The Base Salary of a US employee is $75,000

Calculate the hardship allowance for the following situations:

1. US to Montreal (Canada)
2.US to Stuttgart (Germany)
3.US to Sau Paulo (Brazil)
4. US to Beijing (China)
5. US to Mumbai (India)
6. US to Baghdad (Iraq)
Hardship allowance: Is paid to the international workers to compensate for challenging work locations

Base Salary $75,000

Computation of the hardship allowance for the following situations

Rate ( Taken as per the U.S. dept of
Situations state website)
1. US to Montreal (Canada) 0%
2.US to Stuttgart (Germany) 0%
3.US to Sau Paulo (Brazil) 10%
4. US to Beijing (China) 15%
5. US to Mumbai (India) 25%
6. US to Baghdad (Iraq) 30%

For the rates, please visit the below website

https://aoprals.state.gov/Web920/hardship.asp

Note: Mostly the rates will be given in the exam. But this is an easy problem so might not come for the exam
ompensate for challenging work locations

ce for the following situations

Hardship Allowance (Base Sal*Rate)

$0
$0
$7,500
$11,250
$18,750
$22,500

n easy problem so might not come for the exam

Situation at Hand:

India has Social Security Agreement (SSA) with Germany. A German expat employee has worked in Germany for 7 years. And
relocated to India and has spent 6 years on assignment.

Case 1: She repatriates to Germany after completing 6 years of assignment

How will pension be paid?

Answer: Assuming that the the German national held a Certificate of coverage from the German social security authorities b
Indian social security regulations apply. This will exempt him/her from contributing to Indian social security for the period st
pension benefits will directly be provided by the german social security without any reduction to the beneficiary choosing to
Therefore, as India and germany already have an SSA in place ,

Case 2: She wishes to settle down in India

How will the pension be paid?
Answer: Firstly, the german employee must fully withdraw her benefits from the german social security and contribute towa
the basis of the length of service rendered on a pro rata basis.
Germany for 7 years. And has

cial security authorities before being deputed to India to work with an establishment to which the
security for the period stated in the COC. Thus the provision for payment (i.e. on pro rata basis) of
e beneficiary choosing to reside in his/ her home country post assignment.

urity and contribute towards the social security of india. Thus, she will be eligible for pension on
 COLA Calculation Problem

Given:
Net Salary $70,000
Housing 17%
Spendable Income 38%
Savings & Other expenses: 45%
Cost of living (COL) Index: 145
Exchange Rate: USD to BRL 1.719

Solution:

As per the Problem:

United States is the Home country
Brazil is the Host Country

Note:
As COL index of the Home country (i.e US) is not given. We assume

1. Calculate the Spendable Income in USD after adjusting for COL

Spendable Income (38% of Net Salary before adjusting COL index) =

Now lets take COL index and calculate the Spendable Income
COL index (US) = 100
COL index (Brazil) = 145

Now Cross Multiply: 100x=26,600*145

Therefore Spendable Income in USD after adjusting COL Index = $ 38,570.00

2. What is the COLA amount in USD

COLA in USD= Amt spent in host country - Ammt

$ 11,970.00
3. What is the spendable income in BRL

Spendable Income in BRL = Spendable Income in USD x USD to

66,301.83

4. What is the COLA amount in BRL

COLA amount in BRL = COLA Amt in USD x USD to BRL exc

20,576.43
 100%

t given. We assume COL index as = 100

r COL

$26,600 Amount Spent In the Home country

$26,600
x

Amount Spent In the Host country

n host country - Ammt spent in Home country

Enjoy this amt as the allowance in US$
Income in USD x USD to BRL exchange rate
Spent in the host country

n USD x USD to BRL exchange rate

Enjoy this amt as the allowance in BRL
Home Country Net Salary calculation
Gross Salary $145,000
Hypothetical Social Security: 5% of Gross Salary
Hypothetical Personal Income Tax: 26% after deducting for Social Security

1. Calculate the Net Home Country Salary

2. Of the Net Home country salary: (a) Housing is 15% (b) Spendable Income is 40 % (c ) Saving an
3. If COL Index is 113 for at the host country (a) what will be the Spendable Income Payable at Ho
4. If Exchange Rate is 2.85, calculate the Spendable Income and COLA in Host currency

Solution for Part 1 & 2

Remuneration For Internation Assignment
Basic Calculation - Home Country annual Salary
Particulars Home Country - USD
Gross Home country Salary $145,000
Less: Hypothetical SS (5% of GS) $7,250
Total Gross home country salary after hypothetical SS $137,750

Less: Hypothetical Personal IT (26% of the above amt) $35,815.00

Net Home Country Pay $101,935

Breakdown of Net home country pay:
Housing (15%) $15,290.25
Spendable Income (40%) $40,774
Savings & Other expenses (45%) $45,870.75
40 % (c ) Saving and other expenses is 45%. Calculate amounts
ome Payable at Host Country (b) what will be the COLA amount

Solution for Part 3

COL Index 113

Exchange Rate 2.85

3 a)Spendable Income (Host) $46,074.62

3 b) COLA Amt $5,300.62

Solution for Part 4

Sorry, I am still trying to figure this out
 The AnnualCOLA Calculation
Net Salary of an employee working in US is $100,000. The segmentation of the Net salary is a

Given:
Net Salary $100,000
Housing 15%
Spendable Income 40%
Savings & Other expenses: 45%
The assignee is deputed to Brazil on international assignment and the COL Index is:

USA 100
Brazil 145
The USD - BRL Exchange Rate is
3.75
1. Calculate the Spendable Income in USD after adjusting for COL and its equivalent amount i
2. What is the COLA amount in USD and its equivalent amount in BRL
3. The housing cost for the expat is $2350 per month. How much housing allowance will the a

1. Calculate the Spendable Income in USD after adjusting for COL and its equivalent amount i

Spendable Income 40% of Net Salary before adjusting COL index) =

Now lets take COL index and calculate the Spendable Income
COL index (US) = 100
COL index (Brazil) = 145

Now Cross Multiply: 100x=40,000*145

Therefore Spendable Income in USD after adjusting COL Index = $ 58,000.00

2. What is the COLA amount in USD and its equivalent amount in BRL

COLA in USD= Amt spent in host country - Ammt spent in Ho

$ 18,000.00

3. The housing cost for the expat is $2350 per month. How much housing allowance will the a

Monthly Housing Cost = $2,350

Annual Housing Cost= $28,200

Less: 15% Housing Allowance= $15,000
Total housing allowance to be paid= $13,200
he segmentation of the Net salary is as follows:

he COL Index is:

g for COL and its equivalent amount in BRL

amount in BRL
ow much housing allowance will the assignee be paid

g for COL and its equivalent amount in BRL

OL index) = $40,000 Amount Spent In the Home country

$40,000
x

40,000*145
Amount Spent In the Host country $ 217,500.00 Amount in BRL

amount in BRL

ent in host country - Ammt spent in Home country

Enjoy this amt as the allowance in US$ $ 67,500.00 Amount in BRL

ow much housing allowance will the assignee be paid

Solution:

Remuneration For Internation Assignment

As per the Balance Sheet Approach
Particulars Home Country - INR
Gross Home country Salary 2500000
Basic Pay 1000000
Less: Hypothetical SS - PF (12% of BP) 120000
Total Gross home country salary after deduction 2380000

Less: Hypothetical Personal IT (25% of the above amt) 595000

Net Home Country Pay 1785000

Breakdown of Net home country pay:
Housing (15%) 267750
Spendable Income (50%) 892500
Savings & Other expenses (35%) 624750