# Negotiate salary & benefits for relocation from US to Japan



## US to Japan

I am a Design Engineer from Wilmington, Ohio relocating to Toyohashi City for job-related training. My wife who is currently not working will also be relocating with me. The training will be for 1 to 2 years. I currently earn $47k per year plus 401k contribution of 4% from the Company. At $1=86.14Yen this translates to 351,958 Yen per month including 401k contribution . I have been offered a monthly salary of 309,700 yen + 7000 yen (for spouse). They will help me find housing and 84% of the rent will be paid. The cost of housing is estimated to be 70k to 100k yen per month. Cost of commute to work will be paid.
Is this a good offer?


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## larabell

US to Japan said:


> Is this a good offer?


If you want to live in Japan and the company is likely not to send you if it's too expensive, then it doesn't sound all that bad. By the time you figure in the housing, you'll be getting about 10~20% more than what you're getting now. And if the housing prices you've quoted turn out to be optimistic, you're only going to get stuck for 16% of the difference.

Keep in mind that, historically, 86 yen to the dollar is remarkably low. That puts you at risk if you have Stateside bills that you're going to be paying. If you're cutting the cord with the US dollar entirely (at least while you're here), it probably doesn't matter all that much. I had the opposite thing happen. My US salary was converted to Yen when I went "local" (at the company's request) so when the bottom dropped out of the dollar, all my Stateside expenses suddenly got cheaper. See if you can get the company to add a clause that re-adjusts your salary whenever the yen moves more than a certain percentage (I think a 10% move is a good suggested trigger). Even if you don't need it, if the dollar moves up (which it likely will eventually), you'll collect a bit of a windfall.

I assume they're paying for your moving expenses *and* for the realtor to help you find a place you like. At the prices you've quoted, it's probably not going to be huge -- but I don't know Toyohashi City so maybe things are cheap and large there. For a couple years, the experience will probably worth it. Make sure they cover furnishings, too -- and storage of your own stuff while you're here. A small aparement can become even smaller really fast if you ship over all your US-sized stuff.

I'd also get them to add a clause that says they ship you back all-expenses-paid if you're teminated for any reason other than cause. Most companies would do that anyway, but... if you get laid off but decide to stay in Japan you could use that as leverage to squeeze a bigger severance out of your former employer.

Ask them what to do about income taxes. In most cases, your Japan tax *should* end up lower than your US tax but the Japanese will count that 84% of your rent as income. And I understand that the housing exclusion has been eliminated from the US tax code. But, more importantly, you'll have to file two returns (Japan and US), and the US one will be *very* complex. Get them to assign your tax preparation to the company accountant -- not just for the two years you're here but until the effect of your stay on your tax return disappears. If you can, get them to gross-up any income you're forced to claim that is the result of the assignment (like the company-covered part of your housing).

Other than that, it's a fair offer. But if the company *needs* you, and *you* specifically, to come to Japan, it's not very generous. You'll likely be living in smaller quarters and squeezing a bit more than you do now (how much, of course, depends on your lifestyle). The days of 50~100% cost-of-living adjustments are probably over. But you could negotiate for at least 10% over your current salary (after the dollar-to-yen adjustment but not counting the housing -- in Ohio you're probably only paying 16% of what you'll be paying here for your current place, anyway ;-). It really depends on how likely they are to simply find someone else and how badly you want to go.

I hope that helps some...


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## US to Japan

larabell said:


> If you want to live in Japan and the company is likely not to send you if it's too expensive, then it doesn't sound all that bad. By the time you figure in the housing, you'll be getting about 10~20% more than what you're getting now. And if the housing prices you've quoted turn out to be optimistic, you're only going to get stuck for 16% of the difference.
> 
> Keep in mind that, historically, 86 yen to the dollar is remarkably low. That puts you at risk if you have Stateside bills that you're going to be paying. If you're cutting the cord with the US dollar entirely (at least while you're here), it probably doesn't matter all that much. I had the opposite thing happen. My US salary was converted to Yen when I went "local" (at the company's request) so when the bottom dropped out of the dollar, all my Stateside expenses suddenly got cheaper. See if you can get the company to add a clause that re-adjusts your salary whenever the yen moves more than a certain percentage (I think a 10% move is a good suggested trigger). Even if you don't need it, if the dollar moves up (which it likely will eventually), you'll collect a bit of a windfall.
> 
> I assume they're paying for your moving expenses *and* for the realtor to help you find a place you like. At the prices you've quoted, it's probably not going to be huge -- but I don't know Toyohashi City so maybe things are cheap and large there. For a couple years, the experience will probably worth it. Make sure they cover furnishings, too -- and storage of your own stuff while you're here. A small aparement can become even smaller really fast if you ship over all your US-sized stuff.
> 
> I'd also get them to add a clause that says they ship you back all-expenses-paid if you're teminated for any reason other than cause. Most companies would do that anyway, but... if you get laid off but decide to stay in Japan you could use that as leverage to squeeze a bigger severance out of your former employer.
> 
> Ask them what to do about income taxes. In most cases, your Japan tax *should* end up lower than your US tax but the Japanese will count that 84% of your rent as income. And I understand that the housing exclusion has been eliminated from the US tax code. But, more importantly, you'll have to file two returns (Japan and US), and the US one will be *very* complex. Get them to assign your tax preparation to the company accountant -- not just for the two years you're here but until the effect of your stay on your tax return disappears. If you can, get them to gross-up any income you're forced to claim that is the result of the assignment (like the company-covered part of your housing).
> 
> Other than that, it's a fair offer. But if the company *needs* you, and *you* specifically, to come to Japan, it's not very generous. You'll likely be living in smaller quarters and squeezing a bit more than you do now (how much, of course, depends on your lifestyle). The days of 50~100% cost-of-living adjustments are probably over. But you could negotiate for at least 10% over your current salary (after the dollar-to-yen adjustment but not counting the housing -- in Ohio you're probably only paying 16% of what you'll be paying here for your current place, anyway ;-). It really depends on how likely they are to simply find someone else and how badly you want to go.
> 
> I hope that helps some...


Thank you Lara. That was very helpful. I will keep in mind the dollar to yen ratio being at a low and see if I can tie my salary in Japan to the currency ratio. Is there any reason you picked 10% move for trigger? Is that typical?

Yes, the company is paying for the relocation expenses. The company I work for is a Japanese company headquartered in Tokyo. They are shortlisting some housing options and when I get there, they will help me review them before I decide on which one. I am expecting the rent to be around 85,000 yen. The housing will be furnished with Gas Range, Microwave, Refrigerator, TV, Futon Set, Dining Set, Curtain, Washing Machine, Air Conditioner, Lighting. They will also help with getting the utilities set-up. 

Regarding the tax preparation, I will see if they will do my US & Japan taxes. I am not very clear on couple of your statements - "If you can, get them to gross-up any income you're forced to claim that is the result of the assignment (like the company-covered part of your housing)." 

"But you could negotiate for at least 10% over your current salary after the dollar-to-yen adjustment but not counting the housing"
When you say 10% over my current salary is that including or excluding the 401K contribution of 4%? The company will stop contributions to my 401k when I move to Japan, but will continue to manage my account.

PS: Currently, I pay $500 per month for a one bedroom apartment in Wilmington, Ohio. That's about half the cost of the 85000 yen that I will be paying in Japan, not much more than 16% ;-)


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## larabell

US to Japan said:


> Is there any reason you picked 10% move for trigger? Is that typical?


I have no idea what's typical. But exchange rates jump around all the time so the company isn't going to want to adjust your salary every week. At the same time, you probably don't want to wait until you're flat broke from an exchange rate move before you're adjusted. I guessed. The company's accountants may have a better guess but don't let them peg it too high. If the rate moves by 18% and stays there for a couple years but your agreement says 20% before they adjust, you could be out a lot of money. Pick a number you can live with.



> Regarding the tax preparation, I will see if they will do my US & Japan taxes. I am not very clear on couple of your statements - "If you can, get them to gross-up any income you're forced to claim that is the result of the assignment (like the company-covered part of your housing)."


You should be able to do this math yourself. If you're in a 30% tax bracket and the company pays 50K Yen toward your housing, that's about $500 (I'm using the lazy man's 100 yen/dollar rate) so you'll pay 30% of that in additional taxes -- even though you never really saw the money. Pretty much everything the company pays on your behalf is taxable income to you. Companies with experience moving ex-pats around usually know this and they have various want of compensating you for the extra expense.



> "But you could negotiate for at least 10% over your current salary after the dollar-to-yen adjustment but not counting the housing"
> When you say 10% over my current salary is that including or excluding the 401K contribution of 4%? The company will stop contributions to my 401k when I move to Japan, but will continue to manage my account.


If the offer is for a job in Japan, you probably won't be able to contribute to your 401K, either (for what it's worth). As for the 10% -- that's a guess. I'd have to know a lot more about your financial situation than you've posted here and, frankly, I'm not interested in doing the exact math for you. All I'm saying is that you'll likely be stuck paying extra taxes as a result of the side-benefits of the relocation and housing expenses, besides the fact that things are, in general, more expensive here than in the US. From what I can see, you're making the move with more-or-less exactly what you're making now *and* paying extra taxes and more for living expenses. If moving to Japan is a dream-come-true and that's the price you're being asked to pay, so be it. One friend of mine (who came over to replace me when I jumped to a different employer) accepted a straight dollar-to-yen conversion because he really wanted to come to Japan (he had found a girlfriend here on a previous trip). It all depends on your situation, no?



> PS: Currently, I pay $500 per month for a one bedroom apartment in Wilmington, Ohio. That's about half the cost of the 85000 yen that I will be paying in Japan, not much more than 16% ;-)


From what you said, you'll be paying 13,500 for your apartment here (the company will pay the other 84%, no?). That comes out to around $150 give-or-take. You're going to have an extra $350 per month to make up for the salary cut. But both the Feds and the Japanese government are going to want some percentage of what your company is paying for their share of your housing expense. And you haven't indicated that they're going to reimburse you for those taxes, despite the fact that you wouldn't be paying them if it weren't for this relocation deal.

Again, if that's OK with you... fine. I just thought you might like to know what might piss you off about this deal before you actually make the move. If I were in your position, I'd already have already drawn up a spreadsheet to see how much of a price I was actually paying.


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