Which type of expatriate is a citizen of the country where the firm is headquartered?

employees who have citizenship in the country where the hiring company is headquartered. 

a parent country national who works overseas for an extended period of time.

employees who are hired or chose to return to their home countries to work for the multinational

individuals from the foreign country where a multinational has decided to set up a facility 

these employees enjoy citizenship in a country other than that of the foreign subsidiary where they work or the country where the parent company is based.

when firms maintain a talented group of managers who can be plugged into any country and successfully represent the firms values.

a employee who stays on at one or more foreign subsidiaries for an extended period of years.

a foreign employee working abroad who is brought to the home country where the parent firm is based to fill a temporary position at the corporate headquarters for as long as a few years.

an approach that stressed ability and performance when selecting international staff without regard to nationality

an approach which headquarters makes all key decisions and foreign subsidiaries have little autonomy or input

when human resource management control is placed in the hands of the foreign subsidiary, but broad decisions are still made by headquarters. 

when foreign employees can move from country to country in a particular region, rather than into headquarters positions.

occurs in a corporate environment in which frequent interruptions between parent, host, and third country nationals

occurs in a corporate environment in which frequent interactions occur between employees from a specific country who represent different races, ethnic groups and so on

synergistic multiculturalism 

an approach to managing cultural diversity that involves being open to the positive aspects of all cultures and attempts to leverage cultural differences in ways that benefit the company.

an approach to managing cultural diversity in which the firm believes its way is the only way and cultural diversity is ignored. 

an approach to managing cultural diversity in which the firm believes tis way is the best way and tries to smooth out differences across the firm by imposing corporate values

the extent to which a foreign culture is different from a person's home country, making adjustment more difficult in an expat context

the return and adjustment of expatriates back into their home country after an extended stay overseas

24) An employee who is not a citizen of the country in which the firm is located but is acitizen of the country in which the organization is headquartered is referred to as a(n)________.A) host-country nationalB) third-country nationalC) expatriateD) operantAnswer:CExplanation:C) An expatriate is an employee who is not a citizen of the country inwhich the firm operations are located, but is a citizen of the country in which theorganization is headquartered. A host-country national (HCN) is an employee who is acitizen of the country where the subsidiary is located. A third-country national (TCN) is acitizen of one country, working in a second country, and employed by an organizationheadquartered in a third country.Diff: 2Page Ref: 386-387Chapter:14Skill:ConceptLO:325) The U.S. expatriate population has grown rapidly in recent years because of the largenumbers being sent to ________.A) Russia and ItalyB) China and IndiaC) France and MexicoD) China and TaiwanAnswer:BExplanation:B) An expatriate is an employee who is not a citizen of the country inwhich the firm operations are located, but is a citizen of the country in which theorganization is headquartered. The U.S. expat population has grown rapidly largelybecause of the large numbers of workers who are being sent to China and India.Diff: 2Page Ref: 386-387Chapter:14Skill:ConceptLO:3

What Is an Expatriate?

An expatriate, or expat, is an individual living and/or working in a country other than their country of citizenship, often temporarily and for work reasons. An expatriate can also be an individual who has relinquished citizenship in their home country to become a citizen of another.

Key Takeaways

• An expatriate is somebody who has left their country of origin in order to reside in another country.
• Expats may leave home for work reasons and seek more lucrative employment in a different country.
• Expatriates may live for a while overseas or completely renounce their citizenship of one country in favor of another.
• Retiring abroad has become an increasingly popular option.
• The IRS may impose an expatriation tax on individuals who renounce their citizenship, usually based on the value of a taxpayer's property or income in the United States.

Understanding Expatriates

An expatriate is a migrant worker who is a professional or skilled worker in their profession. The worker takes a position outside of their home country, either independently or as a work assignment scheduled by the employer, which can be a company, university, government, or non-governmental organization.

If your employer sends you from your job in its Silicon Valley office to work for an extended period in its Toronto office, you would be considered an expatriate or "expat" after you arrive in Toronto.

Expats usually earn more than they would at home, and more than local employees. In addition to salary, businesses sometimes give their expatriate employees benefits such as relocation assistance and housing allowance.

Living as an expatriate can be exciting and present an excellent opportunity for career advancement and global business exposure, but it can also be an emotionally difficult transition that involves separation from friends and family while adjusting to an unfamiliar culture and work environment. Hence, the reason behind the higher compensation offered to these migrant workers.

Special Considerations: Retiring Abroad

Much expatriation occurs during retirement. While most Americans spend their retirement in the U.S., a growing number are opting to retire overseas. People are motivated to relocate abroad at an older age for several reasons, including lower cost of living, better climate, access to beaches, or some combination of those and other reasons.

But it can also be tricky to navigate taxes, long-stay visas, and the language and cultural differences experienced when settling down in other countries.

Popular retirement destinations include countries in Central America, the Caribbean, and parts of Asia.

A common choice presented to a retiree expat is between permanent residency and dual citizenship. Note that neither dual citizenship nor residency gets you out of filing a U.S. tax return every year. It is both surprising and burdensome, but Americans still have to pay income taxes wherever they live, and they owe it no matter where their income was earned.

You may also have to file an income tax return in your country of residence, although most deduct the amount American residents pay to the U.S. via treaties that minimize double taxation.

If you're a retiree or near-retiree who's on the fence, you face a tough decision that will require some soul searching and research—and maybe a trip abroad (or several) to test the waters before you make any decisions.

Foreign Earned Income Exclusion

For Americans working abroad as expatriates, complying with United States income tax regulations is an added challenge and financial burden because the U.S. taxes its citizens on income earned abroad.

However, to avoid double taxation, the U.S. tax code contains provisions that help to reduce tax liability. Taxes paid in a foreign country can be used as a tax credit in the U.S., which when applied against the expat’s tax bill, reduces it.

The Foreign Earned Income Exclusion (FEIE), for example, allows expats to exclude from their tax returns a certain amount of their foreign income, which is indexed to inflation. For 2022, this amount is $112,000. For 2023, it is $120,000. An expat that earns, say $180,000 in 2022 from their job in a foreign country that is tax-free will only need to pay U.S. federal income tax on $180,000 - $112,00 = $68,000.

Foreign Tax Credit

The FEIE does not apply to rental income or investment income. Therefore, any income made from interest or capital gains from investments will have to be reported to the IRS. The Foreign Tax Credit (FTC) is a provision that ensures expats are not double-taxed on their capital gains. For example, assume an expat falls in the 35% income tax bracket in the U.S. This means their long-term capital gain on any investment is taxed at 15%.

Since the FTC provides a dollar-for-dollar credit against taxes paid to a foreign country, if the expat paid 10% tax to the country where they work, they'd only have to pay 5% tax to the U.S. Likewise, if they pay no tax to the foreign country, they’ll owe the full 15% tax to the U.S. government.

If the income tax paid to a foreign government far exceeds the amount of the credit (because the foreign tax rate far exceeded the U.S. rate), the expat will forfeit that amount. The credit, however, can be carried into the future.

Expatriation Tax

An individual who has renounced their citizenship in their home country and moves to another is also referred to as an expatriate for tax purposes and is subject to an exit tax known as expatriation tax.

According to the Internal Revenue Service (IRS), the expatriation tax provisions apply to U.S. citizens who have renounced their citizenship and long-term residents who have ended their U.S. residency for tax purposes, if one of the principal purposes of the action is the avoidance of U.S. taxes. This emigration tax applies to individuals who:

• Have a net worth of at least $2 million on the date of expatriation or termination of residency
• Have an average annual net income tax liability that is more than $178,000 if the expatriation date was in 2022 ($190,000 if the expatriation date is in 2023) over the five years ending before the date of expatriation or termination of residency
• Do not (or cannot) certify five years of U.S. tax compliance for the five years preceding the date of their expatriation or termination of residency

Advantages and Disadvantages of Becoming an Expatriate

Living and working in another country for an extended period of time can have its benefits. These can range from new experiences and adventure to more practical considerations like a lower cost of living or being closer to extended family abroad. Depending on where you settle, you may also get government perks like free healthcare and education and more favorable taxation.

There are also some potential drawbacks. Regarding taxation, unless you fully relinquish your American citizenship, you will still need to file tax returns each year and may need to pay taxes to Uncle Sam, even on income earned in your new country.

You'll also be a long way from home, potentially. This can make seeing friends and family more difficult, and time zone differences can also interfere with finding a good time to link up by phone or video chat. Learning a new language and customs can also be difficult for some, and certain items or products that you like may not be available where you live. And remember that not all countries enjoy the same level of political and economic stability that the U.S. does.

Pros

• New experiences and maybe a better climate

• Potentially lower cost of living

• Potential access to affordable healthcare

Cons

• Potential for double taxation

• Long way away from friends and family

• Language, cultural, political, and economic barriers

• Potential challenges securing the proper visa

What Does It Mean to Become an Expatriate?

An expatriate or "expat" is somebody who leaves their country of origin and settles abroad for an extended period of time, often permanently.

How Do Americans Become Expats?

If you are an American citizen and move to another country and plan to stay there, you have become an expat.

What Country Has the Most Expats?

The United Arab Emirates (UAE) and the U.S. follow Saudi Arabia in the rankings for the largest number of expats. The expat population makes up 98.4% of Saudi Arabia's total immigration population. Poland, Portugal, and Sweden had the smallest expat populations. Qatar had the highest proportion of expats compared to its total population, at 70.9%.

What Is Expat Taxation?

Americans living overseas still have to file U.S. tax returns unless they relinquish their American citizenship. Several international tax treaties exist to help minimize double taxation.

What Is an Expat Community?

When people relocate to a foreign country, they often find comfort in seeking out other foreigners, especially from their home country. Expat communities are enclaves of people from a similar national origin, often with their own school and shopping options. In many countries, English-speaking enclaves are called "Anglo" communities.

Which type of expatriate is a citizen of the country where the firm is headquartered foreign country national?

What is the country where an expatriate is working called?

Are citizens of the country where the MNE's subsidiary is located?

Is a citizen of one country working in a second country and employed by an organization?