The Balance Sheet for Expatriates
What is the Balance Sheet Approach?
The Balance Sheet seeks to keep the employee economically neutral vis-a-vis the home country while living in another country. Often there are additional costs on expatriate assignment due to higher tax rates, taxability of relocation support, inefficiencies in purchasing due to expatriate status, and other reasons.
Through a series of balancing payments, the employee’s home country salary is protected against the additional costs associated with income tax, goods and services, and housing. The balancing of payments allow the employee to retain their home country purchasing power and preserve their savings ability.