Additional Geographic Assessor Topics (Listed Alphabetically)

The Methodology for the Geographic Assessor databases is based upon assumptions for US and Canadian personnel temporarily relocated to international areas. For this reason, US State Department and United Nations cost compensation practices are imitated. This information may be useful to local nationals. However, as spending patterns and tax burden vary for employees according to country of origin, some of the cost components, particularly housing and consumables, may not be applicable for local (non-US/Canadian) nationals. Living costs for foreign nationals reflect their own expenditure patterns, which usually are not similar to the average North American pattern because of differences in average income levels and living conditions.

All housing outside the US and Canada is rental only (no home ownership is reported by the Geographic Assessor databases outside of the US and Canada).

When comparing international cities where the employer will not be guaranteeing tax equalization, please consult with your tax or accounting professionals to determine the impact on total cost of living. The Geographic Assessor databases allows for user-defined values in many of the cost fields, and, whenever you input a custom tax value (including hypo and gross ups), the program will automatically recalculate the total cost-of-living. (Also see Tax Equalization.)

All International Comparisons default to display in the Base City currency. For more information, see Currency and Exchange Rate.

ERI per diem estimates are based upon published rates by the US Department of State, United Nations, IRS and other sources. Maximum Travel per diem allowances for international areas are published by the US Department of State and United Nations. Non-international locality rates are also available as established by the US Department of Defense for the following areas: Alaska, American Samoa, Guam, Hawaii, Johnston Atoll, Midway Islands, Northern Mariana Islands, Puerto Rico, US Virgin Islands and Wake Islands.

What the Geographic Assessor Reports:

1.	A first look at an employee's potential international income tax burden.

2.	Travel operating expense differentials.

What the Geographic Assessor Does Not Report:

1.	International tax gross-up or tax paid by the employer.

2.	Detailed information regarding leasing costs, individual international county law or home ownership costs.

3.	Corporate relocation practices.

4.	"Trend" or "predict" costs beyond the effective date for the current release, nor "predict" exchange rates past most recently available published rates.

5.	Calculated "at home" expenses during international stay. The Geographic Assessor databases assume COLA for one location only.

National Averages

As many companies use a US or Canadian average only for their cost-of-living indices and allowances, the Base City may be specified as: "United States Average" or "Canada Average" rather than the employee's actual before-transfer living area. The "Earnings level" should be chosen according to company policy. Please consider the tax implications and overall spending pattern implications of including any of the following: base salary, bonus, private income, spouse income, etc.

For more information about National Averages, please see: Canada National Average vs. US National Average

HYPO TAX

Tax Equalization Default Assumptions

ERI's effective income tax estimate for the employee is driven by user inputs for citizenship, residency and length of stay. (See Tax Equalization.)

Depending upon the corporate policy, you may wish to replace the ERI estimated combined effective hypo tax with your international tax accountant's provided values:

•Federal tax only, or

•Combined effective tax of employee's Base location, or

•International effective tax, or

•Zeros (if the employer will handle taxes separately from the general COLA).

It is recommended that you "zero" the dollar values for those categories for which company policy does not award cost-of-living allowances or which company policy addresses separately from the general COLA. For example, if your organization provides an automobile at the destination, the transportation differential should be removed (zero-out) from the overall cost-of-living computation. Simply click on appropriate fields and delete dollar values as desired. The program will automatically recalculate the total cost of living.

For third country national and expatriate purposes, the Geographic Assessor databases presumes a North American expenditure pattern .

Expatriate employees may be required to pay taxes in BOTH home and host countries. A "hypo" tax in the destination may or may not be appropriate in this situation.

Please modify the Geographic Assessor for legal counsel. All tax planning should be assisted by the expertise of an international tax consultant.

See Taxes - Country of Residence for more information.

See Using GA FAQ #15 for more information about the option to "Never Use Tax Equalization."

See Two City Comparison - Background for more information.