If one necessarily has to live in an apartment in order to be able to perform work for a company (e.g. relocation to a big city in Europe), would it one save money (in taxes, etc.) if the company reduced one's salary by the monthly cost of paying the living arrangements, and then the company would pay those living arrangements on one's behalf. Doing this should result in a lower gross income, and therefore less taxes?

For example, suppose company X pays $5,000 a month in salary and apartment rent is $1,000 a month. Would it be more financially sound to instead have company X pay a salary of $4,000 a month with the added benefit that company X now pays for the rent of $1,000 a month?

EDIT: To help out if relevant tax laws do matter, I am a U.S. citizen who would be working and living in Ukraine for a period of a year.

  • 2
    This greatly depends on the relevant tax laws, so without knowing these this question cannot be answered. – littleadv Dec 12 '14 at 20:18
  • This does seem like the sort of benefit that your company would have to report as taxable income to the IRS if you were working in the US. – dg99 Dec 12 '14 at 22:10
  • well if your an expat working in some country's with "issues" you might expect a hardship bonus BTW the FO and State have very serious warnings about travel to that region – Pepone Dec 12 '14 at 23:06

In most cases the rent paid by the company would be include as part of your salary for tax purposes, so your income would still be seen as $5000 per month.

  • How does that differ from a relative or family member contributing to another's rent? – user3898238 Dec 12 '14 at 21:42
  • 2
    @user3898238 If someone were to pay your rent, that would be considered income for tax purposes. There are exemptions for gifts, but if your employer is giving it to you in return for work that's not a gift. – DJClayworth Dec 12 '14 at 21:54
  • @user3898238 - your employer would be reporting to the government how much they pay you including any benefits like rent payments, as they would be using this as an expense against their revenue in order to pay less tax themselves. If a friend or family member decides to pay your rent for you as a gift it is usually not reported to the government (unless as a gift) so would be treated differently. – Victor Dec 13 '14 at 21:11

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