This glossary is intended to help you understand the terms used on Smart Expatriation and words commonly used in the field of international mobility. Our definitions do not replace the legal definitions that may vary by country.
- COLA exchange rate
- Cost of living allowance (COLA)
- Cost of living index
- Cost of living
- Dependent (child or parent)
- Destination services
- Employee social contributions
- Employer cost
- Employer social contributions
- Expat index
- Family allowances
- Family size
- Fiscal year
- Gross base salary
- Gross benefit
- Gross bonus
- Hardship allowance
- Home country/location
- Host country/location
- Household goods
- Housing benefit/allowance
- Housing offset/norm/notional expense/contribution
- Hypothetical/tax norm
- Interregional assignment
- Local index
- Local national plus
- Mobility premium
- Net base salary
- Net benefit
- Net bonus
- Per diem
- Personal Income Tax
- Preassignment visit/trip
- Rotational assignment
- Settling-in allowance
- Short-term assignment
- Spendable income
- Spousal assistance
- Tax equalization/equalize
- Tax status
- Taxable income
- Temporary living
- Work permit/visa
|An employee of the company who leaves his home country of employment to work in another country for a temporary period of time, normally longer than three months.
|COLA exchange rate
|Exchange rate used to calculate the cost of living at a given time.
|Cost of living allowance (COLA)
|A differential payment to assignees to address differences in purchasing power between home and host countries. It is usually calculated by applying a cost of living index to an employee’s home country spendable income.
|Cost of living index
|A ratio of costs of goods and services in the home country compared to the host country used in calculating the cost-of-living allowance.
|Cost of living
|The aggregate of goods and services prices for a specific « market basket » of items that enables comparisons amongst locations.
|Dependent (child or parent)
|Those who rely on the assignee for the majority of their financial support, and are usually considered family for the purpose of calculating the assignee’s international assignment-related allowances. This may include unmarried children (natural or adopted) typically under the age of 19 who would normally reside with the employee in the home country or other dependent relatives as approved by the organization’s international assignment policy.
|Assistance provided to the assignee and family upon arrival in the host country to help them settle into their new surroundings. Usually includes assistance in finding a residence, arranging schooling for dependent children, and guidance regarding shopping, transportation, and driver’s licenses. Most often provided by a third-party provider.
|Employee social contributions
|These are the contributions that the employees pay into the social security system. They are deducted from the gross salary of the employee to obtain a salary net of social contributions. Some contributions may be compulsory or voluntary.
|Represents all direct costs associated with the employment of an individual. This is the gross salary of the employee plus social contributions payable by the employer. All costs related to international assignments can also be added.
|Employer social contributions
|These are the compulsory contributions that the employer must pay to the social security agencies on behalf of an employee. They are added to the gross salary in order to obtain the employer cost. Some contributions may be compulsory or voluntary.
|Index that compares the prices of a basket of goods and services in a home country compared to the prices of an identical basket of goods in a country of assignment. For this index, we believe that the assignee consumer does not exactly fit the median local consumption pattern. In the host country, the assignee will not be able to make as reasoned consumption choices as a local consumer or will purchase imported products which cost more. This difference in behavior is an added cost in consumption compared to a median consumer. From a methodological point of view, we compare the price of a median basket in the home country with the price of the basket at the 75th percentile in the host country. Comparing the price is also weighted by the difference in standard of living per capita (GDP (PPP)/capita).
|Earnings supplement paid by the State and the amount varies by country depending on household composition, age of children and income.
|A number that includes the assignee and any dependents who accompany the assignee to the host country.
|This is the base year to be taken into account in the tax calculation rules. Generally between January 1 and December 31, the period may vary by country.
|Gross base salary
|Gross base salary is the fixed share of the salary before deduction of social contributions and tax. It can be paid over 12 or more months, depending on company agreements.
|Earnings supplement subject to social contributions and taxes.
|Gross bonus is the variable share of the salary before deduction of social contributions and tax.
|A mathematical calculation to determine the gross salary from the net salary (before income tax and social contributions).
|A payment (generally calculated as a percentage of base salary) to compensate the assignee for undesirable cultural, social, physical, or other conditions. Hardship is usually determined by the measurement of certain criteria such as climate, social life, safety, accommodation quality.
|The location where the assignee worked prior to the international assignment. The home country may or may not be the assignee’s country of citizenship.
|Location across national borders to which the assignee is temporarily sent to work from the home country.
|Household items, including furniture and personal effects that are sent by sea, air, and/or ground to and from the host location.
|Financial assistance related to the provision of accommodations in the host country for the assignee and accompanying family. This allowance may be or may be not expressed as the total cost of foreign housing, or alternatively as the foreign housing cost net of a home country housing norm.
|Housing offset/norm/notional expense/contribution
|An approximation of typical home country housing costs that would normally be borne by employees of the same base salary and family size in the home location.
|Under the process of tax equalization, the assignee’s share of his or her worldwide tax burden. This is normally determined by estimating the amount of taxes that the employee would have paid had he remained in the home country.
|A temporary transfer across national borders where the home and host countries are both within a defined geographical area (e.g., Western Europe, Southeast Asia).
|Index that compares the prices of a basket of goods and services in a home country compared to the prices of an identical basket of goods in a country of assignment. For this index, we believe that the assignee consumer will have a behavior identical to that of a local consumer. This index applies to international assignees that adapt their consumption to that of local residents. From a methodological point of view, we compare the price of a median basket in the home country with the price of a median basket in the host country.
|Local national plus
|Local national salary, plus benefits typically provided for foreign assignees/expatriates (tuition fees, housing allowance, flight tickets,…)
|The transitioning of an assignee to an employment status/ package in the host country equivalent to that of host country nationals. The length of transition may vary among different organizations and industries.
|An incentive payment (usually expressed as a percentage of base salary) to encourage the acceptance of an assignment.
|Net base salary
|Net base salary is the fixed share of the salary after deduction of social contributions and tax. It can be paid over 12 or more months, depending on company agreements.
|Earnings supplement exempt from social contributions and taxes.
|Net bonus is the variable share of the salary after deduction of social contributions and tax.
|A cash payment to an employee to cover certain temporary living expenses, usually meals, hotel, and incidental expenses, expressed as a daily rate.
|Personal Income Tax
|A tax imposed by government on the annual gains of a person derived through work, business pursuits, investments, property dealings.
|A trip to the host country for the assignee (and possibly other accompanying family members) prior to the start of the assignment, to make certain arrangements and view the possible new surroundings.
|A temporary transfer across national borders that requires the assignee to work for a designated number of consecutive days in the host country, followed by a designated number of consecutive days leave (taken in the home country, host country, or another “leave location”).
|A lump sum cash payment or actual expense reimbursement to the assignee to cover the cost of settling-in expenses.
|A temporary transfer across national borders that generally lasts more than 1 or 3 months and less than a year.
|The portion of base salary that is normally devoted to the purchase of goods and services (e.g., food, clothing, entertainment, transportation). This amount is not a fixed percentage of base salary; rather, it varies according to income level, and family size.
|Assistance to recognize that spouses who accompany employees on international assignments may experience a disruption in their careers or self-improvement pursuits. May include job search, personal development, or other assistance.
|A compensation methodology for calculating the assignee’s share of his or her worldwide tax burden by attempting to ensure that the employee is financially “no better or worse off” than he or she would have been had the assignment not taken place.
|Individual circumstances of the individual having an impact on the calculation of the tax or social contributions.
|Income serving as the basis for the application of the tax rules It can vary depending on the net salary of the individual because the salary itself may be subject to deductions that vary by country.
|The period of time between the assignee leaving permanent accommodation in the home country and moving into permanent accommodation in the host country.
|All countries require valid identification (passport) for lawful entry. In addition, most countries require a valid work permit/visa before an assignee may live and work in that host country. Often, a spouse cannot be gainfully employed under the work permit/visa of the assignee.