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with their own citizen. This makes getting a work visa in the E.U. or Canada particularly difficult for a non-citizen. Experts advise making the jump into the E.U. or Canada by working for an American company and applying from within the company for a transfer to one of their overseas offices. Note: As of this writing, the UK (England, Wales, Scotland and Northern Ireland) voted in the Brexit to leave the EU. The actual exit may take several years. If you plan to work in a UK country, you will need to stay abreast of any developments with regard to the UK and its relationship with the EU. Financial Sponsorship. If you are entering a country without a job intending to search for a job while there, or intend to enter as a freelancer, the country may require confirmation of financial sponsorship proving you have a reliable means of support while you are in the country. This includes bank records and a list of assets or other proof of your ability to cover your living expenses while you are a guest in the country. Criminal and Medical Certifications. Many countries require a work visa applicant to submit to a criminal background check and will deny a work visa if the applicant has a criminal past. This is particularly the case in Asia and the Middle East. In addition, work visa applicants must submit medical records verifying their immunizations are current and they are not contagiously ill. Proof of medical insurance is also required in the event you become ill or are injured while in the country and need medical care. Moving Costs and Confusion. Moving to another country and setting up a household can be expensive and confusing. Should you ship your furniture or buy it when you get there? How do you get a wireless service set up? What about utilities? Can you open a bank account there? American companies that relocate employees to their foreign offices will assist the employee with the costs of moving, help the employee find housing and get their household set up. The expat community (see below) may also be a source of information and assistance for getting settled. Currency and Pay. If you have read The 21st Century Student’s Guide to Financial Literacy – Going Global, you understand that currency values fluctuate and that the currencies of some countries can be unstable. The U.S. dollar is a very stable currency. An employee working in a foreign country is paid in the currency of the host country , which is the country where the employee is located. The rate of pay, however, usually links back to the home country , which is the country where the company the employee works for is headquartered. For example, if you work for an American company in China, the pay is set by American pay standards, but delivered in yuan . An employee of a foreign company and working in that foreign country is paid in the currency and at the pay scale of that country . That’s generally not a problem in most developed countries which have a stable currency, similar pay levels and employee benefits. But if you were to take a position in an emerging market country with an unstable economic system and are paid in that country’s currency, you may be paid much less than you would receive in the U.S. for similar work and be at risk of value fluctuations. The trade off is, of course, that the cost of living in those countries is usually much lower. Taxes. The rules for paying U.S. federal income taxes are generally the same whether you are in the U.S. or abroad, regardless of where you reside. Whether you work for an American company, a foreign company, or are freelancing overseas, you must still pay U.S. income taxes. You are also required to pay the host country’s income tax. However, overseas taxpayers may partially offset their U.S. income tax liability by the taxes they paid to the host country. Suffice to say that the tax situation of an American earning a paycheck overseas PRODUCT PREVIEW
Chapter 6 | The Global Employee 102
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