Salary Check

Today a session was organised to give the students insights about laws relating to taxes, immigration and employment. It’s true! The highest tax bracket in Belgium is 55%! Based on the current tax structures, I crunched few numbers to find a regression between Salary levels in Bangalore and Belgium which will lead to same net savings. I could be way off target here… :)

If X is the salary in Belgium and Y is the EUR equivalent of Indian Salary, the regression I end up with is Y = 0.6017X – 26,962.00. Basically means the salary in India will yield the same net savings as the salary in Belgium even if the Indian salary is 26962 Euros less than 60% of the salary in Belgium. euroFor example, A 78000 Euro salary in Belgium will result in net saving of 5000 Euro per annum, which is the same net saving for a salary of 20000 Euros (78000*0.6016 – 26,962) in India. Note: Utility of 5000 Euros in India is exponentially higher than in Belgium.

Assumptions: 

  • Monthly expense in Belgium -> 2000 Euros + 5% of gross salary every month
  • Monthly expense in Bangalore -> 500 Euros (equivalent) + 5% of gross salary every month
  • Exchange rate: 1 Euro = 60 Rupees
  • 12 % – 13 % social security contribution each month
Advertisements

5 thoughts on “Salary Check

  1. Hello friend,

    I have a job offer with the following salary package:
    Fixed gross monthly salary = 4400 Euros per month before tax.
    Net monthly salary: 2650 Euros per month.
    Following are the deductions:
    Company provided car for which I have to pay = 160 Euros per month.
    Loan(House loan + Personal Loan + Insurance)EMI back home in India = Rs. 75000 ~ 1272 Euros per month.

    Following are additional benefits:
    Free internet.
    13th month salary (4400 Euros – tax = 2250 Euros)
    Double vacation salary (4048 Euros – tax = 2050 Euros)
    Performance bonus ( 2200 Euros – tax = 1200 Euros).
    Total bonus = 2250 + 2050 + 1200= 4500 Euros.

    Salary details in India:

    Total gross salary : Rs. 19 lakhs per annum – fixed salary ~ 32203 Euros per annum.
    Total gross salary per month = 2684 Euros per month before tax.
    Total tax = Rs. 400000 = 6780 Euros per annum = 565 Euros per month.
    Total net salary = 2120 Euros per month.
    Monthly expenditure = Rs. 25000 = 425 Euros per month.
    EMI Loan = 1272 Euros per month.
    Car EMI = Rs. 10000 = 170 Euros per month
    Savings = 253 Euros per month.

    Is my Belgium offer, a good deal?

    1. Hi There,

      The equation is simple. Saving in India is 253/mnt. To save 253 with the Belgian offer (excluding bonus), your monthly expenses must be 965/mnt (2650-1272-160-253). Considering avg. monthly rent for a 1BR apartment is 600 to 900, the offer isn’t good. You may have to negotiate harder. Having said that, choice of career is not based on finance alone… so the offer might be more attractive if you consider other factors… but financially, in comparison to your job in India, this isn’t good.

      Cheers.
      Ashwin.

      1. Thanks a ton, Ashwin.

        You have a wonderful statistical analytical sense!

        Coming back to my salary computation:
        You have not included my 4500 Euros bonus per annum that I will get over and above my monthly salary of 2650 Euros per month. This will result in 375 Euros per month which offset the 253 Euros saving that I would do in India.So theoretically, I have 1218 Euros to spend every month.

        This bonus amount will be higher than 4500 Euros if there is no social contribution charges on the 13th month bonus component, double vacation component, and performance bonus component. It could go upto 5even 500 Euros.

        So my 1st question is: Does the Belgian government deduct social insurance charges on the bonus component of the salary. Or to simply put it, what are the deductions applicable on the bonus component of the salary package, other than income tax(which is higher for bonus components).

        If I pay 1000 Euro per month as rent for a furnished 2 BR apartment (with car park), I have 218 Euros to spend every month. With this I cannot survive, I am sure. I have another option. I can pay back a part of my loan EMI component so that I am left with a committment of 1000 Euros per month for EMIs instead of 1272 Euros per month. So now, I would have (272+218 = 490 Euros) per month.

        So my 2nd question, Can my Wife and I survive with 490 Euros per month for food, travel, basic stuff like soap, shampoo, etc, ?

  2. Hi Ashwin and Karthik,
    I recently have a job offer from a Belgian company with the following details:

    Gross monthly: 4300 Euro (~65000 Euro /year including bonus)

    There are another things like lunch coupons, which I am ignoring.

    How much net I would be getting after all deductions. Also, is there different treatment on tax deductions for foreigners?

    We are a three member familly with a 2.5 yr old kid. Further, we would be staying in Antewerp. I would appreciate if you can please provide me some figures on monthly expenditure (like rent for 2 bedroom apartment, food, childcare etc). Please help me with your thoughts as you might already have Belgian experience by now. You can either reply here or on my personal email id (saloni1982@gmail.com).

    Thanks,
    Saloni

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s