When you move domestically, you are staying within the same legal, currency, and tax systems, as well as maintaining a similar type of household. By household, we mean the more practical issues associated with moving your home goods and being able to use them. For example, domestically, you would have the same voltage necessary to use your appliances and it would be compatible with your electronics. Internationally, these items more than likely will not work. In addition, domestic relocations are often a permanent move for an employee’s job and household. International assignments are, for the most part, for a limited time.
You and your family should learn as much as you can about your assignment location before you depart. A trip to the host location before the actual move is a good idea to get a taste and feel of that location which is soon to become your new home. Also, consider accessing online research and informational materials on your host country and host city/town. Expatriate clubs and online communities, blogs, and discussion forums can offer opportunities to glean personal insights from people who have experienced living in that location, as well as sources for helpful ‘real life’ tips on social customs; weather; suitable attire; schools; postal, medical, and banking services; retail, recreational, and transport amenities; etc.
In addition, organizations often include cross-cultural training and destination services in their policies. Cross-cultural training can be provided in many forms from self-study to classes from third-party providers. Destinations service providers, depending on your company’s policy, can assist in finding a home or grocery store, or take you to get a driver’s license.
If you lack foreign language skills, you should arrange for language training. If English is not the predominant language at the assignment location and foreign language skills will be necessary to enhance your performance and effectiveness, language training may be required for you and your family prior to departure. If continued training is necessary after your arrival, your children might receive it at their school, while you and your spouse could receive private tutoring.
Company international assignment or global mobility relocation policies should provide specific guidelines regarding shipping and/or storing goods during your assignment. Although the policies vary by company, and sometimes within companies by destination and the availability of furnished accommodations at the destination, there are certain common elements to many policies. Limits on the total weight of the shipment are normally established, often with specified limits for air shipments accompanying the assignee and surface shipments to follow. Specific items are often excluded, such as cars, boats, pianos, airplanes, antiques, collectibles, guns, and wine/liquor. There is no consistent rule with respect to the shipment of household pets. Where pet transport is concerned, if your employer makes no provision for this in its policy, there are firms that deal with international pet transport which you may wish to investigate. They can help you understand the issues you are likely to face in taking your pet with you to your host country (e.g., possible quarantine).
Many companies provide automobile assistance and policies are designed to protect you in a ‘forced’ domestic sale and/or foreign purchase of a personal automobile necessitated by the international assignment. It is usually much more economical to sell your automobile before departure because few employers will reimburse auto shipping charges. It is important to also bear in mind that emission requirements and safety standards differ greatly country-to-country and can be expensive to comply with if you are bringing your automobile to your host location. Furthermore, employers typically do not provide for storage. You should evaluate the impact of long-term storage for your vehicle.
This depends on the country and make of automobile, among other factors. In some countries, the basic cost of an automobile may be low, but when value-added tax is added, and considering the generally higher cost of running the vehicle (e.g., higher petrol/fuel prices in other countries and insurance), it might indeed be more expensive as compared with your home location. And, in many parts of the world, taken together, the purchase price of the automobile and the operating costs could mean acquiring an automobile is considerably more expensive. Your employer may offset some of these costs or your goods and services differential may cover excess operating costs. In some situations, you may be offered a company car, or alternatively, a driver.
Before purchasing an automobile, it is advisable to determine whether one is needed — or even practical — at your location.
There are numerous factors to consider before selling your home, including:
Many employers do not want their employees to sell their homes when they accept international assignments. These assignments are usually considered temporary in nature and the assignee is often expected to return to the same location upon repatriation.
The issue of whether employees should sell their homes should be considered on a case-by-case basis.
There are various perspectives on the financial aspects of this transaction. From a cash-flow perspective, you must decide whether the rental stream will cover carrying costs. If not, does your employer’s policy provide any assistance to offset rental shortfall, or address specific items such as property management fees? Even if your cash flow is positive, you may still experience a tax loss due to depreciation deductions. You must determine whether you will receive any actual or hypothetical tax benefit from the loss. Only after examining these issues will you have the full financial picture. Finally, if you decide to sell after you have rented the property, the issue becomes even more complicated.
For US taxpayers, any depreciation taken in respect of the rental of your principal residence after 6 May 1997, will be recaptured on the subsequent sale of the property. The gain attributable to the depreciation is subject to a maximum tax rate of 25 percent.
If your employer does not provide any assistance, then you may incur double housing costs. Most foreign housing policies provide that a home country housing norm will be withheld from your salary to equalize your costs. Depending upon your reasons for leaving the house vacant, your employer may forgo collecting the housing norm. For US taxpayers, if you do bear the carrying costs without any offset from your employer, you may not receive any additional tax benefit from your mortgage interest and real estate tax payments. This can result if your employer’s tax policy provides for a statistically determined hypothetical itemized deduction, in which case actual deductions may only reduce your hypothetical tax if they exceed the statistical deduction.