Net-to-Net Comparisons

Analyses of tax, goods and services, and housing between home countries and assignment locations

ORC prepares net-to-net comparisons for organizations that wish to integrate expatriates into assignment-location compensation programs: for example, permanent transferees, long-term expatriates, and employees making intraregional moves. A net-to-net comparison is also appropriate when the company wants to establish a local salary that will be acceptable to a foreign-national or when the employer has already made a local salary offer and wants to provide the employee with a package that affords a certain comfort level. Or the employer may not want to provide traditional expatriate compensation, preferring to put the employee on the local payroll, with local benefits, and so forth.

The goal of the net-to-net comparison is the establishment of a host-country salary that preserves an individual's home-country standard of living. Due to the often significant differences in tax rates, social security contributions, housing costs, and general cost of living between countries, a simple exchange rate conversion of gross salary would be meaningless. Therefore, under the net-to-net system, the individual's net pay in the home location is adjusted for any cost-of-living difference in the host location, and then grossed up for the host-country taxes and housing costs.

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