# Local Hire - Taxes/Benefits



## ajpopper

I have started discussions with my company on taking an exciting management assignment in Frankfurt or Prague. It's a major decision since my wife is well paid and we live well in California, but the posting is very exciting and my wife would like our two small children to grow up bilingual (as well as take a little time off work). Additionally, I know both cities pretty and my wife is comfortable in either based on prior travels.

The hiring manager said that the posting would be a local hire basis. The posting would probably run 2 -3 years. What are the immediate pros/cons/costs? I am trying to get some grounding 
Taxes? Housing costs? Potential spouse employment (engineer w MBA)? Benefits such as company car? Other thoughts?

Thanks so much
AJ


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## Bevdeforges

Local hire basis most likely means you'll be on "local payroll" rather than having the array of "expat perks" that some companies offer.

Most likely you WON'T be offered the sort of "tax gross up" whereby your pay is adjusted while you're overseas to be equivalent to the after-tax pay you would have gotten had you stayed in the US. (The calculation is horribly complicated and the whole process costs the company a fortune.) This means you'll be living like someone in Germany, paying the same German taxes (and getting the same German benefits). 

Specific perks, like housing or a company car depend on your level and the German company policies in these matters. You should still get a decent relocation (moving costs, temporary housing on arrival until you can sort out long-term digs, etc.).

One thing you do want to get clear on is repatriation if, for any reason, the assignment doesn't work out. It's basically just relocation back home, but if it isn't spelled out ahead of time and for some reason you wind up losing your job, you don't want to be stuck in Germany having to repatriate on your own dime.

Your visa status will determine whether or not your wife will be able to work. Do talk that one through with the HR people. There's a reasonable chance she won't be able to work (though immigration laws have changed since I was living in Germany). There are other things for a "trailing spouse" to occupy herself with, or she could have a chance to take a sort of sabbatical if she prefers.

You will have to continue to file US taxes along side your German ones. It's not really as daunting a prospect as some make it out to be unless you have a complex tax situation.

There's more stuff to consider, but I'm sure others will contribute. Be sure to post specific questions or concerns as you think of them.
Cheers,
Bev


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## James3214

Expat packages are obviously better to get but it sounds like you won't do too bad from a local hire contract. You will probably pay more in taxes (and there are lots of them, salary, income, unification, church (and even your company car benefit will be taxed) etc but for most people moving to live and work in Germany is not for the money but more about enjoying a more balanced work/lifestyle with good infrastructure, healthcare, transport links (Frankfurt is ideal for exploring the rest of Europe). Vacation dates are also a lot more than in the US (around 30 days for most). Costs such as housing are high in the Rhein Main area but not too high that you still can't afford to live well. Don't forget the costs of schooling your children in international schools if you want it, although they will become bilingual a lot quicker if you can stick them in the local German schools where they will get extra German lessons to help them integrate.
I think your wife might be able to work as well. They relaxed the law recently on spouses working to encourage more skilled workers to make the move. Check it out when you here because engineers are very much in demand at the moment (but be careful you could both be highly taxed that it might not be worth it!)
You probably know a lot of it as you have been here before. But, I say despite the financial aspects, still make the move, as I am sure Germany would be a good experience for you and your family. 

Just my view anyway. As Bev says, feel free to post any specific questions and we will do our best to answer them!


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