Did you know that in Germany, persons who declare a religious preference pay more money in taxes than others? The money goes to the religious institutions and not to the country coffers. There goes separation of church and state! Each country has it's own eccentricities, and it pays to know them.
A partner at KPMG once told me, "You know, I could save some money for the company, but you won't want to touch it with a ten-foot pole." That is the day that this topic took hold of me and I haven't figured out a way to drop it. Money, Politics and Religion - it's all of the 'deadly topics' combined into one! He was right, but I got my ten-foot pole out and nudged it ever so slightly.
Most U.S. nationals who go on assignment overseas are tax equalized. It's called a home-package and it holds the U.S. expatriate to U.S. compensation and tax on a hypothetical basis. Because, in reality, the overseas taxes must be paid - but they don't feel it. The foreign-taxes are paid by the company on their behalf and a deduction equivalent to U.S. taxes is taken from their U.S. pay. The intention, that from a tax perspective the assignee is no better and no worse off for having taken the assignment.
It's an expensive benefit that most assignees don't realize the extent of investment the company is making in them. This is a big reason why the typical assignment will cost the company four times as much as a local hire. The foreign taxes paid by the company are also seen as income and taxes must be paid on the taxes. But the assignee is not really pocketing that money - they are keeping their net pay status quo.
There are several more reasons that this is done (which I won't go into here) but the implications of this are that U.S. nationals who then declare a religious preference into Germany will essentially cost the company more money, due to the higher tax burdened by the faithful that is levied by this tax regime.
Which left the only thing that I could do. Let it frustrate me? No, the only thing that I could do as an expatriate manager was to ensure that this point was covered, in passing, during the expatriate tax briefing as a point of information. There was nothing we could do to ask them to keep their religion to themselves.
Though the issue drove me crazy, yet - at the same time - it really is one of the reasons that I enjoy expatriate management so much. It's learning new frameworks and then seeing the downstream implications that fascinates me about this field.
The hardest thing to understand in the world is the income
tax.
A partner at KPMG once told me, "You know, I could save some money for the company, but you won't want to touch it with a ten-foot pole." That is the day that this topic took hold of me and I haven't figured out a way to drop it. Money, Politics and Religion - it's all of the 'deadly topics' combined into one! He was right, but I got my ten-foot pole out and nudged it ever so slightly.
Most U.S. nationals who go on assignment overseas are tax equalized. It's called a home-package and it holds the U.S. expatriate to U.S. compensation and tax on a hypothetical basis. Because, in reality, the overseas taxes must be paid - but they don't feel it. The foreign-taxes are paid by the company on their behalf and a deduction equivalent to U.S. taxes is taken from their U.S. pay. The intention, that from a tax perspective the assignee is no better and no worse off for having taken the assignment.
It's an expensive benefit that most assignees don't realize the extent of investment the company is making in them. This is a big reason why the typical assignment will cost the company four times as much as a local hire. The foreign taxes paid by the company are also seen as income and taxes must be paid on the taxes. But the assignee is not really pocketing that money - they are keeping their net pay status quo.
There are several more reasons that this is done (which I won't go into here) but the implications of this are that U.S. nationals who then declare a religious preference into Germany will essentially cost the company more money, due to the higher tax burdened by the faithful that is levied by this tax regime.
Which left the only thing that I could do. Let it frustrate me? No, the only thing that I could do as an expatriate manager was to ensure that this point was covered, in passing, during the expatriate tax briefing as a point of information. There was nothing we could do to ask them to keep their religion to themselves.
Though the issue drove me crazy, yet - at the same time - it really is one of the reasons that I enjoy expatriate management so much. It's learning new frameworks and then seeing the downstream implications that fascinates me about this field.
- Albert Einstein
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