Lump Sum Relocation:  How to negotiate a great relocation package

Has your employer told you that you will be getting a relocation package for your overseas assignment? 

Congratulations! An overseas assignment can be exhilarating, fascinating, and life-changing. 

You may already be researching bucket-list vacation destinations and hot new restaurants, not to mention planning to ace your new role and advance your career. 

But before you can enjoy any of these things, you have to organise your move. 

Some relocation packages are structured as a lump sum payment amount that gives you flexibility and choice of how to spend the funds. These are more common for domestic relocation offers because your employer will still need to provide other international services separately, such as immigration filing or tax support as your work location changes. 

With a lump sum relocation package, you will be (mostly, if not completely) responsible for arranging all aspects of your relocation. You may have to work with a fixed budget based on your tenure and destination, or you may be able to negotiate your lump sum budget based on anticipated expenses. 

Whether you are negotiating a new agreement or wondering how to stretch a lump sum package you have been given, knowing your likely expenses is key. 

Our comprehensive list of relocation expenses can help you and your employer communicate clearly about your expectations and needs – before relocating for your new role or overseas assignment. 

Building a relocation package: Expenses to consider

Some of the expenses you may encounter when planning an overseas assignment include...

Moving and storage expenses

When you are moving overseas, the actual “moving” part is one of the first things you think about, so let’s get this one out of the way. 

Yes, you will probably need to hire a mover and no, this is not a time to take short-cuts. If you are moving thousands of kilometres, you need professional international movers. They specialise in overseas packing for air and sea shipments and know the customs clearing process in your destination country. 

Don’t take unnecessary items, but don’t expect to purchase or rent everything you need overseas either. Some items are difficult or expensive to buy overseas, and – if you are moving with children – you may want to have some comforts of home when you are living far away. 

You may also need short and long-term storage in your home country. 

Home Finding and School Finding 

Back in the day, every overseas assignment started with a “look-see” orientation trip. You and your spouse would travel to your new country, to be met by a friendly and knowledgeable expert in your destination. You would visit top tourist destinations, see school options for your children and tour homes and apartments for rent. 

While a guaranteed pre-decision “Look-See” trip may be a thing of the past, the needs that it met haven’t changed. Plan a trip for you and your spouse to visit your assignment city ahead of your move. Hire a real estate agent, look at housing options, and meet with school administrators. 

Any money you invest in finding a home and schools for your family will pay dividends in your enjoyment and success in your new role. 

Visas or work permits  

To work overseas, you will most likely need a visa or permit. It is customary for your employer to arrange your immigration paperwork because the company has a duty to keep itself and its employees compliant.

If immigration filing support isn't mentioned explicitly in your relocation offer, ask early to ensure that you understand how your company supports this important step in cross-border relocation. 

Consider hiring a pet relocation company with your lump sum

Pet relocation services may be expensive but – most expats agree - they can be worth the cost. 

Pet relocation companies provide complete door-to-door services, which are key when you are busy arranging an international move. Don’t assume that you will be able to take your pet with you on an international flight. Most airlines have major restrictions about which overseas routes are acceptable for pet transport. 

The day of your move – if you are like most of us – will be very hectic. Adding in a two-hour round-trip drive to get proper agricultural documents for your pet may just tip you and your family over the edge. Get a price for professional pet relocation and consider adding this to your relocation budget.

Tax assistance for your lump sum relocation

Expat assignments often come with tax consequences.

In many tax jurisdictions, relocation reimbursements and cost-of-living adjustments are considered taxable benefits, so your company's payroll reporting will need to reflect this. Your company will likely provide support, and they can help you to ensure that your tax provider has expertise in overseas or dual-country returns. 

Temporary housing during your overseas move

You may need temporary housing at both ends of your move – at home, while your household goods are packed and shipped, and at your destination, while you wait for your moving shipment to arrive. 

Real estate services for your existing property

As exciting as your move overseas may be, you also will have responsibilities at home that need to be addressed. Will you sell or rent your current home? 

Some expats keep their family home and return home every summer. Others choose to keep or rent their family home, only to find several years later that their needs have changed. For many, selling their home right away allows them maximum flexibility during their holidays and at the end of their assignment.

Whatever you decide, each option has associated costs – from estate commissions for a home sale to property management for rentals or long absences. 

Additional expenses when considering an overseas assignment

While not technically part of your initial relocation, you may also want to consider:

Travel costs during an overseas assignment

Most relocation packages include travel expenses to move to an assignment country and a flight home when the assignment is over. In addition, some relocation packages cover the costs of air travel for a set number of “home visits” per year or per assignment. 

GASA (Goods and Services Adjustment)

Your employer may offer a Goods and Services Adjustment if the cost of living in your new country is much higher than that of your home country. This allows your employer to keep your current salary and bonus structure intact while helping you meet increased financial needs.

Tuition and housing assistance

Your employer may reimburse the tuition expenses for your minor children, especially in countries where local schools are not an option due to language differences. You may also get assistance with your housing costs if they vary significantly from your housing costs at home. 

Lump Sum Relocation Frequently Asked Questions FAQ 

Q: What are the most common types of lump sum relocation packages? 

A: There are many types of lump sum relocation packages. The most common are cash lump sum – a fixed amount that the employee spends as needed, “Managed Cap” – where the employer contracts with specific providers and provides cash or “points” limits for services, and hybrid models – which combine a lump sum for general services and contracted critical services such as taxes or immigration.

For an international assignment, a pure lump sum offer without additional support is rare. Companies have a responsibility to ensure that their operations and employees are compliant with the laws and taxes of where they they work, so expect a hybrid approach for most overseas relocation offers. 

Q: What is an average lump sum relocation package?

A: Lump sum relocation packages can vary widely based on the destination country and an employee’s role and tenure within the company. Packages can range from limited reimbursement for in-country moving to full reimbursement of all aspects of an international relocation. 

Q: What expenses can I negotiate for my lump sum relocation package?

A: While each relocation package is different, you and your employer should clarify who will pay for the following:

• Orientation trip: airline flights, hotels, food, child-care during your trip
• Moving expenses: household goods moving and storage, auto shipping, pet relocation
• Temporary housing at origin and destination
• Real estate services: costs associated with selling or managing your property at home and real estate search in your assignment country 
• Language and cultural training
• Ongoing expenses which may include but are not limited to: tuition, housing, “home visit” trips, GASA, tax preparation and tax gross-ups, etc. 

Q: What does GASA mean?

A: GASA stands for Goods and Services Adjustment. It refers to a cost of living adjustment that may be paid by an employer to an employee on an overseas work assignment, particularly if the assignment country has a much higher cost of living than the employee’s home country.

Q: What does gross-up for relocation expenses mean?

A: In many tax jurisdictions, lump sum relocation packages are considered taxable benefits. In this case, a company may help offset additional taxes by increasing lump sum reimbursements to cover both the relocation expenses as well as employment taxes associated with the benefit. 

Get the most from your lump sum relocation package

If you are wondering how to get the most from your lump sum budget, we can help. We specialise in relocating the employees of major companies around the world, and we help individuals like you every day with custom international moving solutions. 

Spend your lump sum wisely - on just the relocation services you need. Contact one of our international moving specialists today. 

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