definition, reasons for their hiring, types of expatriate assignments, benefits and challenges they face, best practices for managing them, and the overall impact they have on global business operations. By gaining a deeper understanding of expatriate employees and their role, organizations can better navigate the complexities of international business and optimize their global workforce .

Now, let us delve into the world of expatriate employees and discover the crucial role they play in driving the success of companies in the global marketplace.

Definition of Expatriate Employees

Expatriate employees, commonly known as expats, refer to individuals who are employed by a company in their home country but are assigned to work in a foreign country for a specific period. This assignment may range from a few months to several years , depending on the needs of the company and the nature of the project or role.

Expatriate assignments are typically undertaken by multinational corporations and organizations with global operations. The purpose of these assignments is to leverage the unique skills, knowledge, and experience of employees in a foreign market, ensuring the successful implementation of business strategies and the attainment of organizational goals.

Expatriate employees Vs Local Employees

Expatriate employees possess several key characteristics that set them apart from local employees in foreign countries:

• Nationality and Citizenship: Expatriate employees are citizens of one country but work in a foreign country, often referred to as the host country. They retain their home country citizenship while temporarily residing and working abroad.
• Mobility and International Experience: Unlike local employees who primarily work within their home country, expatriate employees are highly mobile and adaptable. They have experience living and working in different cultural contexts and are accustomed to navigating the challenges and opportunities that come with operating in foreign environments.
• Cultural Adaptation: Expatriates face the unique challenge of adapting to a new cultural and social environment. They must develop cross-cultural competence and navigate differences in language, customs, work practices, and business etiquette. The ability to adapt and bridge cultural gaps is crucial for their success in the host country.
• Specific Expertise: Expatriate employees are selected for their specialized knowledge, skills, and experience that are essential for fulfilling specific roles or projects in the host country. They bring valuable expertise and technical know-how that may be lacking or in high demand in the foreign market.
• Global Mindset: Expatriates possess a global mindset, which means they have an understanding and appreciation of diverse cultures and business practices. They can think and operate beyond the confines of their home country, adapting their approaches to fit the specific requirements of the host country and collaborating effectively with international colleagues.
• Dual Roles: Expatriate employees often have dual roles as representatives of both the parent company and the host country. They act as a link between the headquarters and the local operations, serving as a communication channel and ensuring alignment between the organizational goals and the local context.

Reasons for hiring expatriate employees

Expatriate employees are sought after for their specialized skills and expertise that make them valuable assets in international business operations. Some of the specific skills that expatriates bring to the table include:

• Technical Expertise: Expatriates often possess advanced technical knowledge and specialized skills in areas such as engineering, technology, finance, marketing, or research and development. Their expertise allows them to tackle complex challenges and drive innovation in foreign markets.
• Industry Knowledge: Expatriates bring industry-specific knowledge and experience from their home country, which can be instrumental in navigating local market dynamics, identifying opportunities, and formulating effective business strategies.
• Language Proficiency: Expatriate employees often have language skills that are critical for communicating and conducting business in foreign markets. Their ability to speak the local language or have proficiency in languages of strategic importance can enhance relationships with local stakeholders, customers, and partners.
• Cross-Cultural Competence: Expatriates possess cultural intelligence and a deep understanding of both their home culture and the culture of the host country. This enables them to navigate cultural nuances, build relationships, and adapt business practices to suit local customs. Their cross-cultural competence facilitates smoother interactions and promotes effective collaboration in multicultural work environments.

Advantages of Hiring Expatriates

Hiring expatriate employees offers several advantages in terms of cultural understanding and adaptation.

Expatriates who have spent considerable time in the host country develop an intimate understanding of the local market. They are attuned to consumer preferences, cultural sensitivities, and emerging trends, providing valuable insights that can inform market entry strategies and product localization efforts.

Expatriates, furthermore, can bridge cultural gaps and establish meaningful relationships with local stakeholders, including clients, suppliers, government officials, and business partners. Their understanding of local customs and business etiquette helps build trust, facilitates negotiations, and fosters successful partnerships.

Finally, expats are accustomed to adapting to new environments and are often more flexible in their approach to work. They can assimilate into the local culture, respect local practices, and collaborate effectively with local employees. Their ability to adapt promotes a harmonious work environment and facilitates the integration of global and local perspectives.

Types of Expatriate Assignments

Expatriate assignments can vary in terms of duration, purpose, and structure. Some of the common types of expatriate assignments include:

Short-term Assignments

Short-term assignments typically last anywhere from a few weeks to a few months. They are usually project-based and involve specific tasks, such as conducting market research, managing a temporary project, or providing training and expertise in a specialized area. These assignments aim to address immediate business needs or fill a skills gap.

Short-term assignments serve to meet specific project or expertise requirements in the host country. They are focused on achieving short-term objectives and are characterized by a shorter duration, allowing companies to quickly address immediate needs without committing to a long-term expatriate presence.

Challenges associated with short-term assignments include limited time for cultural adaptation, building relationships, and achieving project objectives. To address these challenges, organizations may provide cultural training and orientation programs to help expatriates quickly adapt to the host country’s business environment. Effective project management and clear objectives are also essential to maximize the impact of short-term assignments.

Long-term Assignments

Long-term assignments typically span several years and involve a more substantial commitment from the expatriate employee. The purpose of long-term assignments is often to establish or manage a subsidiary, lead a foreign office, or oversee strategic initiatives in the host country. These assignments require a deeper integration into the local culture and business environment.

Long-term assignments are more strategic in nature and involve a substantial investment of time and resources. They aim to establish a sustained presence in the host country, develop and maintain local relationships, and drive long-term growth and market expansion. The duration of these assignments allows expatriates to deeply understand the local market dynamics, establish trust with stakeholders, and oversee the implementation of strategic initiatives.

Long-term assignments present challenges such as culture shock, family adjustment, and maintaining motivation over an extended period. Organizations support expatriates by offering cultural training, language support, and assistance with housing, schooling, and healthcare for the expatriate and their family. Regular communication, career development opportunities, and periodic home visits can help expatriates maintain engagement and satisfaction throughout the assignment.

Rotational Assignments

Rotational assignments involve sending employees to work in different locations over a defined period. This allows individuals to gain diverse experiences, exposure to different markets, and a broader understanding of the organization’s global operations. Rotational assignments can be short-term or long-term in nature, depending on the specific rotation schedule.

Rotational assignments provide employees with a diverse range of experiences and skill development opportunities. The duration of these assignments can vary depending on the organization’s rotation program, with individuals typically spending a designated period in each location before moving to the next. The purpose of rotational assignments is to foster global perspectives, transfer knowledge across locations, and groom future leaders with a well-rounded skill set.

Challenges associated with rotational assignments include frequent transitions, adapting to new work cultures, and managing personal and family life during the rotation process. Organizations address these challenges by providing comprehensive pre-departure training, ongoing support throughout the rotation, and resources to manage family logistics and well-being. Structured mentorship programs and knowledge-sharing platforms facilitate a smooth transition between locations and promote effective knowledge transfer.

Benefits of Being an Expatriate Employee

Being an expatriate employee offers both significant benefits and unique challenges. Let’s explore these aspects in detail:

• Career Advancement: Expatriate assignments provide opportunities for career advancement by expanding professional networks, gaining international experience, and developing a global skill set. Working in a different cultural and business environment can enhance leadership capabilities, problem-solving skills, and adaptability, making expatriates more competitive in the job market.
• Personal Growth and Cultural Enrichment: Living and working in a foreign country exposes expatriates to new perspectives, customs, and ways of life. This immersion in a different culture fosters personal growth, broadens horizons, and enhances cultural intelligence. Expatriates often develop greater self-awareness, flexibility, and resilience, which contribute to their personal and professional development.
• Skill Development: Expatriate assignments provide opportunities to acquire new skills and knowledge, such as language proficiency, cross-cultural communication, and global business acumen. Expatriates often gain expertise in areas specific to the host country, allowing them to become valuable resources within their organizations.

Challenges Faced by Expatriates

While there are some nice advantages to being an expat employee, there also comes significant challenges. Cultural adjustment, for example, can be one of the most significant challenges for expatriates. Adapting to a new culture, customs, and work practices may lead to feelings of disorientation, frustration, and isolation. Expatriates may face difficulties in understanding local norms, communication styles, and social expectations.

Language barriers, furthermore, can hinder effective communication and impede integration into the local environment. Expatriates may struggle with language fluency, making it challenging to build relationships, understand business nuances, and navigate daily life in the host country.

Finally, relocating with a family introduces additional challenges. Spouses and children may experience difficulties in adjusting to a new school system, social environment, and lifestyle. Managing the needs and well-being of family members, including spouse employment, childcare, and healthcare, can add complexity to the expatriate experience.

Overcoming Expatriate Employee Challenges

While it is important to keep the challenges of being an expat employee in mind, let’s not forget that there are strategies to overcome them. 

For example, prioritizing cultural awareness and investing time in learning about the host country’s customs, traditions, and work practices can be extremely beneficial. Seek cultural training, language classes, and engage in cultural activities to bridge the gap and foster understanding.

Furthermore, build relationships with local colleagues, other expatriates, and community groups to create a support network. Seek mentorship or buddy programs that can provide guidance and assistance during the transition.

Also, utilize technology tools to bridge geographical and cultural gaps. Video conferencing, instant messaging, and collaboration platforms can facilitate communication with colleagues and loved ones back home.

Best practices for Managing Expatriate Employees

Effective expatriate management is crucial for organizations that deploy expatriate employees. It ensures that the organization maximizes the potential of its global workforce and minimizes risks associated with international assignments. Here are key reasons why effective expatriate management is essential:

• Success of International Operations: Expatriate employees play a significant role in the success of international operations. Effective management ensures that expatriates are well-prepared, supported, and equipped to fulfill their roles and responsibilities, contributing to the achievement of business objectives in the host country.
• Cost Efficiency: Managing expatriate assignments effectively can result in cost savings for organizations. By selecting the right candidates, providing adequate training and support, and facilitating a smooth assignment experience, organizations can minimize assignment failure rates, reduce turnover, and avoid unnecessary expenses associated with premature repatriation or failed international ventures.
• Employee Retention and Engagement: A well-managed expatriate program promotes employee satisfaction, engagement, and retention. Expatriate employees who feel supported and valued are more likely to be motivated, productive, and committed to the organization upon their return, leading to higher employee retention rates and knowledge retention within the organization.

Repatriation Programs

Repatriation programs are crucial for organizations to facilitate the smooth reintegration of expatriate employees back into their home organization. These programs help expatriates navigate the challenges and adjustments that come with returning to their home country after an extended period abroad. A structured approach is essential, with the program being developed well in advance of the expatriate’s return. This ensures that there is ample time for planning, support, and addressing concerns related to repatriation.

One important component of a repatriation program is aligning the expatriate’s career goals, expectations, and opportunities within the home organization. This involves having discussions that assess how the skills, experiences, and growth aspirations of the expatriate align with the strategic needs and future plans of the organization. By understanding the expatriate’s career aspirations, the organization can effectively utilize their talents and provide a sense of value upon their return.

Repatriation programs also need to address the concerns and challenges that expatriates may face during the reintegration process. Reverse culture shock, feelings of disconnection, and difficulty readjusting to the organizational and social dynamics of the home country are common challenges. By creating a platform for expatriates to voice their concerns and offering support resources, counseling, or mentorship, organizations can help expatriates navigate these challenges and facilitate a smoother transition.

Expatriate employees play a vital role in global business operations. They bring specialized skills, cultural understanding, and a global mindset that contribute to the success of companies expanding into foreign markets. Expatriates bridge the gap between headquarters and foreign subsidiaries, facilitating effective communication, knowledge transfer, and the establishment of strong relationships. Their presence is crucial for maintaining consistency in operations, ensuring the implementation of business strategies, and upholding organizational values in diverse cultural contexts.

In this article, we have explored the concept of expatriate employees and their significance in international business operations. We discussed the definition of expatriate employees as individuals who are employed by a company in their home country but work in a foreign country for a designated period. We highlighted the specific skills and expertise that expatriates bring to the table, including technical knowledge, cross-cultural competence, and language proficiency.

By recognizing the importance of expatriate employees, organizations can leverage the full potential of their expatriate workforce and create a competitive advantage in the global business landscape.

Table of Contents

Talk to our experts & get a free quote!

[email protected]

China: +86 215 211 0025, 333 w. san carlos st., suite 600, san jose, ca 95110, usa.

Select Service Employer of Record Payroll & Benefits

Select Service Location United States Singapore Hong Kong China ----- Argentina Australia Austria Bangladesh Belgium Bolivia Brazil Bulgaria Cambodia Canada Chile China Colombia Croatia Czech Republic Denmark DR Congo Dubai Egypt El Salvador Estonia Finland France Georgia Germany Ghana Greece Hong Kong Hungary India Indonesia Ireland Israel Italy Jamaica Japan Kenya Kuwait Latvia Lithuania Luxembourg Malaysia Mexico Morocco Myanmar Netherlands Nigeria Norway Pakistan Panama Peru Philippines Poland Portugal Qatar Romania Serbia Singapore Slovakia South Africa South Korea Spain Sri Lanka Sweden Switzerland Taiwan Thailand Tunisia Turkey United Arab Emirates United Kingdom United States Uruguay Vietnam

Monthly salary* $800 - $2000 $2000 - $5000 Over $5000

Candidate needs Visa? Yes, he/she is an expat No, he/she is local

Est. Headcount 1 - 10 10 - 50 50 - 100 Over 100

Please leave this field empty.

By sending your inquiry, you consent to receiving marketing information from NNRoad, in accordance with the Privacy Policy .

• Israel-Gaza War
• War in Ukraine
• US Election
• US & Canada
• UK Politics
• N. Ireland Politics
• Scotland Politics
• Wales Politics
• Latin America
• Middle East
• In Pictures
• BBC InDepth
• Executive Lounge
• Technology of Business
• Women at the Helm
• Future of Business
• Science & Health
• Artificial Intelligence
• AI v the Mind
• Film & TV
• Art & Design
• Entertainment News
• Destinations
• Australia and Pacific
• Caribbean & Bermuda
• Central America
• North America
• South America
• World’s Table
• Culture & Experiences
• The SpeciaList
• Natural Wonders
• Weather & Science
• Climate Solutions
• Sustainable Business
• Green Living

The difference between an expat and an immigrant? Semantics

The argument that it's not just executives and professionals, but also maids and other workers.

Editor's note (30 January 2016): The top of this story has been updated to reflect news that occurred in the days since it was first published.

What is an expatriate, exactly? And when is an expat an immigrant — or not?

The word expat is loaded. It carries many connotations, preconceptions and assumptions about class, education and privilege — just as the terms foreign worker, immigrant and migrant call to mind a different set of assumptions. It's front and centre currently as US President Donald Trump signed an executive order abruptly banning immigrants , short and long-term visa-holders and, for a time, green card-holders, from certain countries from entering the US.

But what makes one person an expat, and another a foreign worker or migrant? Often the former is used to describe educated, rich professionals working abroad, while those in less privileged positions — for example, a maid in the Gulf states or a construction worker in Asia — are deemed foreign workers or migrant workers. The classification matters, because such language can in some cases be used as a political tool or to dehumanise — as the debate around the word “migrant” suggests .

Fears surrounding job security, concerns over immigration and nationalism inspire discussion across the globe about who falls into which category. But a key part of this dialogue is how exactly we define different people who cross borders to work.

In the last decade or so, many people, especially those of us from emerging economies such as Nigeria and Peru, have increasingly identified as not just citizens of one nation, but also as part of a global  citizenry, a BBC World Service poll found . But in richer nations, the survey found, the trend among industrialised nations “seems to be heading in the opposite direction.”  At times it seems globalisation is under siege from across the political spectrum.

In the UK and the US, immigration and the movement of workers across borders were two of the defining political issues of 2016. In the UK, it was a key message for the Leave campaign in the EU referendum, which resulted in a public vote for a so-called Brexit. In the US, jobs and immigration were at the forefront of incoming President Donald Trump’s successful campaign.

Weigh in on the question on Facebook: What makes a person an expat?

Clarity and breadth

Dr Yvonne McNulty and Chris Brewster are two academics who have been trying to categorise such people — mostly to give a bit of clarity to human resource types who consider their hires expatriates.

“It’s not about the colour of your skin, and it’s not about the salary that you earn,” says McNulty, an expat researcher and senior lecturer at the school of human development and social science at SIM University in Singapore.

“Are maids expats? Yes they are. Are construction workers in Singapore that you see on the building sites expats? Yes they are,” she says.

A business expatriate, she says, is a legally working individual who resides temporarily in a country of which they are not a citizen, in order to accomplish a career-related goal (no matter the pay or skill level) — someone who has relocated abroad either by an organisation, by themselves or been directly employed by their host country.

But in practice that’s not really how most of us define expat, both in academia and among the general population, says Brewster, a professor of international resource management at Henley Business School in the UK.

“Both groups of people, when they talk about expatriates, are talking about rich, educated, developed elites,” he says. “Others are just migrants or immigrants. But logically that’s not the correct way to look at these things.

“There’s probably more of these ‘others’ than there are of these highly expensive people but no-one thinks about them, no-one studies them. If they’ve studied them at all they’ve called them migrants.”

We’ve got migrants all wrong

That’s all wrong, Brewster says. Migrants, by definition “are people who intend to go and live in a county for a long time and they’re not allowed to. They have to go home when they’ve completed their assignment,” he says.

Whether someone is an expat or not doesn’t depend on origin – it’s about the motivations behind their decision to move abroad, says Malte Zeeck, founder and co-CEO of InterNations , the world’s largest expat network, with 2.5 million members in 390 cities around the world.

“Just calling everyone who lives abroad an expat won’t really change some political and socioeconomic realities,” he adds. While there are many types of expat with many different reasons to move abroad, “for people that we today call expats… living abroad is rather a lifestyle choice than borne out of economic necessity or dire circumstances in their home country such as oppression or persecution,” Zeeck says. “That’s what differentiates them from refugees or economic migrants and not their income or origin.”

Defining an expat is something Zeeck dealt with from Day One of InterNations.

“Immigrants are usually defined as people who have come to a different country in order to live there permanently, whereas expats move abroad for a limited amount of time or have not yet decided upon the length of their stay,” he says.

In its early days, InterNations set out to reach assignees – often in management positions – sent abroad by their employers. But Zeeck quickly realised this traditional definition was too strict and arcane a way to consider this group.

As more of us live out the globalisation of world populations, as our travel behaviours change and our working habits shift to a more free-flowing, borderless and sometimes nomadic style , these definitions have had to be reviewed and revised.

“I use expat in a much broader sense of the word, describing rather someone who decides to live abroad for a specified amount of time without any restrictions on origin or residence,” Zeeck says. That includes an awful lot more people than just those sent on assignment with a multinational.

Defining the impact

Changing definitions is one thing, but there’s still a large divide in the working conditions of, for instance, a banker in Geneva and a construction worker in Qatar. Qatar has come under fire for the working conditions of those building World Cup stadiums. For example, rights group Amnesty International claimed that construction workers at a World Cup stadium lived in squalid conditions, had wages withheld and passports confiscated . Following the controversy, Qatar has banned the controversial 'kafala' labour system that forced foreign workers to seek their employer's permission to change jobs or leave the country, though rights groups say this will do little to prevent abuses of workers in the Gulf state .

But while there might be progress being made in Qatar and other countries — in Brazil, for example  — there’s still a very real privilege gap between the people traditionally thought of as expats and those given different labels.

Whatever the moniker or motivation, most of us who move overseas to work do so in hopes of bettering our lives – whether the draw is money or experience, says Zeeck.

“We’re in the position to help shape this word — expat,” he says, “How we define it definitely helps with that.”

To comment on this story or anything else you have seen on BBC Capital, please head over to our  Facebook page or tell us how you define an expat here or message us on Twitter .

Who is an Expatriate Employee?

Who are expatriate employees and are you considered one.

We’ve all been hearing this term expat employee or expatriate worker. Living abroad and working on expat assignments are part of being an expatriate employee. Sometimes, the assignments are short, and sometimes it takes more than a year. Other times, expat employees travel from one country to another to complete their job tasks. So what exactly does it mean? In this article, we will explore the definition and what exactly it is to be an expatriate employee .

Definition of Expatriate Employees

A person living/working in a country other than his or her country of citizenship is considered an expat. Expatriate employees are often working in another country temporarily. Expatriated employees are usually sent abroad by a multinational employer (profit or non-profit) on a long-term job assignment over a year. Often, the organization has to send a senior manager to oversee the operation abroad or set up a new branch office. Often, there will be local nationals in the office – which would be the employees who are citizens of the country or have been domiciled there for a long period of time.

Woman on beach resting in hammock and working on laptop

Understanding Expat Employees

When it comes to expat workers, they earn more than they would at home and more than local employees. Furthermore, if you’ve chosen to become an expat employee, your company will also give your expat employee benefits such as relocation assistance and housing allowance. Becoming an expatriate has a lot of benefits, from getting opportunities for career advancement and global business exposure to living abroad and exploring exotic cities and cultures.

On the other hand, it can also be a difficult transition emotionally for some expats as they will have to leave their friends and family back home and adjust to a new culture and work environment. It is also one of the main reasons companies offer higher compensation and benefits to expat workers.

Expat Employees are “Special”

Generally, expatriate employees expect and deserve higher levels of pay, international health insurance , benefits and more from global employers for a variety of reasons:

• Expats are often in high demand, and their positions are more often than not senior management level
• They fulfil essential positions abroad that are critical for your organization’s financial success
• International experience is considered to require additional income
• Expats are moving abroad by themselves, especially with their families making a big financial and emotional commitment. Picking up stakes and moving your life abroad to a new country is also a big deal.
• Expat assignments are expensive. Not only do they often get paid more, but you have to factor in costs such as housing , schools, insurance, travel and much more. A failed expat assignment can cost hundreds of thousands.
• Finding the right expat employee can be very expensive, especially if a “head hunter” is used as their fees often range between ten and twenty percent of the annual wage.

Who are Expatriate Employees?

Expat employees are professional or skilled workers in his or her profession. The employer can become an expat employee by taking job opportunities outside of their home country , either independently or through his or her employer. The employer can be a company, university, government, or even non-governmental organization. A simple example is if you are working in the Silicon Valley office, and your employer sends you to work for a year in its Hong Kong office. In the Hong Kong office, you’re an expatriate employee.

Who is NOT considered as Expatriate Employee?

Business traveller.

Business travellers are those who are still employed and have a payroll with their employers in the home country. They can be sent on short-term global mobility assignments, and their place of employment is still in their home country. For example, someone can go overseas on a business trip for a few days or longer, yet it’ll still be a short-term assignment. Most business traveling employees are going on trips in under six months. Companies should make sure they secure a robust business travel plan for their entire company if sending employees abroad for short-term trips.

Accidental expat

An accidental expat is when a business traveler stays overseas for too long, and sometimes with the host country’s law, the place of employment may shift to the host country. They may work for a year, coming home only on the weekends. In such a scenario, business travel risks becoming an accidental expatriate. In other cases, even global nomads who move from one country to another without returning home become accidental expat. The COVID-19 pandemic has certainly added a lot of accidental expats as employees traveling are now stranded in overseas locations.

Foreign hires

Other than business travelers, another type of false expatriate employee is foreign hire. Multinational companies occasionally recruit candidates from one country to work in another country. For example, contractors in the Middle East recruit laborers from Indonesia, Phillippines, and other developing Asian countries.

Another example is giant tech companies in the USA recruiting graduates from top universities in India for jobs in California. Foreign hires also include US multinational companies hiring American security guards to work in the Middle East . All these employees are considered foreign hires and not expatriate employees because their employer is in just one country. However, one may certainly disagree with this description – you might just call these valued hires ex-pats.

Expat Contractors

Some global mobility managers will not consider contractor employees if the person is sent or hired abroad for a short or long-term assignment. They are not on the company payroll and are often considered contractors or consulting employees. However, if that “contractor” is only working for your company and indeed if the contract is extended beyond a year, is he or she really a contractor? If something goes wrong or if there is a sickness or injury, that expat contractor might be seen as an employee by the courts – local or back in the home country.

Duty of Care for Expatriate Employees

We have written some articles on the global mobility manager’s duty of care. It is a hot topic in global mobility circles these days. Suffice it to say it is critical for managers to ensure that expat employees, local nationals, contractors, and business travelers are protected and well-insured. All too often, we see people sent abroad for short and long-term assignments with inadequate global healthcare coverage, disability, evacuation, and life insurance coverage on a group or individual basis.

Many expat employers do not place adequate kidnap and ransom coverage for employees in high-risk locations. This puts employees and employers at risk – either because global mobility managers are not being well-advised or the employer wants to save money. Many countries, including the USA and Canada , have issued guidelines for meeting the duty of care for overseas employees. This can extend to adequate insurance but also health and safety as well. International employers need to take a proactive stance to insure, prepare, and protect their employees everywhere.

As part of TFG Global Insurance Solutions Ltd, we can discuss your organization’s duty of care from an expat insurance specialist perspective. If your organization would like to have us examine your global benefits plan , please feel free to reach out to us today. If possible, you can send us the details on your global health insurance plans, expat census, and contracts. We have often been able to find holes in current insurance coverage that were putting employees and the company at risk.

Our firm hase been able to secure thousands in savings for clients when our firm has been appointed as broker of record for their existing insurance policy, often keeping them with the existing insurer after conducting an expat benefit plan RFP. It really makes sense to work with an expat insurance specialist firm .

You might also like

We use cookies to make sure the website can function, to measure traffic and to support the marketing of our services. By clicking on "Allow" or using the website, you agree to our use of cookies, our Privacy Statement & Legal Terms of Use . Please read our Cookie Notice for further information about our use of cookies. You may change your consent by rejecting optional cookies in the settings or by blocking cookies in your browser.

Cookie and Privacy Settings

We may request cookies to be set on your device. We use cookies to let us know when you visit our websites, how you interact with us, to enrich your user experience, and to customize your relationship with our website.

Click on the different category headings to find out more. You can also change some of your preferences. Note that blocking some types of cookies may impact your experience on our websites and the services we are able to offer.

These cookies are strictly necessary to provide you with services available through our website and to use some of its features.

Because these cookies are strictly necessary to deliver the website, refusing them will have impact how our site functions. You always can block or delete cookies by changing your browser settings and force blocking all cookies on this website. But this will always prompt you to accept/refuse cookies when revisiting our site.

We fully respect if you want to refuse cookies but to avoid asking you again and again kindly allow us to store a cookie for that. You are free to opt out any time or opt in for other cookies to get a better experience. If you refuse cookies we will remove all set cookies in our domain.

We provide you with a list of stored cookies on your computer in our domain so you can check what we stored. Due to security reasons we are not able to show or modify cookies from other domains. You can check these in your browser security settings.

We also use different external services like Google Webfonts, Google Maps, and external Video providers. Since these providers may collect personal data like your IP address we allow you to block them here. Please be aware that this might heavily reduce the functionality and appearance of our site. Changes will take effect once you reload the page.

Google Webfont Settings:

Google Map Settings:

Google reCaptcha Settings:

Vimeo and Youtube video embeds:

You can read about our cookies and privacy settings in detail on our Privacy Policy Page.

• Hire Globally

Hire employees in 180+ countries

Hire international contractor

Find the best candidates for your team

Retain talents with the best benefits

Work visa & permit services

Explore all our add-ons

• About company

Our borderless team and our mission

How we accelerate global hiring

Discover our partner benefits

Platform news and annoucements

Our offices around the world

How we keep your data secure

How to hire remote teams

Shape your global hiring strategy

Global hiring cost insights

Calculate employment cost

• For HR , For Legal

What Is an Expatriate Employee?

• Author Antoine Boquen
• February 8, 2023

Recruit, hire and pay remote teams with Horizons

Key Takeaways

1. Expatriate employees (‘expat employees’ ) are sent to work in foreign markets as part of their employer’s international expansion strategy.

2. Successful expat employees possess specialist skill sets that combine management and leadership expertise with cross-cultural skills.

3. Deploying expat employees has its challenges, including; creating expat employee compensation packages; complying with the host country’s immigration procedures and employment legislation; and, managing expat employee welfare.

4. Expat employees take on challenging roles that involve a considerable emotional commitment. As such, managing expat employees is a challenging task that requires a sophisticated HR infrastructure that coordinates between professionals in the home and host countries. Horizons can advise on how best to deal with these types of challenges, amongst others, such as whether or not a tripartite agreement is required.

What are Expatriate Employees?

An expatriate is an individual living or working in a foreign country where they do not hold citizenship. From a business and international expansion standpoint, expat employees are those who are sent abroad to work in a host country where their employer has established operations.

In defining expat employees, it helps to understand the circumstances where an individual is not considered an expat employee:

Business Travelers

Where the expat employee settles down to work in a foreign country (usually for a period lasting longer than 12 months), business travelers are engaged in temporary, short-term assignments (usually for a period lasting less than 6 months). One difference, therefore, relates to the time horizon: business travelers know they will be returning to their place of work in their home country; expat employees understand their place of work is in the host country.

Foreign Hires

Expat vs. immigrant: the key difference.

The words expatriate and immigrant are often used interchangeably. There are a number of similarities between the two: both terms describe individuals who have left their native country to live and/or to work in a foreign country. Indeed, expatriates are a form of immigrant however the key difference between an expat and an immigrant revolves around permanence .

Expats move to foreign countries to work, sometimes settling over the medium to long term with their families in tow, whereas immigrants are those seeking to relocate to another country on a permanent basis. Where expats go through the immigration process as it relates to obtaining the relevant visas and permits, immigrants are likely to be those applying for citizenship.

What are the Benefits of Using Expat Employees?

Businesses that utilize expat employees as part of their global mobility strategy choose to do so for a variety of reasons. As you’ll see, speed (time to market), competence and reliability are key factors.

Company-specific Knowledge and Expertise

Expat employees tend to hold senior managerial roles. The expat employee might have a rare skill set or company-specific knowledge that would require extensive training. Using an expat employee, that’s hired internally, negates the need to engage in a complex executive search, interview process and training program which can reduce the time to market.

Reliability

As well as suitability, such as knowledge of the host country’s work culture, reliability is an important characteristic to look for when identifying suitable expat employees. Keep in mind that expat employees will often serve as the bridge between the executive team and the foreign operation.

Most businesses have secrets or some intellectual property they’d like to protect. It could be a process, a license agreement or anything that contributes towards making the company unique. Protecting this uniqueness becomes especially important when entering new markets and attempting to build a competitive advantage.

The Challenges of Using Expat Employees

Using expat employees has its challenges, particularly in terms of employee management and compliance.

Compensation

• The cost-of-living (housing, schooling costs) in the host country (keeping in mind that many employees seek to benefit from global labor arbitrage);
• Relocation packages (travel compensation, house sale and moving assistance, costs of immigration/visas etc);
• Potential promotions and pay raises associated with new foreign roles.

Navigating Shadow Payroll

Shadow payroll is a critical component of global payroll implementation. Unfortunately, the process is inherently complex. Also known as expat payroll, shadow payroll is a mechanism that ensures compliance with the employment taxes (including payroll tax) of the host country, whilst keeping the expat employee on their home country’s payroll system.

Whilst compensation is processed via the home country’s payroll system, the payroll system in the host country “shadows” what is being reported in the home country. This allows companies to manage their liability for payroll contributions, like income tax and healthcare contributions, in both legal jurisdictions. For an in-depth explanation, see our guide to managing shadow payroll . Additional reading of interest to execs and global mobility teams is our explainer article on Tripartite Agreements .

Administrative Work: Visas/Permits

Visa, work and residence permit requirements differ significantly between countries. The administrative work involved in preparing expat employees for their move requires input from HR and legal professionals.

Many companies choose to work with a global mobility partner that can assist with securing all necessary visas and permits, ensuring a smooth transfer of expat employees to their new location.

Managing Employee Welfare

• Identify candidates whose technical and leadership abilities are matched by their suitability for foreign assignments. For example, employees who have previous cross-cultural experience or have demonstrated an interest in a particular foreign culture.
• Create a plan for repatriation and ensure expat employees have access to career guidance whilst abroad. HR and managers must ensure expat employees maintain a sense of connection and that their international experience can be utilized when they are repatriated.

Successfully deploy expat employees – with Horizons

Frequently asked questions.

Expatriate employees, or ‘expat employees’, are those employees who are sent by their employer to work in a foreign country, usually as part of an international expansion strategy.

Related insights

• Remote Work

Digital Nomad Taxes: How to Calculate and Manage Them

• For Finance

What Is Payment In Kind?

What Is VAT Compliance?

• How to Hire

Outsourcing vs Insourcing: Key Differences

What Is a Form 1120? Tax Form Filing Tips

What Is a W-4 Form? Guide to Tax Witholding

The Global Workforce Payment Platform

Stay updated on international hiring, employment, compliance, and payroll news.

Horizons © 2024   –  Privacy     Imprint & Terms    Third-Party Processor    GDPR Policy

What to expect when you connect with Horizons

• Learn about our EOR benefits
• Get insights into local employment laws
• Explore our additional services
• Experience a demo of our platform
• Receive a custom proposal

Recruit, hire and pay remote teams without a local entity

We respect your data, and process it according to our  Privacy Policy

What is Expatriate?

Expatriate is a term used to describe an employee who is temporarily or permanently assigned to work in a foreign country. Expatriates may be assigned to work in a foreign country by their company, or they may be sent to work in a foreign country by their government. Expatriates may be assigned to work in a foreign country for a variety of reasons, including to gain experience working in a foreign country, to learn a new language, or to gain knowledge about a foreign culture.

What are the benefits of expatriate assignments?

There are many benefits of expatriate assignments for both the employee and the employer. For the employee, expatriate assignments can offer opportunities for growth and development, as well as new and exciting experiences. They can also provide a chance to learn about a new culture and to improve foreign language skills. Additionally, expatriate assignments can offer a higher salary and a variety of benefits, such as tax breaks and allowances.

For the employer, expatriate assignments offer the chance to send employees to new and challenging assignments, which can help to develop their skills and knowledge. Additionally, expatriate assignments can help to build a global network of contacts, which can be beneficial for the company. Additionally, expatriate assignments can be cost effective, as the employee may be able to claim tax breaks and allowances.

Who uses Expatriate?

Expatriate is used by human resources professionals to describe employees who are temporarily assigned to work in a foreign country. These workers may be sent by their company to work in a new office or to support a project in a foreign country. Expatriates may also be transferred to a new position in a foreign country.

How do you build an expatriate program?

There is no one-size-fits-all answer to this question, as the best way to build an expatriate program will vary depending on the company’s needs and goals. However, some tips on how to build an expatriate program include:

• Establish a clear purpose for the program. Before creating an expatriate program, it is important to establish a clear purpose for it. What are the company’s goals for the program? What do they hope to achieve by sending employees abroad?
• Define the target audience. Who will the program be aimed at? Is it for senior executives only, or will it also include lower-level employees? Defining the target audience will help to determine the specific criteria that employees must meet in order to be eligible for the program.
• Establish eligibility criteria. In order to be eligible for an expatriate program, employees must meet certain criteria. Establishing clear eligibility criteria will help to ensure that only the most qualified employees are chosen for the program.
• Design a comprehensive selection process. The selection process for an expatriate program should be comprehensive and rigorous. It should include a review of the candidates’ skills and experience, as well as their personal and professional goals.
• Create a comprehensive training program. Once employees have been selected for an expatriate program, they need to be properly trained for their new role. The training program should include information on the company’s culture and business practices, as well as on the specific country where the employee will be working.
• Develop a support system. An expatriate program is only successful if there is a strong support system in place. This includes a network of mentors and advisors who can help the employee adjust to their new surroundings.

Why do you need an Expatriate program?

The modern workplace is a global one, and businesses need to be able to operate in multiple countries in order to be successful. In order to do this, they need to have employees who are able to work in different cultures and who have the skills to navigate different business environments. An expatriate program is a way to identify and recruit employees who have the necessary skills and cultural understanding to work in a foreign country. It also provides a way for businesses to support their employees as they move to a new country and help them to adjust to their new surroundings.

Where should you post your expatriate jobs?

There are a few different places to post Expatriate jobs. One popular site is Indeed.com. You can also post directly on company websites or job boards. Another option is to use a staffing agency that specializes in finding candidates for international positions.

Related Terms

Stay one step ahead..

Be the first to hear about tips, tricks and data-driven best practices for HR professionals.

• SUGGESTED TOPICS
• The Magazine
• Newsletters
• Managing Yourself
• Managing Teams
• Work-life Balance
• The Big Idea
• Data & Visuals
• Reading Lists
• Case Selections
• HBR Learning
• Topic Feeds
• Account Settings
• Email Preferences

The Right Way to Manage Expats

• J. Stewart Black
• Hal Gregersen

Sending executives abroad is expensive, but most companies don’t get much back for their money. Those that do follow three practices.

In today’s global economy, having a workforce that is fluent in the ways of the world isn’t a luxury. It’s a competitive necessity. No wonder nearly 80 % of midsize and large companies currently send professionals abroad—and 45 % plan to increase the number they have on assignment.

• JB J. Stewart Black is a professor of global leadership and strategy at INSEAD and a coauthor of Competing in and with China: Implications and Strategies for Western Business Executives (Thinkers50). Email: [email protected]
• Hal Gregersen is a Senior Lecturer in Leadership and Innovation at the MIT Sloan School of Management , a globally recognized expert in navigating rapid change, and a Thinkers50 ranked management thinker. He is the author of Questions Are the Answer: A Breakthrough Approach to Your Most Vexing Problems at Work and in Life and the coauthor of The Innovator’s DNA: Mastering the Five Skills of Disruptive Innovators .

Partner Center

• Skip to primary navigation
• Skip to main content
• Skip to primary sidebar
• Skip to footer

International Citizens Group

Resources for International Citizens and Expatriates

Celebrating 20 Years of Helping International Citizens Thrive Abroad

• Expatriate Selection: Lessons From the U.S. Peace Corps

“Ask not what your country can do for you, ask what you can do for your country.” – President John F. Kennedy, 1961 Inaugural Address

On March 1, 1961, John F. Kennedy created the US Peace Corps. In August of that year, the first 52 Peace Corps volunteers arrived on the shores of Ghana. Today’s 4,000 or so annual volunteers are a devoted and skilled bunch of mostly early career professionals. Yet those first volunteers were among the nation’s best and brightest, all graduates of Harvard, Yale, or Princeton at the behest of Ghanian President Kwame Nkrumah.

Despite their credentials and commitment, it wasn’t long before issues arose. Perhaps most infamously, an early volunteer to Nigeria wrote a letter home describing the state of living conditions as squalid, horrifying and primitive. Intercepted by the local postal service, it was soon on the front page of major Nigerian newspapers, sparking outrage among the populace.

In my Peace Corps assignment to Central Asia’s Kyrgyz Republic, roughly one-third of the assignees departed prior to the end of their 27-month assignments (including yours truly, who resigned early in favor of a local faculty position in order to research governmental corruption without tainting US-Kyrgyz relations). To help improve the fit between volunteers and host countries, the Peace Corps is among the earliest known organizations to perform psychological assessments on applicants interested in volunteering abroad. The results of this early experiment were reportedly mixed. However, psychological assessments have improved with time and are now a recognized best practice to use in expatriate selection for organizations staffing international offices.

The expatriate selection process can be complicated. At its best, it involves many stakeholders, including managers, HR staff, and host country professionals, each of whom has input on what is relevant to the determination. What are the key questions they should ask, and what steps can organizations take to prepare the employees they choose for international assignments?

Expatriate Selection: Who Chooses?

At its best, expatriate selection is a collaborative effort. Participants include management, HR professionals, and host-country recipients, each of whom has a particular (if at times overlapping) role to play. Host country staff are primarily responsible for assessing technical skills. They answer the question: can this candidate complete the required tasks?

While this is a crucial question, it is not the only question. Unfortunately, scholars have for decades documented that technical competence regularly overshadows other issues of concern. What other factors should companies consider in selecting expatriates?

Other key elements include whether the expat candidate has the cultural and social skills to succeed in the new assignment. Family questions may also be relevant. HR and host country managers should have an expansive role to better assess these variables.

A significant barrier to expatriate success is cultural distance. This measures how different the host country’s culture is from the home country. A forthcoming article will discuss this in more detail, but for now, know that cultural differences may present themselves in many ways. And for the home country staff, these differences may not be obvious.

Host country staff, however, may shed light on which cultural practices most challenge foreign national workers. These may be language or communication differences, social norms, or business practices. The deeper the differences, the more important it is that the chosen expatriate brings prior international experience to the job. In addition, host country staff may coordinate with HR and home country staff to assist in the expatriate selection and identify which foreign nationals most flourish amidst these cultural differences.

Furthermore, HR staff may spearhead those pre-departure psychological assessments that the US Peace Corps popularized so many years ago. These practices are among the most important – but least understood – of all selection practices.

Global Insurance for Organizations

• Compare multiple quotes and coverage options
• Work with an insurance expert at no additional cost
• Find the best global plan for your needs and budget

Also Read: Resources & Articles for Expats

“Grit: The Power of Passion and Perseverance”

Grit. It’s a topic popularized by Wharton Professor Angela Duckworth in her book Grit: The Power of Passion and Perseverance . Grit is the ability to remain committed to long-term goals despite challenges, sometimes for years at a time. As Duckworth revealed in a series of groundbreaking studies, grit may be the single most important variable for employee success. More so than skills. More so than intelligence.

And for the expat, grit may be even more important than among domestic employees. An individual accepting an international assignment is taking a leap of faith. No matter how much support is received – and later articles review exactly what kind of support expatriates tend to need and want – the expatriate will inevitably face challenges.

These challenges may be from work styles or relationships with co-workers or supervisors, challenges for the family in adjusting, or social setbacks. Consider the ongoing Covid pandemic and the upheaval this caused for expatriates. New concerns sprouted about healthcare, travel restrictions and closing borders, and social isolation in countries where restaurants and other public venues closed en masse .

Selecting for grit – and yes, there are surveys that do just this – is, therefore, one of the key psychological variables that organizations should look at when assessing expatriate candidates. What else?

What Factors Should Companies Consider for Expatriate Selection?

The so-called Big Five Personality traits are openness to experience, conscientiousness, extraversion/introversion, agreeableness, and neuroticism. They are among the most important and best understood of the many personality traits which make up an individual’s character. (An easy trick to remember the Big Five? Take the first letter of each trait. It spells “OCEAN”). Put simply, if you understand where someone falls on each of these traits, you can predict a lot about their attitudes and behaviors in life and work.

Extraversion

Extraversion measures sociability and leads to expat success. Studies show that extroverts are less likely to quit their jobs, while supervisors rate them higher in performance. Extraversion also correlates with ambition, which also leads to higher job performance.

However, don’t take these studies to mean that organizations should exclude introverts from international assignments. After all, they represent around 50% of the population. And as Susan Cain documents in her well-researched book, Quiet , introverts also offer employers valuable skills.

Consequently, this is more about understanding in which positions each can flourish. For instance, extroverts are well-positioned to handle international assignments that require regular contact with the local population. By contrast, introverts do well when given space for their creative and thoughtful juices to flow and when they have quiet workspaces far away from daily chaos. In addition, introverts may require more organizational support in terms of socialization and integration with host country nationals.

Openness to Experience

Another trait predicting expatriate success is openness to experience. These individuals seek out novelty and adventure. They’re more likely to try different foods, listen to new music, and support cultural activities. They are, in turn, primed for positive attitudes when it comes to embracing the changes and opportunities of a new national culture.

Indeed, studies show that expatriates high in openness to experience tend to perform at higher levels. In one study, higher-performing expatriates were more likely to report that they took the international position for the love of travel and the opportunity for new experiences. Furthermore, these individuals tend to gain more value from their interactions with host country nationals – enthusiastically soaking up information and using it to improve their day-to-day performance. Finally, spouses high in openness to experience adjust better, as well.

Neuroticism and Conscientiousness

Organizations may also seek expatriates that are low in neuroticism and high in conscientiousness. Neurotic types tend to struggle with ambiguous and stressful environments, with which, as we know, foreign assignments are rife. Finally, conscientiousness measures dependability and diligence and is related to grit. It predicts higher job performance for both domestic and international workers.

Click here for a survey that measures each of these so-called “Big Five” personality traits. In addition, companies can customize open-ended interview-style questions to assess where expat candidates fall on each of these traits.

Expatriate Preparation: How To Prepare Employees for International Assignment

Your expatriate selection process is complete, now what?

Expatriate research reports that the most important pre-departure expatriate preparation involves a series of in-depth training sessions. There are many types of training for expatriates. The primary categories are area studies, cultural practices, language training, sensitivity training, and field experience.

At the most basic level, expats must understand practical living conditions. Can they drink the water? Where do they go for medical treatment or for groceries? And what are the best neighborhoods to live in?

Expatriate Training

In addition, training for accompanying family members is key. This means including spouses and even children in some training sessions and providing families with information about schooling for children and spousal employment.

Finally, expatriate training should include business-relevant matters, such as local business laws and relationships with local partners. Expatriates should, furthermore, be clear about their job expectations, their performance management systems, and their compensation policies.

In addition to training, the company often undertakes other concrete activities on behalf of the international assignee. This includes visas and other bureaucratic support, which can be a byzantine nightmare for the uninitiated employee.

Studies also show that expatriates are grateful for long lead times before departure. Rushed assignments such as those with two months’ notice or less prove troublesome in terms of selling a house, buying or renting a new one, changing schools, and organizing a move (and to another country, at that).

The US Peace Corps learned some lessons the hard way but responded by putting more effort into their selection policies. In so doing, they – and all organizations following suit – give those selected the best chance of succeeding in even the most challenging environments. When paired with pre-departure and training preparations, your expatriates will arrive in their host countries with every possible advantage.

Related Articles

• Culture Shock: What It Is and How HR Can Help
• Understanding and Preventing Expat Failure
• The 5 Best Countries to Work in for Expats

Sources and Further Reading

Anderson, B. A. (2001). Expatriate management: An Australian tri‐sector comparative study.  Thunderbird International Business Review ,  43 (1), 33-52.

Harris, H., & Brewster, C. (2002). An integrative framework for pre-departure preparation.  International Human Resource Management: A European Perspective ,  224 .

Hung-Wen, L. (2007). Factors that influence expatriate failure: An interview study.  International Journal of Management ,  24 (3), 403.

Lin, C. Y. Y., Lu, T. C., & Lin, H. W. (2012). A different perspective of expatriate management. Human Resource Management Review, 22(3), 189-207.

Mesmer-Magnus, J. R., & Viswesvaran, C. (2007). Expatriate management: A review and directions for research in expatriate selection, training, and repatriation.  Handbook of research in international human resource management , 197-220.

Our Most Famous and Infamous RPCV . Peace Corps Worldwide.

Suutari, V., & Brewster, C. (2001). Expatriate management practices and perceived relevance: Evidence from Finnish expatriates.  Personnel Review .

Wang, C. H., & Varma, A. (2019). Cultural distance and expatriate failure rates: the moderating role of expatriate management practices.  The International Journal of Human Resource Management ,  30 (15), 2211-2230. – see page 2213 for an overview of the selection process.

Zeitlin, Arnold (1986). First Group of Peace Corps Volunteers Marking 25th Anniversary. AP News.

Let us help you with your insurance needs

Expat advice, popular resources, travel plans, featured articles.

What are the Most Expensive Countries in the World to Live In? Define Expatriate – What is an Expat Anyway? Best, and Safest, Places to Live, or Retire, In Mexico! International Retirement: The Best Places to Retire Abroad Expat? Expatriate Resources

Company Info

• How to Move Abroad to Popular Expat Locations
• The Ultimate Moving Abroad Checklist
• The Best Countries to Live in as an Expat
• Safest Places In the World to Live
• Cost of Living Abroad
• International Calling Codes
• Living the Expat Life
• Five Tips for Becoming an Expat
• Expat Forums, Twitter and Social Networks
• 5 Common Problems Faced by Expatriates
• Education Abroad
• Retire in a New Country
• The Best Places to Work Abroad
• How to Apply for Citizenship
• US Work Visas for Foreigners
• Traveling Abroad
• Health and Wellness Advice for Expats
• Hospital Search
• Health Insurance Plans for International Citizens
• International Travel Insurance
• International Tax Advice
• Living on Social Security While Abroad?
• Taxation of American Expats
• International EORs and PEOs
• Expatriate Stigmatization: How HR Professionals Can Combat this Underestimated Challenge
• Perceived Organizational Support: Fundamental to Expat Success
• Pre-Departure Preparation and Training: The Role of HR

Enter the URL below into your favorite RSS reader.

Sustainable Expatriate Management: Rethinking International Assignments

• Citation (BibTeX)

Sorry, something went wrong. Please try again.

If this problem reoccurs, please contact Scholastica Support

Error message:

View more stats

This article explores the concept of sustainable expatriate management, which incorporates environmental, social, and economic factors, and how it can be implemented in a corporate context. We argue that with increasing societal and environmental issues, it is crucial to revisit the overall global philosophy and policies, including the expatriate life cycle. We apply the UN Sustainable Development Goals (SDGs) framework to examine how businesses can remodel their practices to become more resilient. Furthermore, based on a systematic literature review, we identified gaps in research on the integration of environmental factors into sustainable expatriate management. Lastly, this article presents a model for understanding the three layers of sustainability in expatriate management, which can assist practitioners in identifying blind spots and material topics.

Introduction

According to Ghauri, Strange and Cooke (2021) , the global business environment has improved awareness of sustainability as a ‘new reality’. Furthermore, addressing the UN Sustainable Development Goals (SDGs) in a corporate context is becoming increasingly popular (Liou & Rao-Nicholson , 2021; Montiel , Cuervo-Cazurra , Park , Antolín-López , & Husted , 2021; van Tulder , Rodrigues , Mirza , & Sexsmith , 2021) . Although “sustainable” and “green” global mobility are widely discussed concepts, they have not yet been widely integrated into sustainable expatriate management.

However, due to its nature, expatriate management is exposed to various societal and environmental issues that are forcing the field to move towards more sustainability-oriented practices. This implies that decision- and policy-makers should revisit the overall global philosophy, including policies and practices. Therefore, stakeholders should reevaluate topics like business trip policies, health, and equality, as well as other facets of the international assignment cycle (Fan , Zhu , Huang , & Kumar , 2021) . Consequently, in this paper, we will outline how practitioners can rethink expatriate management using a sustainable development lens and how this shift in perspective provides fertile ground to redesign the expatriate life cycle.

Inspired by the “strong sustainability” or embedded systems view (Giddings , Hopwood , & O’Brien , 2002) , we define sustainable expatriate management as any employee-related cross-border (work) activity, which, by its design, considers planetary and societal boundaries and acknowledges the embeddedness of economic impacts within this larger framework (see Figure 1 for clarification).

Source: Own illustration based on Giddings et al. (2002) , p. 192.

Theoretical Framework: Sustainable Development Goals

According to Finaccord’s (2019) latest research, in 2017, there were 66.2 million expatriates working abroad globally, and forecasts for 2021 expect 87.5 million in total. Therefore, this topic affects a relatively large amount of people moving across borders. Nowadays, increasing environmental, social, and economic crises are challenging global business practices. According to the World Economic Forum Global Risks Report, the risks that are most likely and will have the most impact are predominantly environmental risks (e.g., climate action failure, human environmental damage, biodiversity loss, natural degradation, extreme weather, natural resources crises) (World Economic Forum , 2022) . These are expected to affect multinational enterprises’ (MNEs) activities on a global scale.

As the complex, or so-called wicked, problems of our time are interconnected, it is crucial to avoid a siloed perspective of these risk categories. Therefore, we provide a holistic, SDG-focused perspective that addresses the question of how MNEs’ business practices need to be remodeled to become more resilient. We view business sustainability in terms of environmental, social, and economic systems and consequently apply the UN Sustainable Development Goals “wedding cake” framework (Stockholm Resilience Centre , 2018) . This model implies that the environmental, social, and economic layers are interdependent, as well as their respective sublevel SDGs, as indicated in Figure 2 .

Source: Own illustration based on Stockholm Resilience Centre , 2018

Based on Figure 2 , the biosphere/environment represents the foundation of economies and societies and, therefore, the general context in which all other SDGs must be placed. Society cannot survive without the environment, which is why society must pay attention to resources and the preservation of habitats. Such a conceptualization adopts an integrated and interconnected view of social, economic, and ecological development to ensure the future viability of the planet and its living species.

Three Layers of Sustainability in Expatriate Management: Identifying Blind Spots

Based on a systematic literature review of 238 articles clustered according to the 17 Sustainable Development Goals and their respective layers, environment/biosphere, society, and economy, it is evident that research in this field has been increasing in recent years. Furthermore, it shows that the expatriate management literature is dominated by social issues (80%), followed by economic literature (19%), and work that focuses on the environment/biosphere (1%) (Ommen , Schmitz , & Karlshaus , 2022) . Considering that expatriate management is a part of international HRM literature, it is unsurprising that the social category dominates; however given the growing importance of the climate crisis discourse, it is surprising that this has not yet been addressed in research and practice.

This social literature is dominated by articles addressing SDG 5 “Gender Equality” and SDG 3 “Good Health and Well-being” as well as limited literature focused on SDG 16 “Peace, Justice, Strong Institutions”. In the economic category, the literature most often addresses SDG 10 “Reduced Inequalities” and SDG 8 “Decent Work and Economic Growth”, followed by SDG 17 “Partnership for the Goals” as an overarching category. Finally, the ecological category is only represented in one article addressing SDG 13 “Climate Action”, which has only recently been published (Ommen et al. , 2022) (see Table 1 for an overview).

Source: Own illustration; for a full list of references, see Ommen et al. , 2022 , and the Appendix to the article. *“–” indicates SDG cases for which blind spots were not identified in this study

What Is Material for Sustainability in Expatriate Management?

In the sustainability reporting discourse, understanding materiality (i.e., identifying elements of utmost importance to a company’s sustainability challenges) has become increasingly important as part of the international ESG factors: environment, society, and governance. Furthermore, organizations attribute different levels of importance to specific environmental or social factors based on the sectors they operate in.

Considering the essential or material topics, MNEs need to first reduce or avoid their negative impacts (e.g., CO 2 emissions etc.) and also increase their positive impacts (e.g., fostering intercultural ties). By doing so, MNEs can significantly reduce the respective risks to which they are exposed.

The emission of greenhouse gases (GHG) is among expatriate management’s negative material environmental impacts, due to flights, shipments, hotel stays, and local transportation (SDG 13). These also include water and land use due to construction activities (SDG 6, 15), and waste management that should be reconsidered from an environmental perspective.

From a social perspective, negative impacts on equal opportunities can be caused by disparities in pay and promotion opportunities (SDG 5), working conditions, and health issues related to increasing travel activities and continuous readjustment (SDG 3). Furthermore, expatriates working in hostile environments or dangerous locations need adequate protection mechanisms and respective codes of conduct (SDG 16). Finally, integration into local communities during long-term stays might become relevant for some expatriates and their families (SDG 11).

From an economic perspective, a positive impact could be generated by supporting the local economy (SDG 8). However, negative impacts can arise through unequal opportunities because of the different treatment of expatriates and locals (SDG 10). To reduce this, companies should ensure responsible local consumption and circular use of respective household appliances or furniture in apartments (SDG 12).

In sum, MNEs should consider the following Sustainable Development Goals to reduce their negative impact and increase their positive impact:

Environmental : SDG 13 Climate Action

Social : SDG 3 Good Health and Well-being, SDG 5 Gender Equality, SDG 16 Peace, Justice and Strong Institutions, SDG 11 Sustainable Cities and Communities

Economic : SDG 8 Decent Work and Economic Growth, SDG 10 Reduced Inequalities, SDG 12 Responsible Consumption and Production

Sustainable Expatriate Management: Actionable Recommendations

The above discussion suggests that companies can derive a specific prioritized agenda. Inspired by the SDG Compass (Global Reporting Initiative , United Nations Global Compact , & WBCSD , 2015) , we advance these considerations by sharing how MNEs can best address the SDGs in sustainable expatriate management. For an overview of selected ideas for each of the SDGs, please also see Table 2 .

Source: Own illustration; based on selected measures of the SDG Compass Business Indicators; Note: Not all themes will apply to all types of MNEs or all sectors equally. As expatriates are usually relatively privileged, we suggest that they should use their privileged status to support disadvantaged groups and individuals to meet SDGs.

Defining Priorities

First, each of the material topics needs to be evaluated for each company. Certain topics may be more or less relevant in a corporate context, depending on the respective sector. Taking the example of GHG emissions (SDG 13), most emissions come from consultants on regular short-term assignments or business commuting trips if the company is in the service delivery sector. Therefore, these emissions play a more significant role for the company.

In terms of gender equality (SDG 5), a company should first investigate the share of women in their overall assignee population, including management positions. Based on a materiality matrix approach, respective stakeholders should evaluate their priorities alongside considering the judgment of material topics to attain a holistic perspective. By taking this approach for all topics associated with each SDG, MNEs can prioritize different materiality topics.

Setting Strategic Goals

To transform international assignments at the company level, MNEs need strategic concepts, including tools, to impact the defined materiality topics discussed above. There are different levers available to create change, including international assignment policy, processes, and culture. A policy can be designed so that assignees are nudged to not take air shipments, which cause significant GHG emissions (SDG 13). Further, by working with stakeholders across the supply chain, MNEs should implement key performance indicators (KPIs) to reduce negative impacts. To be effective, these should align with scientific facts and goals, such as the Paris Agreement’s target of limiting warming to 1.5°C.

Integrating the Goals

After defining their strategy and goals, MNEs should next address their implementation needs. This should particularly consider the sustainable consumption of mobility-related benefits (SDG 12), where there may need to be a mindset shift. Therefore, in the preparation phase, assignees need to be made aware of their choices. To do this effectively, departments taking care of international assignments may need to be trained on related topics while they consult assignees. Besides policy changes, MNEs should also implement profound changes, for example in terms of gender equality (SDG 5). Managers should be aware of equal selection principles and provide women with support mechanisms to ensure equity if they become the main caregiver for their children.

Measuring and Evaluating

Finally, MNEs need to track whether the implemented measures have been effective. This means measuring an international assignment program’s GHG emissions (SDG 13), environmental impact, gender share (SDG 5), and other measures. If the result does not meet the initial targets, the previous phases (strategy development, implementation) should be analyzed to see if adjustments are necessary. To better integrate the respective measurement indicators with those already existing in the corporate context, the SDG Compass website provides respective input categorized by SDG: https://sdgcompass.org/business-indicators/ .

Although there is awareness of pressing contemporary challenges in the field of expatriate management, action is still needed to decrease the negative impact on society, the economy, and the environment. Many concepts aim to address sustainability across borders. However, research has not yet produced a hands-on and integrated SDG framework for expatriate management. In this work, we aim to inspire and motivate practitioners to take action and further their sustainability ambitions. Although our paper is labeled rethinking expatriate management, the challenges outlined equally apply to inpatriates, repatriates, and other forms of cross-border assignments.

Companies need to be more aware of the environmental and social impacts of their programs and need to monitor processes to increase transparency across their vast service portfolios and associated supply chains. This is not only necessary because of sustainability but also to comply with legislative requirements (e.g., EU Taxonomy). However, corporate departments dealing with international assignments are not facing these challenges alone. They need to form partnerships (SDG 17) and collaborate with their vendors and internal stakeholders (enabling functions, corporate sustainability, procurements, etc.) to drive the much-needed change toward sustainable development.

About the Authors

Marina A. Schmitz serves as a Researcher and Lecturer at the Coca-Cola Chair of Sustainable Development at IEDC-Bled School of Management in Bled, Slovenia as well as CSR Expert/Senior Consultant at Polymundo AG in Heilbronn, Germany. She has worked as a Lecturer, Research Associate, and Project Manager at the Center for Advanced Sustainable Management (CASM) at the CBS International Business School in Cologne and the Chair of HRM and Asian Business at University of Goettingen. Enno Ommen is working in Bayer AG’s Sustainability Excellence Office at CropScience Division. He had previously worked in the area of Global Mobility for about 10 years, which equipped him with profound knowledge in the field of expatriate management. He studied International Business (BA) at CBS International Business School and International Human Resource Management (MSc) at Manchester Business School. Further, as one of Bayer AG’s Sustainability Champions, Enno is supporting the sustainable transformation of the company. Anja Karlshaus studied at the University of Cologne, Santa Clara University (USA), and the European Business School. In 2009, she took over the HRM professorship at CBS International Business School, later assumed the role of dean of the Business Administration faculty, before being appointed president. Moreover, she was previously employed at Dresdner Bank, Allianz and Commerzbank – being now member of various committees (Chamber of Industry and Commerce, City of Cologne, State of NRW). She researches sustainability, diversity, and agile HR.

Submitted : September 30, 2022 EDT

Accepted : April 06, 2023 EDT

Full list of references: Alamgir, F., & Alakavuklar, O. N. 2020. Compliance Codes and Women Workers’ (Mis)representation and (Non)recognition in the Apparel Industry of Bangladesh. Journal of Business Ethics , 165(2): 295–310. Bader, B., & Berg, N. 2013. An empirical investigation of terrorism-induced stress on expatriate attitudes and performance. Journal of International Management , 19(2): 163–175. Bader, B., Stoermer, S., Bader, A. K., & Schuster, T. 2018. Institutional discrimination of women and workplace harassment of female expatriates: Evidence from 25 host countries. Journal of Global Mobility , 6(1): 40–58. Bader, A. K., Reade, C., & Froese, F. J. 2019. Terrorism and expatriate withdrawal cognitions: the differential role of perceived work and non-work constraints. The International Journal of Human Resource Management , 30(11): 1769–1793. Bailey, L. 2021. International school teachers: precarity during the COVID-19 pandemic. Journal of Global Mobility , 9(1): 31–43. Bhanugopan, R., & Fish, A. 2008. The impact of business crime on expatriate quality of work-life in Papua New Guinea. Asia Pacific Journal of Human Resources , 46(1): 68–84. Bücker, J., Poutsma, E., Schouteten, R., & Nies, C. 2020. The development of HR support for alternative international assignments. From liminal position to institutional support for short-term assignments, international business travel and virtual assignments. Journal of Global Mobility , 8(2): 249–270. Bullough, A., & Renko, M. 2017. A different frame of reference: Entrepreneurship and gender differences in the perception of danger. Academy of Management Discoveries , 3(1): 21–41. Chang, C., & Cooke, F. L. 2018. Layers of union organising and representation: the case study of a strike in a Japanese‐funded auto plant in China. Asia Pacific Journal of Human Resources , 56(4): 492–517. Dickmann, M., & Bader, B. 2020. Now, Next and Beyond. Global Mobility’s response to COVID-19. RES Forum Research , 1. Dickmann, M., & Watson, A. H. 2017. “I might be shot at!” exploring the drivers to work in hostile environments using an intelligent careers perspective. Journal of Global Mobility , 5(4): 348–373. Faeth, P. C., & Kittler, M. G. 2017. How do you fear? Examining expatriates’ perception of danger and its consequences. Journal of Global Mobility , 5(4): 391–417. Faeth, P. C., & Kittler, M. G. 2020. Expatriate management in hostile environments from a multi-stakeholder perspective – a systematic review. Journal of Global Mobility , 8(1): 1–24. Fee, A., McGrath-Champ, S., & Berti, M. 2019. Protecting expatriates in hostile environments: institutional forces influencing the safety and security practices of internationally active organisations. The International Journal of Human Resource Management , 30(11): 1709–1736. Fischlmayr, I. C., & Puchmüller, K. M. 2016. Married, mom and manager–how can this be combined with an international career? The International Journal of Human Resource Management , 27(7): 744–765. Gannon, J., & Paraskevas, A. 2019. In the line of fire: Managing expatriates in hostile environments. The International Journal of Human Resource Management , 30(11): 1737–1768. Giorgi, G., Montani, F., Fiz-Perez, J., Arcangeli, G., & Mucci, N. 2016. Expatriates’ multiple fears, from terrorism to working conditions: development of a model. Frontiers in Psychology , 7: 1571. Greppin, C., Carlsson, B., Wolfberg, A., & Ufere, N. 2017. How expatriates work in dangerous environments of pervasive corruption. Journal of Global Mobility , 5(4): 443–460. Kirk, S. 2019. Identity, glass borders and globally mobile female talent. Journal of Global Mobility , 7(3): 285–299. Lirio, P. 2014. Taming travel for work-life balance in global careers. Journal of Global Mobility , 2(2): 160–182. McNulty, Y., & Hutchings, K. 2016. Looking for global talent in all the right places: a critical literature review of non-traditional expatriates. The International Journal of Human Resource Management , 27(7): 699–728. McPhail, R., & McNulty, Y. 2015. 'Oh, the places you won’t go as an LGBT expat!'A study of HRM’s duty of care to lesbian, gay, bisexual and transgender expatriates in dangerous locations. European Journal of International Management , 9(6): 737–765. McPhail, R., McNulty, Y., & Hutchings, K. 2016. Lesbian and gay expatriation: Opportunities, barriers and challenges for global mobility. The International Journal of Human Resource Management , 27(3): 382–406. Ng, E. S., & Sears, G. J. 2017. The glass ceiling in context: the influence of CEO gender, recruitment practices and firm internationalisation on the representation of women in management. Human Resource Management Journal , 27(1): 133–151. Pinto, L. H. F., Bader, B., & Schuster, T. 2017. Dangerous settings and risky international assignments. Journal of Global Mobility , 5(4): 342–347. Posthuma, R. A., Ramsey, J. R., Flores, G. L., Maertz, C., & Ahmed, R. O. 2019. A risk management model for research on expatriates in hostile work environments. The International Journal of Human Resource Management , 30(11): 1822–1838. Stoermer, S., Davies, S. E., Bahrisch, O., & Portniagin, F. 2017. For sensation’s sake: differences in female and male expatriates’ relocation willingness to dangerous countries based on sensation seeking. Journal of Global Mobility , 5(4): 374–390. Toh, S. M., & Denisi, A. S. 2005. A local perspective to expatriate success. Academy of Management Perspectives , 19(1): 132–146. van Bakel, M. 2019. It takes two to tango: a review of the empirical research on expatriate-local interactions. The International Journal of Human Resource Management , 30(21): 2993–3025. Walsh, P. R., Dodds, R., Priskin, J., Day, J., & Belozerova, O. 2021. The Corporate Responsibility Paradox: A Multi-National Investigation of Business Traveller Attitudes and Their Sustainable Travel Behaviour. Sustainability , 13(8): 4343. Wilkinson, A., Knoll, M., Mowbray, P. K., & Dundon, T. 2021. New Trajectories in Worker Voice: Integrating and Applying Contemporary Challenges in the Organization of Work. British Journal of Management , 32(3): 693–707. Wu, T.-Y., Liu, Y.-F., Hua, C.-Y., Lo, H.-C., & Yeh, Y.-J. 2020. Too unsafe to voice? Authoritarian leadership and employee voice in Chinese organizations. Asia Pacific Journal of Human Resources , 58(4): 527–554.

• Book a Speaker

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Vivamus convallis sem tellus, vitae egestas felis vestibule ut.

Error message details.

Reuse Permissions

Request permission to republish or redistribute SHRM content and materials.

Managing International Assignments

International assignment management is one of the hardest areas for HR professionals to master—and one of the most costly. The expense of a three-year international assignment can cost millions, yet many organizations fail to get it right. Despite their significant investments in international assignments, companies still report a 42 percent failure rate in these assignments. 1

With so much at risk, global organizations must invest in upfront and ongoing programs that will make international assignments successful. Selecting the right person, preparing the expatriate (expat) and the family, measuring the employee's performance from afar, and repatriating the individual at the end of an assignment require a well-planned, well-managed program. Knowing what to expect from start to finish as well as having some tools to work with can help minimize the risk.

Business Case

As more companies expand globally, they are also increasing international assignments and relying on expatriates to manage their global operations. According to KPMG's 2021 Global Assignment Policies and Practices Survey, all responding multinational organizations offered long-term assignments (typically one to five years), 88 percent offered short-term assignments (typically defined as less than 12 months), and 69 percent offered permanent transfer/indefinite length.

Managing tax and tax compliance, cost containment and managing exceptions remain the three principal challenges in long-term assignment management according to a 2020 Mercer report. 2

Identifying the Need for International Assignment

Typical reasons for an international assignment include the following:

• Filling a need in an existing operation.
• Transferring technology or knowledge to a worksite (or to a client's worksite).
• Developing an individual's career through challenging tasks in an international setting.
• Analyzing the market to see whether the company's products or services will attract clients and users.
• Launching a new product or service.

The goal of the international assignment will determine the assignment's length and help identify potential candidates. See Structuring Expatriate Assignments and the Value of Secondment and Develop Future Leaders with Rotational Programs .

Selection Process

Determining the purpose and goals for an international assignment will help guide the selection process. A technical person may be best suited for transferring technology, whereas a sales executive may be most effective launching a new product or service.

Traditionally, organizations have relied on technical, job-related skills as the main criteria for selecting candidates for overseas assignments, but assessing global mindset is equally, if not more, important for successful assignments. This is especially true given that international assignments are increasingly key components of leadership and employee development.

To a great extent, the success of every expatriate in achieving the company's goals in the host country hinges on that person's ability to influence individuals, groups and organizations that have a different cultural perspective.

Interviews with senior executives from various industries, sponsored by the Worldwide ERC Foundation, reveal that in the compressed time frame of an international assignment, expatriates have little opportunity to learn as they go, so they must be prepared before they arrive. Therefore, employers must ensure that the screening process for potential expatriates includes an assessment of their global mindset.

The research points to three major attributes of successful expatriates:

• Intellectual capital. Knowledge, skills, understanding and cognitive complexity.
• Psychological capital. The ability to function successfully in the host country through internal acceptance of different cultures and a strong desire to learn from new experiences.
• Social capital. The ability to build trusting relationships with local stakeholders, whether they are employees, supply chain partners or customers.

According to Global HR Consultant Caroline Kersten, it is generally understood that global leadership differs significantly from domestic leadership and that, as a result, expatriates need to be equipped with competencies that will help them succeed in an international environment. Commonly accepted global leadership competencies, for both male and female global leaders, include cultural awareness, open-mindedness and flexibility.

In particular, expatriates need to possess a number of vital characteristics to perform successfully on assignment. Among the necessary traits are the following:

• Confidence and self-reliance: independence; perseverance; work ethic.
• Flexibility and problem-solving skills: resilience; adaptability; ability to deal with ambiguity.
• Tolerance and interpersonal skills: social sensitivity; observational capability; listening skills; communication skills.
• Skill at handling and initiating change: personal drivers and anchors; willingness to take risks.

Trends in international assignment show an increase in the younger generation's interest and placement in global assignments. Experts also call for a need to increase female expatriates due to the expected leadership shortage and the value employers find in mixed gender leadership teams. See Viewpoint: How to Break Through the 'Mobility Ceiling' .

Employers can elicit relevant information on assignment successes and challenges by means of targeted interview questions with career expatriates, such as the following:

• How many expatriate assignments have you completed?
• What are the main reasons why you chose to accept your previous expatriate assignments?
• What difficulties did you experience adjusting to previous international assignments? How did you overcome them?
• On your last assignment, what factors made your adjustment to the new environment easier?
• What experiences made interacting with the locals easier?
• Please describe what success or failure means to you when referring to an expatriate assignment.
• Was the success or failure of your assignments measured by your employers? If so, how did they measure it?
• During your last international assignment, do you recall when you realized your situation was a success or a failure? How did you come to that determination?
• Why do you wish to be assigned an international position?

Securing Visas

Once an individual is chosen for an assignment, the organization needs to move quickly to secure the necessary visas. Requirements and processing times vary by country. Employers should start by contacting the host country's consulate or embassy for information on visa requirements. See Websites of U.S. Embassies, Consulates, and Diplomatic Missions .

Following is a list of generic visa types that may be required depending on the nature of business to be conducted in a particular country:

• A work permit authorizes paid employment in a country.
• A work visa authorizes entry into a country to take up paid employment.
• A dependent visa permits family members to accompany or join employees in the country of assignment.
• A multiple-entry visa permits multiple entries into a country.

Preparing for the Assignment

An international assignment agreement that outlines the specifics of the assignment and documents agreement by the employer and the expatriate is necessary. Topics typically covered include:

• Location of the assignment.
• Length of the assignment, including renewal and trial periods, if offered.
• Costs paid by the company (e.g., assignment preparation costs, moving costs for household goods, airfare, housing, school costs, transportation costs while in country, home country visits and security).
• Base salary and any incentives or allowances offered.
• Employee's responsibilities and goals.
• Employment taxes.
• Steps to take in the event the assignment is not working for either the employee or the employer.
• Repatriation.
• Safety and security measures (e.g., emergency evacuation procedures, hazards).

Expatriates may find the reality of foreign housing very different from expectations, particularly in host locations considered to be hardship assignments. Expats will find—depending on the degree of difficulty, hardship or danger—that housing options can range from spacious accommodations in a luxury apartment building to company compounds with dogs and armed guards. See Workers Deal with Affordable Housing Shortages in Dubai and Cairo .

Expats may also have to contend with more mundane housing challenges, such as shortages of suitable housing, faulty structures and unreliable utility services. Analyses of local conditions are available from a variety of sources. For example, Mercer produces Location Evaluation Reports, available for a fee, that evaluate levels of hardship for 14 factors, including housing, in more than 135 locations.

Although many employers acknowledge the necessity for thorough preparation, they often associate this element solely with the assignee, forgetting the other key parties involved in an assignment such as the employee's family, work team and manager.

The expatriate

Consider these points in relation to the assignee:

• Does the employee have a solid grasp of the job to be done and the goals established for that position?
• Does the employee understand the compensation and benefits package?
• Has the employee had access to cultural training and language instruction, no matter how similar the host culture may be?
• Is the employee receiving relocation assistance in connection with the physical move?
• Is there a contact person to whom the employee can go not only in an emergency but also to avoid becoming "out of sight, out of mind"?
• If necessary to accomplish the assigned job duties, has the employee undergone training to get up to speed?
• Has the assignee undergone an assessment of readiness?

To help the expatriate succeed, organizations are advised to invest in cross-cultural training before the relocation. The benefits of receiving such training are that it: 3

• Prepares the individual/family mentally for the move.
• Removes some of the unknown.
• Increases self-awareness and cross-cultural understanding.
• Provides the opportunity to address questions and anxieties in a supportive environment.
• Motivates and excites.
• Reduces stress and provides coping strategies.
• Eases the settling-in process.
• Reduces the chances of relocation failure.

See Helping Expatriate Employees Deal with Culture Shock .

As society has shifted from single- to dual-income households, the priorities of potential expatriates have evolved, as have the policies organizations use to entice employees to assignment locations. In the past, from the candidate's point of view, compensation was the most significant component of the expatriate package. Today more emphasis is on enabling an expatriate's spouse to work. Partner dissatisfaction is a significant contributor to assignment failure. See UAE: Expat Husbands Get New Work Opportunities .

When it comes to international relocation, most organizations deal with children as an afterthought. Factoring employees' children into the relocation equation is key to a successful assignment. Studies show that transferee children who have a difficult time adjusting to the assignment contribute to early returns and unsuccessful completion of international assignments, just as maladjusted spouses do. From school selection to training to repatriation, HR can do a number of things to smooth the transition for children.

Both partners and children must be prepared for relocation abroad. Employers should consider the following:

• Have they been included in discussions about the host location and what they can expect? Foreign context and culture may be more difficult for accompanying family because they will not be participating in the "more secure" environment of the worksite. Does the family have suitable personal characteristics to successfully address the rigors of an international life?
• In addition to dual-career issues, other common concerns include aging parents left behind in the home country and special needs for a child's education. Has the company allowed a forum for the family to discuss these concerns?

The work team

Whether the new expatriate will supervise the existing work team, be a peer, replace a local national or fill a newly created position, has the existing work team been briefed? Plans for a formal introduction of the new expatriate should reflect local culture and may require more research and planning as well as input from the local work team.

The manager/team leader

Questions organization need to consider include the following: Does the manager have the employee's file on hand (e.g., regarding increases, performance evaluations, promotions and problems)? Have the manager and employee engaged in in-depth conversations about the job, the manager's expectations and the employee's expectations?

Mentors play an important role in enhancing a high-performing employee's productivity and in guiding his or her career. In a traditional mentoring relationship, a junior executive has ongoing face-to-face meetings with a senior executive at the corporation to learn the ropes, set goals and gain advice on how to better perform his or her job.

Before technological advances, mentoring programs were limited to those leaders who had the time and experience within the organization's walls to impart advice to a few select people worth that investment. Technology has eliminated those constraints. Today, maintaining a long-distance mentoring relationship through e-mail, telephone and videoconferencing is much easier. And that technology means an employer is not confined to its corporate halls when considering mentor-mentee matches.

The organization

If the company is starting to send more employees abroad, it has to reassess its administrative capabilities. Can existing systems handle complicated tasks, such as currency exchanges and split payrolls, not to mention the additional financial burden of paying allowances, incentives and so on? Often, international assignment leads to outsourcing for global expertise. Payroll, tax, employment law, contractual obligations, among others, warrant an investment in sound professional advice.

Employment Laws

Four major U.S. employment laws have some application abroad for U.S. citizens working in U.S.-based multinationals:

• Title VII of the Civil Rights Act.
• The Age Discrimination in Employment Act (ADEA).
• The Americans with Disabilities Act (ADA).
• The Uniformed Services Employment and Reemployment Rights Act (USERRA).

Title VII, the ADEA and the ADA are the more far-reaching among these, covering all U.S. citizens who are either:

• Employed outside the United States by a U.S. firm.
• Employed outside the United States by a company under the control of a U.S. firm.

USERRA's extraterritoriality applies to veterans and reservists working overseas for the federal government or a firm under U.S. control. See Do laws like the Fair Labor Standards Act and the Family and Medical Leave Act apply to U.S. citizens working in several other countries?

Employers must also be certain to comply with both local employment law in the countries in which they manage assignments and requirements for corporate presence in those countries. See Where can I find international employment law and culture information?

Compensation

Companies take one of the following approaches to establish base salaries for expatriates:

• The home-country-based approach. The objective of a home-based compensation program is to equalize the employee to a standard of living enjoyed in his or her home country. Under this commonly used approach, the employee's base salary is broken down into four general categories: taxes, housing, goods and services, and discretionary income.
• The host-country-based approach. With this approach, the expatriate employee's compensation is based on local national rates. Many companies continue to cover the employee in its defined contribution or defined benefit pension schemes and provide housing allowances.
• The headquarters-based approach. This approach assumes that all assignees, regardless of location, are in one country (i.e., a U.S. company pays all assignees a U.S.-based salary, regardless of geography).
• Balance sheet approach. In this scenario, the compensation is calculated using the home-country-based approach with all allowances, deductions and reimbursements. After the net salary has been determined, it is then converted to the host country's currency. Since one of the primary goals of an international compensation management program is to maintain the expatriate's current standard of living, developing an equitable and functional compensation plan that combines balance and flexibility is extremely challenging for multinational companies. To this end, many companies adopt a balance sheet approach. This approach guarantees that employees in international assignments maintain the same standard of living they enjoyed in their home country. A worksheet lists the costs of major expenses in the home and host countries, and any differences are used to increase or decrease the compensation to keep it in balance.

Some companies also allow expatriates to split payment of their salaries between the host country's and the home country's currencies. The expatriate receives money in the host country's currency for expenses but keeps a percentage of it in the home country currency to safeguard against wild currency fluctuations in either country.

As for handling expatriates taxes, organizations usually take one of four approaches:

• The employee is responsible for his or her own taxes.
• The employer determines tax reimbursement on a case-by-case basis.
• The employer pays the difference between taxes paid in the United States and the host country.
• The employer withholds U.S. taxes and pays foreign taxes.

To prevent an expatriate employee from suffering excess taxation of income by both the U.S. and host countries, many multinational companies implement either a tax equalization or a tax reduction policy for employees on international assignments. Additionally, the United States has entered into  bilateral international social security agreements  with numerous countries, referred to as "totalization agreements," which allow for an exemption of the social security tax in either the home or host country for defined periods of time.

A more thorough discussion of compensation and tax practices for employees on international assignment can be found in SHRM's Designing Global Compensation Systems toolkit.

How do we handle taxes for expatriates?

Can employers pay employees in other countries on the corporate home-country payroll?

Measuring Expatriates' Performance

Failed international assignments can be extremely costly to an organization. There is no universal approach to measuring an expatriate's performance given that specifics related to the job, country, culture and other variables will need to be considered. Employers must identify and communicate clear job expectations and performance indicators very early on in the assignment. A consistent and detailed assessment of an expatriate employee's performance, as well as appraisal of the operation as a whole, is critical to the success of an international assignment. Issues such as the criteria for and timing of performance reviews, raises and bonuses should be discussed and agreed on before the employees are selected and placed on international assignments.

Employees on foreign assignments face a number of issues that domestic employees do not. According to a 2020 Mercer report 4 , difficulty adjusting to the host country, poor candidate selection and spouse or partner's unhappiness are the top three reasons international assignments fail. Obviously, retention of international assignees poses a significant challenge to employers.

Upon completion of an international assignment, retaining the employee in the home country workplace is also challenging. Unfortunately, many employers fail to track retention data of repatriated employees and could benefit from collecting this information and making adjustments to reduce the turnover of employees returning to their home country.

Safety and Security

When faced with accident, injury, sudden illness, a disease outbreak or politically unstable conditions in which personal safety is at risk, expatriate employees and their dependents may require evacuation to the home country or to a third location. To be prepared, HR should have an evacuation plan in place that the expatriate can share with friends, extended family and colleagues both at home and abroad. See Viewpoint: Optimizing Global Mobility's Emergency Response Plans .

Many companies ban travel outside the country in the following circumstances:

• When a travel advisory is issued by the World Health Organization, Centers for Disease Control and Prevention, International SOS or a government agency.
• When a widespread outbreak of a specific disease occurs or if the risk is deemed too high for employees and their well-being is in jeopardy.
• If the country is undergoing civil unrest or war or if an act of terrorism has occurred.
• If local management makes the decision.
• If the employee makes the decision.

Once employees are in place, the decision to evacuate assignees and dependents from a host location is contingent on local conditions and input from either internal sources (local managers, headquarters staff, HR and the assignee) or external sources (an external security or medical firm) or both. In some cases, each host country has its own set of evacuation procedures.

Decision-makers should consider all available and credible advice and initially transport dependents and nonessential personnel out of the host country by the most expeditious form of travel.

Navigating International Crises

How can an organization ensure the safety and security of expatriates and other employees in high-risk areas?

The Disaster Assistance Improvement Program (DAIP)

Repatriation

Ideally, the repatriation process begins before the expatriate leaves his or her home country and continues throughout the international assignment by addressing the following issues.

Career planning. Many managers are responsible for resolving difficult problems abroad and expect that a well-done job will result in promotion on return, regardless of whether the employer had made such a promise. This possibly unfounded assumption can be avoided by straightforward career planning that should occur in advance of the employee's accepting the international assignment. Employees need to know what impact the expatriate assignment will have on their overall advancement in the home office and that the international assignment fits in their career path.

Mentoring. The expatriate should be assigned a home-office mentor. Mentors are responsible for keeping expatriates informed on developments within the company, for keeping the expatriates' names in circulation in the office (to help avoid the out-of-sight, out-of-mind phenomenon) and for seeing to it that expatriates are included in important meetings. Mentors can also assist the expatriate in identifying how the overseas experience can best be used on return. Optimum results are achieved when the mentor role is part of the mentor's formal job duties.

Communication. An effective global communication plan will help expatriates feel connected to the home office and will alert them to changes that occur while they are away. The Internet, e-mail and intranets are inexpensive and easy ways to bring expatriates into the loop and virtual meeting software is readily available for all employers to engage with global employees. In addition, organizations should encourage home-office employees to keep in touch with peers on overseas assignments. Employee newsletters that feature global news and expatriate assignments are also encouraged.

Home visits. Most companies provide expatriates with trips home. Although such trips are intended primarily for personal visits, scheduling time for the expatriate to visit the home office is an effective method of increasing the expatriate's visibility. Having expatriates attend a few important meetings or make a presentation on their international assignment is also a good way to keep them informed and connected.

Preparation to return home. The expatriate should receive plenty of advance notice (some experts recommend up to one year) of when the international assignment will end. This notice will allow the employee time to prepare the family and to prepare for a new position in the home office. Once the employee is notified of the assignment's end, the HR department should begin working with the expatriate to identify suitable positions in the home office. The expatriate should provide the HR department with an updated resume that reflects the duties of the overseas assignment. The employee's overall career plan should be included in discussions with the HR professional.

Interviews. In addition to home leave, organizations may need to provide trips for the employee to interview with prospective managers. The face-to-face interview will allow the expatriate to elaborate on skills and responsibilities obtained while overseas and will help the prospective manager determine if the employee is a good fit. Finding the right position for the expatriate is crucial to retaining the employee. Repatriates who feel that their new skills and knowledge are underutilized may grow frustrated and leave the employer.

Ongoing recognition of contributions. An employer can recognize and appreciate the repatriates' efforts in several ways, including the following:

• Hosting a reception for repatriates to help them reconnect and meet new personnel.
• Soliciting repatriates' help in preparing other employees for expatriation.
• Asking repatriates to deliver a presentation or prepare a report on their overseas assignment.
• Including repatriates on a global task force and asking them for a global perspective on business issues.

Measuring ROI on expatriate assignments can be cumbersome and imprecise. The investment costs of international assignments can vary dramatically and can be difficult to determine. The largest expatriate costs include overall remuneration, housing, cost-of-living allowances (which sometimes include private schooling costs for children) and physical relocation (the movement to the host country of the employee, the employee's possessions and, often, the employee's family).

But wide variations exist in housing expenses. For example, housing costs are sky-high in Tokyo and London, whereas Australia's housing costs are moderate. Another significant cost of expatriate assignments involves smoothing out differences in pay and benefits between one country and another. Such cost differences can be steep and can vary based on factors such as exchange rates (which can be quite volatile) and international tax concerns (which can be extremely complex).

Once an organization has determined the costs of a particular assignment, the second part of the ROI challenge is calculating the return. Although it is relatively straightforward to quantify the value of fixing a production line in Puerto Rico or of implementing an enterprise software application in Asia, the challenge of quantifying the value of providing future executives with cross-cultural perspectives and international leadership experience can be intimidating.

Once an organization determines the key drivers of its expatriate program, HR can begin to define objectives and assess return that can be useful in guiding employees and in making decisions about the costs they incur as expatriates. Different objectives require different levels and lengths of tracking. Leadership development involves a much longer-term value proposition and should include a thorough repatriation plan. By contrast, the ROI of an international assignment that plugs a skills gap is not negatively affected if the expatriate bolts after successfully completing the engagement.

Additional Resources

International Assignment Management: Expatriate Policy and Procedure

Introduction to the Global Human Resources Discipline

1Mulkeen, D. (2017, February 20). How to reduce the risk of international assignment failure. Communicaid. Retrieved from https://www.communicaid.com/cross-cultural-training/blog/reducing-risk-international-assignment-failure/

2Mercer. (2020). Worldwide Survey of International Assignment Policies and Practices. Retrieved from https://mobilityexchange.mercer.com/international-assignments-survey .

3Dickmann, M., & Baruch, Y. (2011). Global careers. New York: Routledge.

4Mercer. (2020). Worldwide Survey of International Assignment Policies and Practices. Retrieved from https://mobilityexchange.mercer.com/international-assignments-survey

Related Articles

Why AI+HI Is Essential to Compliance

HR must always include human intelligence and oversight of AI in decision-making in hiring and firing, a legal expert said at SHRM24. She added that HR can ensure compliance by meeting the strictest AI standards, which will be in Colorado’s upcoming AI law.

A 4-Day Workweek? AI-Fueled Efficiencies Could Make It Happen

The proliferation of artificial intelligence in the workplace, and the ensuing expected increase in productivity and efficiency, could help usher in the four-day workweek, some experts predict.

How One Company Uses Digital Tools to Boost Employee Well-Being

Learn how Marsh McLennan successfully boosts staff well-being with digital tools, improving productivity and work satisfaction for more than 20,000 employees.

HR Daily Newsletter

News, trends, analysis and breaking news alerts to help HR professionals do their jobs better each business day.

Success title

Success caption

• 02074940118
• [email protected]

Expat Package (What Do Employees Expect?)

Anne morris.

• 1 August 2024

IN THIS SECTION

The success or failure of an overseas assignment can often be impacted by the quality of the expat package provided to assignees when asked to work overseas.

A competitive compensation package will not only help to attract the best available candidates for the job from within your organisation or when recruiting externally, it will also ensure that your overseas assignees feel fully supported financially throughout the lifecycle of their assignment.

The following guide provides an overview of what employers should be looking to include in a comprehensive expat package to maximise the prospects of a successful assignment outcome for both the assignee and for your business.

What is in an expat package?

The expat package is the combination of basic salary plus benefits in kind offered to a prospective assignee to undertake an overseas assignment. This can be made up of all different types of benefits, from additional living and housing costs to healthcare cover and international schooling fees for dependants.

Traditional expat packages are becoming rare these days, where employers are often able to recruit staff locally, and where unable to source local talent are seeking only single expats to avoid expensive relocation costs for entire families.

However, in circumstances where you need to incentivise a key candidate in your home country, especially for an important long-term assignment, you will need to remunerate accordingly. Below we consider some of the main aspects of a comprehensive expat package, although this list is by no means exhaustive.

Expat salary

The starting point of any expat package is the assignee’s salary. This will depend on the industry, the role and level of responsibility that the assignee will hold.

However their overseas salary should at least match, if not exceed, the typical salary an employee would get paid in their home country for doing the same job.

In some cases, you may be looking to reduce the gross salary to account for generous tax policies in the host destination, although this could negatively impact an assignee’s perception of their value as a prospective assignee.

The individual assignee will still want to feel their sacrifice of working away from home or relocating is being adequately compensated, regardless of any individual gains from the whole travel experience.

Depending on the nature of the host destination, the salary could also include a location or hardship premium for taking the assignment in the first place. This type of additional payment can be commonplace where an assignee is asked to work in a high-risk destination or hostile environment, for example, where living conditions are sub-standard, the climate inhospitable or the infrastructure poor.

Cost of living allowance (COLA)

A cost of living allowance is in addition to an assignee’s salary and is designed to reflect any additional daily expenditure in the host destination. Cost of living adjustments are based on the difference in the cost of necessary goods and services on a day-to-day basis between the host and home locations.

By way of example, where an individual’s net spendable home income is £40,000, ie; what they would be expected to spend to maintain their current standard of living, and it would cost 30% more to live in the host location, the salary would need to be adjusted by an additional £12,000 (30% of £40,000). This may also need to be readjusted throughout the course of the assignment to reflect any fluctuations in currency exchange rates and inflation.

The cost of living allowance is to ensure that an assignee is no better or worse off financially when living overseas at any given time. However, where the host location is less expensive to live, most employers will not require a reduction in salary, thereby effectively increasing the assignee’s standard of living for the duration of the overseas assignment.

Relocation costs

For commuter and short-term assignments, assignee relocation costs will not be necessary, but for long-term assignments and permanent relocations these costs should form an integral part of the expat package.

Relocation costs can include removal or storage expenses, depending on whether or not an assignee is looking to have all their furniture and personal belongings shipped overseas. This will also include flights costs for the assignee and any immediate family members relocating with them.

Another important component of relocation is the cost of any home visits throughout the lifecycle of the assignment, and possibly even a pre-assignment trip to enable the assignee and their relatives to familiarise themselves with their foreign surroundings prior to starting their new life overseas.

Housing costs

Housing, either in part or in full, can provide a huge incentive for assignees to relocate.

The cost of housing will be determined by the availability of suitable housing in the host destination, ideally in areas where an assignee can live near other expats and have a relatively short commute to their new workplace, as well as being close to international schools if they are relocating with dependants.

These types of property can often be in high demand so can be more costly than other accommodation in less appealing areas of a host region, but good quality housing in a decent neighbourhood is likely to be high on an assignee’s requirements when moving abroad with their family on a long-term assignment.

Schooling costs

For an assignee moving with their family they will need to cover the cost of schooling for any children. As with good housing in expat areas overseas, international schools that offer a high standard of education can be expensive, but may well be a deal breaker for the assignee with dependants.

This can be particularly important if an international school presents the only viable option in the host destination, especially where there would be language or cultural barriers for their children to be schooled locally within a foreign education institution. An international school will also ensure that the assignee’s children can continue with the same curriculum.

Travel costs

The offer of a company car for overseas assignees is less common these days, although you may still want to include a travel allowance to help offset motoring and maintenance expenses or to cover public transport costs.

In some parts of the world, depending on the host destination, it may also be better for an assignee to hire a driver rather than purchase their own car or rely on public transport, where the cost of this will need to be included in the expat package or in some way compensated for where necessary.

Healthcare costs

The provision of quality healthcare or international health insurance should be a mandatory element of any expat package. As an employer you have a legal duty to ensure the health and safety of your employees, so providing access to proper healthcare is imperative in discharging that duty. It is also an important aspect of showing your employees that you value their health and wellbeing.

Ideally, any healthcare plan should include access to a 24-hour helpline that assignee’s can use to have any medical or security questions answered, or to facilitate the provision of emergency assistance, at a time when an assignee’s usual points of contact would not be available.

Provider costs

The expat package is not just about providing financial incentives for the assignee. A comprehensive package should also include a range of support services that may be offered both prior to deployment and during the lifecycle of the assignment to help the assignee integrate into their host destination.

This could include a pre-deployment programme of cross-cultural training and education for overseas assignees and their families. You may also want to offer intensive language classes to ensure a more positive employee experience and, in turn, a more successful assignment outcome.

The provision of an ongoing benefit and support program while the assignee is overseas could be outsourced to a local specialist who can help novice expats to settle into their new surroundings and signpost them to different services. You should also provide key HR contacts back home to address any personal or professional problems during the course of the assignment.

Repatriation costs

Often overlooked, the provision of an adequate repatriation package can help you retain key talent within your organisation at the end of an assignment. This should include the assignee’s relocation costs back to their home country. This should also include a suitably senior role to return to home to, or at least the potential for career progression matched to the assignee’s industry experience.

It is important to remember here that expatriates can become an extremely valuable commodity given their overseas experience. To avoid wasted expenditure in an overseas assignment and the potential loss of global talent from within your organisation, you should ensure that your assignee is keen to return home to work for you and the incentives are there to do so.

Expat package essentials

The extent of any expat package will often be determined by the duration of the assignment, the host destination, the assignee profile and their personal family circumstances. Depending on the context, the assignee may also be more or less demanding, while considering the opportunities for career progression that an overseas experience may offer them.

For commuter and short-term assignments, relocation costs will not be needed, while for long-term assignments and permanent relocations, the costs can quickly start to stack up. In most cases, however, prospective assignees may be looking for an expat package that can either offset or completely cover normal living expenses, making the overseas experience financially profitable for them.

For many, especially for veteran assignees and for whom global travel in itself may offer little incentive, a generous expat package may be the price you will have to pay to persuade them to take on new assignments abroad. That said, a cost effective balance must still be struck between adequate compensation for the expat and the likely net revenue this will return for your business.

Explaining the link to assignees between the different elements in the expat package can help to justify the total value of the package, as well as show how one allowance could compensate for another one that is perceived as low by the assignee. In particular, tax considerations should be fully explained in how certain allowances and benefits are delivered, where in some host destinations the provision of benefits in kind can reduce or eliminate the tax liability for assignees, thereby making the overall expat package more attractive.

By articulating a clear Employee Value Proposition (EVP) for assignees, a proposition that is not limited to the allowances and benefits in the remuneration package but can include things like career progression, assignees are more likely to see the true benefits of the expat package on offer.

Need assistance?

DavidsonMorris are employer solutions lawyers with specialist experience in global mobility  consultancy and supporting businesses with their international workforce needs. For advice and support with developing an expat package solution that suits your requirements and budget while appealing to key talent,  speak to us .

Expat package FAQs

What is a full expat benefits package?

There is no definitive list as to what a full expat benefits package should contain where much will depend on the nature of the overseas assignment, the host destination and the assignee’s personal circumstances, including whether the assignee’s family are relocating with them. However, a typical expat package should fully compensate an assignee for working overseas, from cost of living and relocation costs to repatriation costs at the end of the assignment.

What does an expat package include?

An expat package can include a number of different benefits and allowances to compensate an overseas assignee for working abroad. In addition to a salary that at least matches the typical salary an employee would get paid in their home country for doing the same job, the package may include relocation costs, housing costs, healthcare costs, travel costs, schooling costs for dependants and any additional cost of living in the host destination.

What does equalisation mean?

In the context of an overseas assignment, equalisation refers to the way in which allowances and benefits in kind are delivered to ensure that the assignee is no worse off financially in the host location than their home location. The cost of living allowance is the most obvious example, where a high cost of living allowance in a more expensive host location will ensure the assignee’s purchasing power for goods and services remains broadly the same.

Founder and Managing Director Anne Morris is a fully qualified solicitor and trusted adviser to large corporates through to SMEs, providing strategic immigration and global mobility advice to support employers with UK operations to meet their workforce needs through corporate immigration.

She is a recognised by Legal 500 and Chambers as a legal expert and delivers Board-level advice on business migration and compliance risk management as well as overseeing the firm’s development of new client propositions and delivery of cost and time efficient processing of applications.

Anne is an active public speaker, immigration commentator , and immigration policy contributor and regularly hosts training sessions for employers and HR professionals

• Anne Morris https://www.davidsonmorris.com/author/anne/ Care Worker Visa UK Sponsorship: A Complete Guide
• Anne Morris https://www.davidsonmorris.com/author/anne/ UK Minister of Religion Visa: Process & Requirements
• Anne Morris https://www.davidsonmorris.com/author/anne/ Temporary Worker Sponsor Licence Guide UK
• Anne Morris https://www.davidsonmorris.com/author/anne/ UK Innovator Founder Visa 2024 Guide & Requirements

About DavidsonMorris

As employer solutions lawyers, DavidsonMorris offers a complete and cost-effective capability to meet employers’ needs across UK immigration and employment law, HR and global mobility .

Led by Anne Morris, one of the UK’s preeminent immigration lawyers, and with rankings in The Legal 500 and Chambers & Partners , we’re a multi-disciplinary team helping organisations to meet their people objectives, while reducing legal risk and nurturing workforce relations.

Legal Disclaimer

The matters contained in this article are intended to be for general information purposes only. This article does not constitute legal advice, nor is it a complete or authoritative statement of the law, and should not be treated as such. Whilst every effort is made to ensure that the information is correct at the time of writing, no warranty, express or implied, is given as to its accuracy and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should be sought.

Contact DavidsonMorris

Sign up to our award winning newsletters, find us on:.

Trending Services

DavidsonMorris Ltd t/a DavidsonMorris Solicitors is a company Registered in England & Wales No. 6183275

Regulated by the Solicitors Regulation Authority No. 542691

Registered Office: Level 30, The Leadenhall Building, 122 Leadenhall Street, London, EC3V 4AB

© Copyright 2024

Terms of Use | Privacy Policy | Cookies Notice

Website design by Prof Services Limited . 

• Global (EN)
• Albania (EN)
• Algeria (FR)
• Argentina (ES)
• Armenia (EN)
• Australia (EN)
• Austria (DE)
• Austria (EN)
• Azerbaijan (EN)
• Bahamas (EN)
• Bahrain (EN)
• Bangladesh (EN)
• Barbados (EN)
• Belgium (EN)
• Belgium (NL)
• Bermuda (EN)
• Bosnia and Herzegovina (EN)
• Brasil (PT)
• Brazil (EN)
• British Virgin Islands (EN)
• Bulgaria (EN)
• Cambodia (EN)
• Cameroon (FR)
• Canada (EN)
• Canada (FR)
• Cayman Islands (EN)
• Channel Islands (EN)
• Colombia (ES)
• Costa Rica (ES)
• Croatia (EN)
• Cyprus (EN)
• Czech Republic (CS)
• Czech Republic (EN)
• DR Congo (FR)
• Denmark (DA)
• Denmark (EN)
• Estonia (EN)
• Estonia (ET)
• Finland (FI)
• France (FR)
• Georgia (EN)
• Germany (DE)
• Germany (EN)
• Gibraltar (EN)
• Greece (EL)
• Greece (EN)
• Hong Kong SAR (EN)
• Hungary (EN)
• Hungary (HU)
• Iceland (IS)
• Indonesia (EN)
• Ireland (EN)
• Isle of Man (EN)
• Israel (EN)
• Ivory Coast (FR)
• Jamaica (EN)
• Jordan (EN)
• Kazakhstan (EN)
• Kazakhstan (KK)
• Kazakhstan (RU)
• Kuwait (EN)
• Latvia (EN)
• Latvia (LV)
• Lebanon (EN)
• Lithuania (EN)
• Lithuania (LT)
• Luxembourg (EN)
• Macau SAR (EN)
• Malaysia (EN)
• Mauritius (EN)
• Mexico (ES)
• Moldova (EN)
• Monaco (EN)
• Monaco (FR)
• Mongolia (EN)
• Montenegro (EN)
• Mozambique (EN)
• Myanmar (EN)
• Namibia (EN)
• Netherlands (EN)
• Netherlands (NL)
• New Zealand (EN)
• Nigeria (EN)
• North Macedonia (EN)
• Norway (NB)
• Pakistan (EN)
• Panama (ES)
• Philippines (EN)
• Poland (EN)
• Poland (PL)
• Portugal (EN)
• Portugal (PT)
• Romania (EN)
• Romania (RO)
• Saudi Arabia (EN)
• Serbia (EN)
• Singapore (EN)
• Slovakia (EN)
• Slovakia (SK)
• Slovenia (EN)
• South Africa (EN)
• Sri Lanka (EN)
• Sweden (SV)
• Switzerland (DE)
• Switzerland (EN)
• Switzerland (FR)
• Taiwan (EN)
• Taiwan (ZH)
• Thailand (EN)
• Trinidad and Tobago (EN)
• Tunisia (EN)
• Tunisia (FR)
• Turkey (EN)
• Turkey (TR)
• Ukraine (EN)
• Ukraine (RU)
• Ukraine (UK)
• United Arab Emirates (EN)
• United Kingdom (EN)
• United States (EN)
• Uruguay (ES)
• Uzbekistan (EN)
• Uzbekistan (RU)
• Venezuela (ES)
• Vietnam (EN)
• Vietnam (VI)
• Zambia (EN)
• Zimbabwe (EN)

Your search term was too short.

Search terms must include 3 or more characters.

Italy – Further Update on Changes to the Expatriate Regime

GMS Flash Alert 2024-008/

In our recent GMS Flash Alert , we discussed upcoming changes to the Italian expatriate regime that were to take effect 1 January 2024.  In a further update, we can now report that the Decreto Legislativo was published in the Gazzetta Ufficiale on 28 December 2023, and is in force from 29 December 2023. 1  The new law limits the expatriate regime, imposing more stringent conditions for expatriate taxpayers to benefit from the regime, although the final legislation represents a considerable relaxation of the original draft.

The draft legislation provided that, for individuals becoming resident from 1 January 2024, relief under the expatriate regime is reduced to 50 percent, with a limit of EUR 600,000 on the amount of income eligible for relief.  To benefit from the relief, three years of previous non-residence would be required, and the employee would need to remain in Italy for four years.  The relief will now be restricted to highly-qualified or specialised individuals (applying the same definition as those who would qualify for a Schengen Blue Card).  The draft legislation apparently prevented the application of the regime to inter-company transfers and this has been reversed in the final legislation, albeit subject to onerous conditions. 

WHY THIS MATTERS

Employers will need to review the situation for employees who went on assignment during 2023 and those planning to take an assignment in Italy in 2024.  In future, employers may need to introduce additional steps to ascertain the eligibility of an employee for the expatriate regime, and assignment policies in respect of assignments to Italy may need to be adjusted.

Until the new legislation took effect, Italy had an extremely liberal and easy-to-access expatriate regime with minimal conditions in order to benefit. 2  It provided for a reduction of 70 percent in taxable Italian-source income (90 percent in the islands and south) for individuals who had not been resident in Italy for two preceding fiscal years and who undertook to transfer their residence for two fiscal years and in fact remained resident.  The relief lasted for five years, and was extendable by a further five years at 50 percent subject to certain conditions being met. The relief was easy to access, not requiring any ruling, and could be based on self-certification.  It was successful in attracting new workers to Italy. 

Key Legislative Proposals

According to the new legislation, from 1 January 2024, the following rules will apply:

1.  The relief will apply to employment income, income assimilated with employment income, and self-employed income produced by workers who have transferred their residence to Italy in the sense of Article 2 of the TUIR, ( decreto del Presidente della Repubblica 22 dicembre 1986, n. 917 ); that is, they have become tax resident in Italy for the fiscal year 2024.

2.  Relief of 50 percent will apply up to a limit of EUR 600,000.  That is, the maximum relief available would be EUR 300,000 if income exceeds EUR 600,000, rather than being unlimited as at present.

3.  Relief of 60 percent will apply for individuals with one minor child.  If a child is born or adopted, the increased relief will apply from the fiscal year in which the child is born until the end of the five-year period.  The child must be resident in Italy for the whole duration of the benefit.

4.  An extension of relief applies to those who transfer their “anagrafic” (i.e., registered) residence to Italy by 31 December and who acquired a principal residence in Italy before 31 December 2023, or in the 12 months before their transfer to Italy.

5.  Relief can be applied where:

• the worker was not tax resident in Italy for the three years preceding the transfer;
• he or she undertakes to stay tax resident in Italy for at least four consecutive tax years ;
• the activity must be performed for the greater part of the year in Italy (i.e., 183 days or more);
• relief is restricted to workers who are in possession of higher qualifications or specialisation (broadly qualifications which would qualify individuals for an EU Blue Card).

6.  Special rules apply to employees who are working in Italy for the same employer that employed them before moving to Italy or an employer in the same group.  In such case:

• if the employee has not previously worked in Italy for the same employer or group, he or she is required to have been non-resident in Italy for the prior six fiscal years.
• if the employee has previously worked in Italy for the same employer or group, he or she is required to have been non-resident in Italy for the prior seven fiscal years.

7.  Relief applies to the period of tax in which residence in Italy occurs and for the four subsequent fiscal years (five in total).  If the tax residence is not maintained for at least four years, the benefit is rescinded, and the tax agency will take steps to recover the amount received with penalties and interest.

A transitional concession has been introduced for individuals who although non-tax resident in Italy in 2023 transferred their anagrafic residence ( Anagrafe enrolment) to Italy before 31 December 2023.  This addressed concerns for individuals who moved to Italy after 1 July with the reasonable expectation of availing of the “old regime.”

Italian citizens returning to Italy are required to have been enrolled on the Anagrafe degli italiani residenti all'estero (AIRE) including those who may not be registered on the AIRE because they have their residence in another country under a double taxation treaty.

The ability to extend the relief for five years no longer applies, although it appears to continue to apply to those individuals who were resident in Italy at 31 December 2023.

KPMG INSIGHTS

As a result of the revised law, the existing legislation will now continue to apply to individuals who moved their residence in fiscal year 2023 and who registered on the anagrafe (the population register) before 31 December 2023.  Individuals who are tax resident in Italy for 2023 will continue to benefit from the old regime until their original expiring period.

Although the original draft legislation appeared to prevent the relief applying to intra-group transfers (in order to prevent “fictitious” expatriations), the final legislation continues the granting of the relief to intra-group transfers, increasing the length of the period outside of Italy.

Since the proposed change specifically brings back the requirement for higher and specific educational requirements, it may be necessary to review such qualifications before opting for and allowing the relief.  This would apply particularly to EU citizens who have not needed a Blue Card.  It is likely that employers will now need to exercise more due diligence over self-certifications for the relief.

Employers, their employees going on assignment to Italy, and their global-mobility program managers, as well as tax service providers, should familiarise themselves with the new policies.  To better understand what’s in the legislation and how the changes may impact assignees and their employers, it may be a good idea to reach out to a global-mobility tax professional or a member of the global-mobility tax team with KPMG in Italy (see the Contacts section).

1   Decreto Legislativo 27 dicembre 2023 n209 ( Gazzetta Ufficiale n301 del 28.12.2023).

2  For the expatriate tax regime rules that had been in force, see section 2.8 of Taxation of International Executives: Italy , a publication of KPMG International.  For earlier coverage of the expatriate tax regime, see GMS Flash Alert 2017-104 , 14 June 2017.

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.

GMS Flash Alert is a Global Mobility Services publication of the KPMG LLP Washington National Tax practice. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

© 2024 KPMG, an Irish partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

For more detail about the structure of the KPMG global organisation please visit  https://kpmg.com/governance .

Lorem Ipsum