Low Taxes Are Plus Point For Expatriates

by Jason Gorringe, Tax-News.com, London

06 July 2001

Writing in the Financial Times, professor of organisational behaviour at the London Business School John W. Hunt says that a survey shows tax, or anyway the lack of it, to be the single greatest compensation for expatriates, who otherwise get little satisfaction from their experiences.

The survey, described in the International Journal of Human Resource Management, covered a group of Finnish expats. It shows that while a decade ago as many as 70 per cent of expats were critical of their compensation package, only 12 per cent of those who responded were dissatisfied. The expats said that what most pleased them about their compensation was that they paid lower taxes when they were abroad - Finnish citizens are among the highest taxed in the world. It comes down to cash: lower tax rates, a higher salary and allowances. Interestingly, other perks seemed to be secondary - perhaps because the expats were well enough paid to be able to afford what they needed.

Professor Hunt says that for most expatriates conditions have improved markedly over the last 20 years. In the past, he says, life abroad was comfortable but often unrewarding. Many spouses were bored rigid by a vacuous round of social events. People became increasingly vocal and critical of non-existent personnel policies, the company's lack of recognition of the role they played and the assumption that they would abandon any aspirations they might have to a career.

It was even hard to return home from the posting, points out the Professor. With restructuring and downsizing in the 1980s and 1990s, head office offered fewer jobs. An increasing number of expats became trapped in foreign locations. Their growing hostility was voiced through the social network. Story after story fuelled disillusionment with this extremely expensive system of ensuring that the corporate culture could be preserved by seeding executive posts with home-trained, loyal members of the clan.

The good news, says the Professor, is that companies listened to the complaints. Expats are far happier today than they were a decade ago. Past studies revealed high levels of dissatisfaction with their lot. Recent studies tell a different story. But the good news seems to be less about management than money, he concludes.

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