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CapRelo Named HRO Today Baker's Dozen Top Global Relocation Company in 2018... Again!

Posted by CapRelo on Fri, Apr 27, 2018

2018-Bakers Dozen

For a baker in medieval England, there were laws relative to the cost of wheat used to make the bread they sold. Bakers could be subject to various punishment if they sold the bread for more than what is was worth. The widely known term ‘baker’s dozen’, of 13 instead of the usual 12, originated when bakers would throw in an extra loaf of bread when selling a dozen for the fear of coming up short. 

As a provider of services to clients who rely on CapRelo to ease the mobility process for employees and their families, we never want to come up short. It’s why we are driven to give more than what is expected—just like bakers with that 13th loaf!

It’s rewarding when those with whom you do business rank you as the best at what you do. Such is the case when HRO Today again named us at the top of a list of global relocation companies with the annual HRO Today’s Baker’s Dozen Award. 

Every year, HRO Today rates companies based on three subcategories: quality of service, deal size and breadth of services. While the feedback is anonymous, it comes solely from the buyers of relocation services. These are the people for which we wake up every day and come to work. I am honored to announce we have been rated fourth Overall and second for Quality of Service.   

Our dedicated team helps to empower employers make the best decisions that drive their global talent. We listen to the needs of global HR teams to find ways to better connect with their cultures and help solve challenges. I’m very proud of our team on this important achievement. 

Would you like to learn more about custom relocation solutions? Leave a comment below or give us a call!

Topics: HRO Today, Baker's Dozen

Tax Rates by Country - Global Wages vs. Take-Home Pay

Posted by CapRelo on Wed, Mar 28, 2018

There are precious few certainties in life but as the old saying goes, taxes are one of them. With America’s tax season in full swing, that inevitability is sure to be on the minds of many in the United States.

During this time of the year it is easy to forget that America isn’t the only country where tax considerations loom over the population, as well as how different tax rates and financial realities can vary around the globe.

With that in mind, CapRelo decided to take a look at salaries, taxes and take-home pay from a number of countries all over the world, and to contextualize that information for an American audience. Here’s what we found.

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To get a baseline on how the average citizen in each country can expect to be taxed, it’s necessary to know how much the average citizen makes. CapRelo examined a report from an intergovernmental economic organization listing the average annual salary for the countries we analyzed. After converting local currencies to their equivalent in U.S. dollars, it was possible to assemble the map above, which illustrates how much the average worker can expect to make around the globe. The countries in darker red are nations where workers are compensated the most.

 

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Of course, the taxman will take a cut, and we were able to find the overall percentage of salary that someone making an average wage can expect to pay in taxes in each country. This was done by taking post-tax earnings and dividing them by pre-tax earnings. We felt this was the best way to produce a consistent comparison across countries, given the occasionally complex nature of various tax codes.

 

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Once taxes have been paid, we get a better picture of exactly how much money the average annual wage is for workers around the globe. This chart shows post-tax take-home pay, once again converted to U.S. dollars. Countries in dark red here have the highest take-home pay.

 

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Comparing maps can make it challenging to ascertain the exact scope of tax impact, so we decided to visualize the data an additional way to show how much of the average wage in each country is consumed by taxes.

 

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Many in America comment on how much they have to pay in taxes, so we thought it would be fun to look at how that rate would change in other countries. By taking the average annual American wage and factoring in the rate it would be taxed in other nations, it is possible to see where things could be better or worse. Only ten of the surveyed countries would produce a lower tax bill than Americans already experience, with the rest taking more… at times, significantly so. Bet you never thought you’d be happy with your current taxes!

 

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Finally, CapRelo wanted to provide an even more detailed examination of taxes around the globe. The result features much of the same data that has already been presented, like average annual salary and post-tax take-home pay for every country (and the average American wage), as well as some new information. First is a more detailed breakdown of the specific tax rate as it applies to the average wage in each country, and second is an analysis of purchasing power.

The latter feature utilizes the Big Mac Index, a metric devised by The Economist that takes the price of a McDonald’s Big Mac in two countries to determine the relative value of money in each place. Utilizing this tool, we were able to find out how much the post-tax take-home pay was actually “worth.” As a result, we see that while somewhere like Russia has an average post-tax take-home pay amount equivalent to just $8,456, that money allows someone to buy the same amount of “stuff” as someone with $19,488 in America. On the flip side, Switzerland’s average take-home pay of $84,006 only goes as far as $65,567 would in the United States.

While taxes may be constant, the information above demonstrates how actual cost impact definitely isn’t. Hopefully seeing how taxes compare across the globe—along with the extra two days afforded by this year’s April 17 deadline—takes a little bit of the sting out of filing this year!

Download Talent Mobility & US Taxes: What You Need to Know

 

Topics: relocation taxes, mobility and taxes, taxes

Tax Reform and Transferees: What You Need to Know

Posted by CapRelo on Tue, Feb 06, 2018

Red Ring Binder with Inscription Tax Law on Background of Working Table with Office Supplies, Laptop, Reports. Toned Illustration. Business Concept on Blurred Background. 3d Render..jpegTax reforms in 2018 will have an impact on deductions and property taxes. Here is a brief summary of the primary changes. Please note that individuals should always consult their tax advisors.

Moving Expense Deduction

As of January 1, 2018, movement of household goods, storage and final move travel are taxable to transferees. With the elimination of the moving expense deduction, the "50 mile", "39 week" and "one year" rules as well as the 18 cents per mile vehicle allowance are no longer relevant. This change should be reviewed closely with your mobility management company to fully understand the impact to your organization.

Tax Rates and Withholding

The tax rates are generally lowered, which should reduce the marginal tax rate for employees. The supplemental withholding rate that is used by most companies to withhold on taxable relocation benefits and to calculate gross-up will fall from 25% to 22%. However, with the loss of moving expenses and other deductions, companies will need to manage their gross-up programs carefully, especially with the new tax rates. 

State and Local Income, Sales and Property Taxes

State and local income, sales and property taxes remain deductible, but only up to $10,000 combined. Employees moving into high-tax areas are more likely to be affected.

Mortgage Interest Deduction

The mortgage interest deduction is retained, but the maximum loan amount to be able to deduct was reduced from $1 M to $750,000. Employees moving into high-cost areas are more likely to be impacted by this new threshold for mortgage interest deductions.

Home Sale Capital Gains Exclusion

There were no changes here. Both the House and Senate had proposed changing the required ownership and use as a principal residence to five out of eight years from the current two out of five. That would have certainly impacted relocation with many transfer­ees moving again inside of a five-year window, but fortunately there were no changes regarding Capital Gains on homes.

Tax Brackets and Rates, 2018

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Today's post is brought to you by our friends at Colonial National Mortgage. Click here to download a copy.

Colonial National Mortgage

 

Although this written communication may address tax issues, it is not a covered opinion as described in Circular 230.  Therefore, to ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments), unless expressly stated otherwise, was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matter(s) addressed herein.

Topics: tax impact of relocation, relocation taxes, mobility and taxes

Maternity and Paternity Leave Laws Around the World [2017]

Posted by CapRelo on Wed, Nov 29, 2017

Having a baby and welcoming that new life to the world is a joy for parents. But being able to step away from work to care for the baby can vary significantly depending on your job and where you live. Being that CapRelo is a global mobility company that helps companies and individuals relocate throughout the world, we wanted to take a look at the family leave laws on a global scale.



We felt this was particularly an important subject to cover as this impacts many families involved in the relocation process. Not only do these families have to adjust to their new surroundings, but they also have to adapt to new laws regarding maternity, paternity, and paternal leave, if applicable. For this study, we focused on the family leave laws in the 25 countries with the highest GDP as well as the members of the European Union in order to get a variety of countries throughout the globe. Information was taken from government websites, an ILO report, and WageIndicator.org.

Countries with the best family leave

Consider yourself lucky if you’re in the following countries that provide generous maternity policies: Australia, Poland, Bulgaria, and Sweden. For dads, paternity laws in these countries were some of the best in the world: Finland, Slovenia, Lithuania, Sweden, and Brazil.

Swedish parents are lucky in that they are entitled to 480 days of paid parental leave when a child is born until the age of 8. During 390 days out of 480, they are entitled to 80 percent of their regular wages, and the remainder at a flat rate. Fathers in the Netherlands actively participate in “Papadag” (daddy day), which is a day off of their workweek during paternity leave to spend taking care of their children. The driving force behind this is to promote a better work-life balance and equality in parenthood.

In regards to pay, we were pleased to find that the majority of countries pay 100 percent (or close to) of the wages to the mother and father during their leave.

Countries lacking in family leave

Interestingly, many countries do not have laws that give significant leave time for mothers or fathers. This can be a difficult reality for parents. The United States, for instance, has one of the worst policies in that there is no mandated leave for mothers and fathers. With that being said, maternity and paternity leave is up to the employer's discretion which can be a positive or a negative.

One pattern that was fairly consistent was the lack of leave time for fathers. Paternity leave is almost always lower than maternity leave, but it was surprising to see how little some fathers actually get. According to our research, the following countries have no mandated paternity leave in place for fathers: Japan, Germany, India, Russia, Switzerland, Croatia, Czech Republic, Austria, Ireland, Malta, Cyprus, and Slovakia. Some countries, such as Mexico, Saudi Arabia, Taiwan, Korea, and Indonesia, have below-average maternity leave laws.  

Takeaways

Overall, the statistics we found show that family leave laws can vary significantly throughout the world. It’s no secret that this is a passionate and important subject regardless of the country someone lives in. Mothers are almost always allowed longer leaves, but paternity leave has been growing in recent years. Even if you have little control over your next country of residence, it’s vital to understand these policies and take them into consideration. However, no matter the family leave laws, a new baby is a wonderful (if maybe stressful) thing for new parents.

Relocating Employees with Families

 

Topics: human resources, employee engagement, employee benefits

12 Key Points in an Employee Transfer Letter

Posted by CapRelo on Fri, Sep 15, 2017

Employee Transfer Paperwork

Employee transfer letters are given to employees who are being transferred to a different branch, department or location of their employer. The reasons for the letters is more than just common professional courtesy. Transfer letters provide employee and employer the "ground rules" of the transfer.

Learn more about how to write an employee transfer letter with our free article.

Foundation for Transfer Letters

The purpose and reasons for issuing transfer letters is central to successful employee relocations. Among the motivation and goals of these documents are the following: 

  • Create a written record of the employee's transfer for the personnel file.
  • Provide evidence that the employee's compensation account follows the employee accurately.
  • Track the personnel in each department to ensure a correct head count for staffing purposes.

Whether the transfer is employer-generated or a mutual agreement between employer and employee, the transfer letter offers visible, physical evidence of the move from one department or location to another

Transfer Letter Checklist

Consider the following items as a template from which to create appropriate transfer letters.

  1. The employee's full name and current address, with accurate contact information.
  2. Identify the reason for the transfer
  3. Name of the department or location from which the employee is transferring.
  4. Name of the department or location to which the individual is moving.
  5. The exact effective date the transfer will take place
  6. State the official start date in the new location, if the date is different from the effective date of the transfer
  7. The name of the supervisor in the new department to whom the transferee will report.
  8. The creation or issue date of the transfer letter.
  9. Note the details of the position in the new location, including any bonuses the employee is to receive as a result of the transfer.
  10. Use a standard letter or memo format, whichever is consistent with previous transfer letters issued by the employer.
  11. Closely proofread the letter to ensure accuracy.
  12. Ensure the letter or memo has the original signature of the appropriate person authorizing the transfer.

If there is a change in title or responsibilities, details about those changes may be described. Additionally, changes in titles and duties should be documented for inclusion in the employee's personnel file. The letter should refer to the the company's relocation policy and summary the portions of the policy applicable to the employee. 

The most vital feature of transfer letters is their clarity. They should be straightforward and direct. This will avoid misunderstandings or confusion regarding the transfer.

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Topics: employee transfer, writing relocation offer letter, employee relocation

How To Determine Fair Tiered Relocation Packages

Posted by CapRelo on Thu, Jul 13, 2017

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Companies offer relocation packages to their employees in tiers to help control relocation costs. Tiered packages are often established to address a variety of complex issues, but essentially it means that what is offered to one employee may not be offered to another. A company trying to retain existing employees or attract prospective talent may find they are able to offer more attractive packages using a tiered program. Determining a fair tiered policy is often merely a matter of weighing certain criteria against its value for the company.

You can learn how to save time and money using tiered relocation packages in our free guide.

Assign by Position and Experience

High-level services are usually considered much more valuable within a company than those functions carried out in lower level positions, which require fewer responsibilities and little need for certain skills sets. For this reason, employees who have reached certain levels in the company (professional, manager or executive level, for example) may be seen as more valuable within the organization and may be offered more robust relocation packages than others.

Examine Existing Living Status

Sometimes, an employee’s homeowner status could be one of the key factors in whether they are offered a higher or lower tier of relocation package. Employees who own homes may need to be offered additional benefits, especially when considering the complexities inherent in having to sell or rent their homes to relocate. Likewise, a company may determine that an employee who rents a residence will need less assistance and will have fewer difficulties moving.

Another factor that may be considered is if employees have families, in particular those with young children who might be more resistant to relocation than single employees. Offering employees with families a more attractive relocation package might help them overcome both practical and psychological barriers to moving.

Corporate policy and culture should always factor heavily into decisions that determine the features offered in tiered relocation packages. For some companies, financial factors may be the bottom line. Other companies may place higher value in employee morale, or in their public perception as an “employee corporation.” Senior management and Human Resources should therefore work hand in hand with the finance department to establish specific criteria when determining the features offer in tiered relocation packages.

Save Time & Money Using Tiered Relocation Packages

 

Topics: Tiered relocation packages, attracting new hires

How To Calculate Tax Gross-Up for Relocations

Posted by CapRelo on Tue, Feb 03, 2015

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Relocation tax gross up defined:

When an employee receives a one-time tax relocation incentive or reimbursement of taxable relocation costs and the company adds to the reimbursement amount, a tax gross up occurs. Reimbursing transferred employees is good corporate relocation policy as it improves employee retention and productivity while helping maintain good customer/employee relations and management.

How is tax gross up calculated?

  • Flat Method – A flat percentage calculated on the taxable expenses and then added to the income. For example, an employer will gross up at a rate of 25% for taxable expenses.  If the transferee is paid $1,000, the gross up would be 25% of this, or $250, and therefore the transferee would receive a benefit of $1,250 total.  Note that the gross up is also considered taxable income and may create an additional tax liability to the transferee.

    It’s important to note that this method likely doesn't cover the employee's tax liability since the gross up is taxable income. Additionally, this method is not compliant with supplemental withholding regulations.

  • Supplemental/Inverse Method – This method is often used because not only are relocation expenses considered income, but the gross up is considered income too.  Therefore employers will pay the gross up on the gross up.  To determine the amount, add up all the tax rates (fed, state, OASDI, SS) and then divide the taxable expense by the sum of the tax rates. Take this number and subtract the taxable expense. 

     

    Supplemental-Inverse Gross Up.png

    This methodology covers gross up on the gross up, but may not accurately reflect the tax bracket of the employee.

  • True-Up Method – This method is typically handled by a CPA or full-service relocation companies and also incorporates the tax on tax calculation. The difference is this methodology takes into account employee income and IRS Form 1040 tax filing status. In most cases policy dictates that only company-earned income will be considered and other forms of income, such as spousal income or investment income, won't be taken into account.

Should your company handle relocation tax itself or give the job to a pro?

Many corporate accounting and finance departments, while adept at handling day-to-day corporate financial operations and record-keeping, may not have the expertise when it comes to accurately and fairly figuring tax gross up. Due to the complexity of tax laws and other local, state and federal regulations, turning the work over to a full-service global mobility management company may be beneficial.

The consequences of miscalculating or ignoring tax gross up:

  • Extra work and time (read: increased company expenses) as well as frustration for your accounting and HR departments if they need to recalculate and correct mistakes and possibly issue corrected W-2 forms (W-2C).
  • A possible audit and /or tax penalties and other fines.
  • Diminished employee morale due to being unfairly taxed, resulting in lowered productivity and retention rates.

The take-away:

Working with an experienced global mobility management company that can efficiently handle all aspects of a transfer may prove beneficial in eliminating tax errors and omissions. Among its many services, a good global mobility management services provider will track expenses and submit accurate reports of taxable costs as well as help calculate tax gross up. As one of your preferred suppliers, a trusted global mobility management company can give you and your transferees peace of mind – along with a lower tax bill. 

 

Download Our Guide to Managing Business Travelers

 

Although this written communication may address tax issues, it is not a covered opinion as described in Circular 230.  Therefore, to ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments), unless expressly stated otherwise, was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matter(s) addressed herein.

Topics: calculating tax gross up

Avoiding Employee Turnover After A Relocation

Posted by CapRelo on Wed, Mar 26, 2014

Please enjoy our video, "How To Avoid Employee Turnover After A Relocation - CapRelo."


Download

 

Topics: employee retention, employee relocation concerns, talent management

Important Features of a Home-Finding Trip

Posted by CapRelo on Tue, Aug 20, 2013

istock_000010968215large-resized-600Competitive relocation policies should include components related to finding a home in the new location.  One such benefit is to offer one or two home finding trips to the destination location.  There are several additional provisions that are considered competitive components.

Our free article provides additional information on real estate considerations for your relocation policy.

House-Finding Trip Provisions

Locating an appropriate home in an unfamiliar new location is a major transferee concern. Whether they are homeowners or renters, relocating employees need assistance when moving. In addition to setting reasonable parameters and time periods for each trip, among the most valuable home-finding trip policy features are:

  • Airfare or mileage reimbursement.
    Depending on the distance of the destination location from the current workplace, transferees and their spouses may prefer to drive or need to travel by commercial airlines.

  • Lodging.
    Describe (or name) acceptable hotels and maximum nights that your company will permit. This is another competitive feature that permits you to exercise cost control, while clearly defining your reimbursement policy.

  • Rental car.
    Transferees need flexible transportation for visiting homes in the new location. Unless employees are relocating to the center of a major city, such as New York, where taxi-fee reimbursement may be a better option, providing a rental car for viewing houses is an important feature.

  • Daily meals allowance.
    Set reasonable per diem meal allowances, capped depending on the parameters of your house hunting policy features. For example, do you permit transferee only, transferee and spouse or transferee and family home-finding trip reimbursement? Defining your daily allowance per person should eliminate confusion or uncertainty.

  • Expert assistance from a real estate agent.
    Be sure to partner with a local or national real estate firm with at least one available agent who has proven experience in relocation house hunting necessities and time constraints. Transferees will maximize their home-finding time, while employers control costs and get the results they want.

These house hunting trip features, accompanied by logical, reasonable and equitable reimbursement maximums, accomplish at least two important goals.

  1. You will offer a competitive corporate relocation program that helps you control most home hunting trip expenses.
  2. Your transferees will endure less uncertainty, stress and concern with finding an appropriate home in the destination location.

Compare your home-finding policy benefits with competing companies’ policies.  Be prepared to modify your policy to keep your relocation program competitive in your industry.

When you combine consistency of application with flexibility to modify policies when necessary, your relocation program will produce the desired results. Surprises faced by employers or transferees are unwelcome events. Minimizing uncertainty and confusion with house hunting trips delivers rewards to employers and transferees alike, while ensuring a smooth, cost-controlled relocation experience.

Free eBook:  A Guide to Developing  Relocation Policies

Topics: Corporate Relocation Costs, House Hunting Trips

Executive Relocation Packages - Negotiating Options & Incentives

Posted by CapRelo on Tue, Jul 31, 2012

business-womanRelocation packages come in a variety of shapes and sizes to meet various corporate goals and budgets.  In recent years, as a result of difficult economic times, many organizations were forced to scale back the size of their relocation programs.  However, as the economy rebounds, it’s important for companies to re-examine their program, especially when trying to recruit for executive-level positions. 

Find out the 5 critical features of an executive relocation package in our free eBook.

Current Relocation Concerns

The current job market and continued real estate crisis has generated concern amongst corporations and professionals alike.  Corporations need to tighten the belt on their budgets while still working to offer job relocation packages that entice quality executives, and professionals are reluctant to relocate and make job changes for fear of the unknown. 

Before an executive will consider relocating for a job change, he or she will carefully consider questions such as:

  • Will I qualify for a mortgage?
  • Can my family and I establish a home there?
  • Are there rentals that meet my needs?
  • Can I sell my current house in this real estate market?
  • Does the school system meet my expectations?

Employers must creatively deal with these concerns in cost-effective manners.  This can be accomplished by developing a progressive domestic relocation policy that includes real estate assistance, the movement of household goods, and tax treatment.

THREE CRITICAL COMPONENTS OF AN EXECUTIVE RELOCATION PACKAGE

Companies need to give their employees and/or potential recruits the tools to answer their critical questions and minimize the mystery and the stress of the unknown.  This can be accomplished by including critical benefits in the executive relocation package. 

1. Real Estate Assistance 
The challenge of selling a home is one of the top reasons employees don’t want to relocate.  The real estate crash placed homeowners in awkward and untenable positions, and many find themselves underwater (mortgage balance higher than market value of homes).   Companies offering relocation packages can fall short of executive’s needs should homeowners risk losing thousands of dollars because of a forced sale for relocation.  

A relocation package should include employer incentives such as loss-on-sale features, quick sale bonuses, buyer incentive assistance, and/or other creative housing-related benefits.  Transferring employees find these benefits critical to relocation options and choices.

2. Movement of Household Goods
Whether a relocation package includes a lump-sum payment or full reimbursement of costs for moving belongings and family, this benefit should be a relocation package component.  Some companies make relocating a DIY project, others offer the services of a van line, while others rely on a third party move management program to save work and stress on the employer and transferring employee.

With the real estate market flooded with short sales and foreclosures that require more time to close than the standard home sale, companies may want to consider extending standard storage times.  It may also be beneficial and valuable to a transferring executive or recruit to offer a trusted and proven professional mover to manage their large and unique moves.

3. Tax Treatment
Moving costs money, and employees need their relocation-related out-of-pocket expenses reimbursed in a timely and accurate manner.   If expenses are not properly coded or tracked, they could spin out of control.  That burden, along with end-of-year tax reporting related to relocation expenses, can cause unnecessary stress. 

A relocation package needs to include management of all invoicing, payments, tax filing, and tax gross-up benefits to make the process easy and hassle free.

At a minimum, HR professionals should consider including these three critical benefits in a relocation package.  Employers will decide if any additional benefits, e.g. retention bonuses, are featured in a relocation package.  If relocation policy design is an intimidating task, consider utilizing the expert services of a relocation management company like CapRelo.  Relocation policies that are designed and measured to meet strategic objectives are essential to a company’s success.

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Topics: relocation benefits, Home Selling and Purchase Assistance, Relocation Services, executive relocation package

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