Nearly all expats receive relocation allowances - but there is often confusion over what expenses should be covered. Suzanne Kayzer from PricewaterhouseCoopers does some benchmarking.

Departure and settling-in allowances are usually paid by companies to their expatriates to cover the additional costs that expats face because of the fact that they move internationally on request of their employers.

Departure allowances are paid as additional costs in the home country; settling-in allowances as additional costs in the host country. Some companies pay these two allowances separately on respective payrolls.

What should be covered

When the allowance is meant as a kind of reimbursement of additional costs for the expatriate, the allowance should in principle be enough to cover the additional costs.

The company may either pay or reimburse some of the costs directly, such as costs of moving and storage, travel to the host country for the expat and his family and applications for work and residence permits.

Also language and culture courses and general preparation of the expat and family for living in the host country may also be paid directly or be reimbursed by the company if they feel such a preparation is important for the success of the international assignment.

Allowances should cover the costs that are not already paid or reimbursed otherwise.

The list can be almost endless, and the actual expenses will vary from one person to another and often from one country to another.

Most relocation allowances should cover:

1. Additional telephone expenses.
2. New clothing and/or (household) goods needed in the host country.
3. Sales of cars and purchase of a new car/import of the own car to the host country/ penalties for the termination of leasing contracts before the initial termination date.
4. Loss of non-refundable tuition or private club membership fees.
5. Babysitting fees during househunting trips.
6. Bank charges for opening new accounts, transferring funds and similar services.
7. Small appliances/transformers.
8. Driver's licence/automobile tag transfer.
9. Connection charges for telephone, electricity, gas, water, cables, etc.
10. Gratuities to movers, doormen, etc., and other unforeseen expenses;
11. Other incidental expenses associated with moving to another country.

If companies specify to their expats that the relocation allowance is intended to cover these costs (although not exhaustively), this will avoid discussion about each individual expense.

Most companies feel that items such as passports and suitcases should not be bought at the company's expense, since these items nowadays will also have to be purchased by other employees for private reasons.

What do companies generally pay?

The 1999/2000 PricewaterhouseCoopers International Assignment Survey shows that 76 percent of companies pays a relocation allowance. The level of the allowance is usually determined by management decision.

Of the companies paying an allowance, over a third of companies pay one month's salary, one in five pay a percentage of home gross salary and one in five pay a fixed amount.

Just under two thirds of companies pay this as a lump sum at the time of the move. A further third also pay a lump sum on repatriation.

This allowance is more likely to be paid by companies with a larger expatriation population. 45 percent of companies reported that they placed a cap on the relocation allowance. This is usually in the form of a fixed amount ranging from 765 euros to 14,346 euros, with an average of 7850 euros.

But above all, when your company considers paying relocation allowances, make sure you are clear on what is to be achieved by paying the allowance, and what it is intended to cover.

From there on you can start to determine the amount/percentage that you want to provide to your expatriates.

It seems easy to compare the amount of your allowance to that of other companies, but when the other reimbursement regulations are not comparable, you may be comparing apples to pears.