Expatriate safety nets

"Touch of Dutch" wrote a good essay last week about the need for expatriates to have a sensible contingency plan for taking care of themselves if their domestic situation goes bad. I think that its a good time to echo her sentiments.

I was faced with the potential loss of my expatriate contract a few months ago, and made a list of the things that would need to be replaced if my support were suddenly withdrawn. It was surprisingly long, and costly, and made me realize how dependent I've become on my corporate parent.

So, this summer, I've put plans in place to 'take back' my life if the worst should happen. I think that it has to be a part of every expat's contingency planning: Take a day to review your contract and your everyday life, so that you will know what you have to do if the balloon bursts unexpectedly.

Visas and work permits: The work permit is company-specific and, in some cases, location-specific. Once you separate from the company, you are on 90-day tourist visa, and the clock is running. If you make application to stay beyond that period, you will be responsible for fees and document handling.

One alternative that I considered was to start a parallel consulting business here in the Netherlands that I could fall back on. It's a surprisingly difficult process, approval of a business plan, demonstration that the Netherlands is necessary for your business, and evidence that you can support yourself, from the outset, in this business. Check the Dutch IND Website for details; I had a few conversations with my local relocation advisors and other expats to understand details particular to my situation.

Salary: If you switch to local contract, then the salary will generally shift towards local norms. Consider not only what your skills are worth in the local markets, but how far your earnings will stretch. I have taken my base salary times my company's G&S differential to estimate what an equivalent compensation would be, then 'reality check' that with Dutch colleagues and managers.

Medical / Dental / Vision / Pharmacy services and coverage are different, or course. The New England Journal of Medicine recently published an article, Going Dutch -- Managed-Competition Health Insurance in the Netherlands, that gives an excellent overview of the system. It is worth finding out your eligibility and costs if you immigrate.

Taxes: I am under a tax equalization policy with my company, which shields me from the impact of dual-country income taxes. I also work under the Dutch "30%" scheme for knowledge workers. It means that I have no clue what my taxes actually are. I've pulled the last year's Dutch and US returns to understand how they interact and to add up the total. It's unlikely that I could complete my taxes alone: I've talked with the tax advisors provided to me to get some idea of their fees.

Remember, too, that in a severance situation, you may have to cash out options or take bonuses within weeks of separation, further increasing the payments that will be due.

Housing: I live in a furnished apartment, and have talked with the owner and relocation people about taking over the contract at the same (or reduced) cost if the company withdrew from the contract. The alternative would be to negotiate my month-to-month lease on the fly (or end up with 20 boxes of personal effects out on the curb). Also, you may need to remburse the company for the amount of the security deposit, which could be a several thousand euro hit.

I've also started keeping good records of my utility contracts and contact information, so that these can be canceled or transferred. Any prorated fees for taxes or maintenance deposits also need to be compiled onto the list.

Finally, I've looked into the availability of local storage facilities for caching household items in case I have to live lightly, or leave the country for an extended period.

Transportation: The loss of a lease car and gasoline allowance will force a different dependence on trains and walking.

I still use a car somewhat thoughtlessly because it is convenient and free, and I've begun to cut back and to become more aware of my schedule of shopping and commuting habits. I know that I can become more 'Dutch about using alternatives, including learning the train and tram schedules and learning how to use strippenkarts.

Banking: Although the cash accounts are clear of the corporate umbrella, bank cards may not be. Check that you have working 'chip and pin' and credit cards available through your bank.

As mentioned above, be aware of the automatic payments that are being deducted from your accounts and how to stop them quickly if needed.

I've also established a separate savings account in the UK, paying 6% interest, that I pay into each month. It builds up a reserve that I can rely on if there are unexpected expenses or contingencies. In the US, we would move towards liquidity in challenging times: in contrast, all accounts are 'short-term' for expatriates in Europe.

Misc. services: Other items to consider include:

• Mobile telephones (can you take over the contract and keep the number)
• Personal computers (can you buy it at prorated value)
• Unreimbursed education, language training, or travel expenses (keep expense submissions up to date and prepay where possible)
• Home Leave (family travel will become your responsibility again)
• Repatriation and Shipping allowances (these may only be available for 90 days and then you lose the benefit)
• Memberships: Health clubs, travel clubs, and discount club (may cease, or require re-registration and new fees)

I don't think it's an impossible situation if you are prepared, but it can be daunting if you have to try to pick up the pieces on the fly when there is a catastrophic event. Always know your Best Alternative to your Expat Contract, and underlie your trust with some practical defensive planning.

Photo credit Rainbow Net and Rigging