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Author Topic: Move to Barcelona for Job that Pays 25% Less?  (Read 1248 times)

squallywood

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Move to Barcelona for Job that Pays 25% Less?
« on: April 17, 2017, 03:51:04 PM »
Hey Everyone,

I'm considering a job move that would bring me to Barcelona from USA for a job that pays less and looking for some input. It's the same company but they do a market-based compensation review, which results in roughly 25% less. The reason I want to move is life experience and the chance to get true Spanish immersion to become fluent (and Catalan.) Thankfully, company pays all moving expenses. However, I'm having some doubts about the move because I'm 26 and in the best years to contribute financially to my investment accounts to compound into the rest of my life.

Current financial situation is really good with projected total compensation of ~170,000 USD of which 95,000 is salary and the rest being stock grants vesting (which is why it's projected, assuming price stays the same). I'd take an immediate hit on the salary and then the stock grants would be granted at a lesser amount in future years while in Spain. Effective tax rate for tax year 2016 was 20% and taxes in Spain would be 24%. I was on track to max out 401K this year but don't yet understand how contributions work while living abroad. I have 50,000 in retirement accounts between Roth, 401K, and general taxed account.

Am I crazy for considering a job that pays that much less, or do I seize the opportunity to live abroad?

TL;DR: 26 years old, make $170,000, do I take job in Spain that pays 25% less plus 4% more in taxes?

rpr

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Re: Move to Barcelona for Job that Pays 25% Less?
« Reply #1 on: April 17, 2017, 04:04:34 PM »
I just want to post in this thread because I love Barcelona and the Catalunya region of Spain. It is absolutely beautiful and there is so much to do.  Just keep in mind that Barcelona itself is a fairly expensive city and from what I have been told, it is difficult to find affordable housing. Will your company be helping with that.

Edit: Besides the compensation, will it affect positively or negatively future career prospects? Is this a short term move?
« Last Edit: April 17, 2017, 04:06:25 PM by rpr »

spjulep

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Re: Move to Barcelona for Job that Pays 25% Less?
« Reply #2 on: April 17, 2017, 06:12:40 PM »
You will still be making a ton of money. Becoming fluent in a new language and having exceptional life experiences will also reward you for your entire life. Do what you can to mitigate the financial hit -- negotiate, look into the foreign earned income exclusion, accept a small home or get a roommate. Also can you come back to your job in the U.S. afterward at the higher salary? For taking a salary reduction, you also want to consider the impact on future earnings (most will compare to your most recent job). Again I don't think it's a reason to miss out on an amazing opportunity, but see what you can do to mitigate.

squallywood

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Re: Move to Barcelona for Job that Pays 25% Less?
« Reply #3 on: April 17, 2017, 08:59:54 PM »
It doesn't necessarily improve future career prospects but probably will as long as I do well in the position.

It is an indefinite move where I don't have a guaranteed return date, but I see myself doing it for 2-4 years then coming back to the states.

When I come back to the states, I'll get bumped back up to my original compensation.

Company doesn't provide for a housing allowance or anything, but they set me up with tax advisors, immigration support, and someone to help find a housing.

Thanks for the input so far!

MVal

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Re: Move to Barcelona for Job that Pays 25% Less?
« Reply #4 on: April 17, 2017, 09:14:43 PM »
Holy smokes, yes, do it!! Boy, would I love to be in your shoes. My salary is a fraction of yours, so picture someone like you making nearly twice what I do now and being able to live in Spain while doing it sounds amazing! Use MMM's employment of the stoicism philosophy; imagine you make less than $50K and live in an average American city. Now compare that to your current opportunity to make more than $50 grand and live abroad!

You are so young and still have amazing income for your age if you do this. Take advantage of your youth to travel and learn languages. I spent a semester in Spain and it really turned me from a poor-speaking Spanish minor to being able to actually have a conversation with someone in Spanish. And English is not as prevalent in Spain as it is in other European countries, so being forced to speak more often will really push your immersion quickly. Barcelona is a beautiful place and the most cosmopolitan part of Spain. I think you'd dig it.
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The soul of the sluggard craves and gets nothing, but the soul of the diligent is made fat.

Proverbs 13:11
Wealth obtained by fraud dwindles, but the one who gathers by labor increases it.

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Liberty Stache

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Re: Move to Barcelona for Job that Pays 25% Less?
« Reply #5 on: April 18, 2017, 11:43:01 AM »
Normally I would vote yes to this type of question but for your specific situation, I voted no. Here's why:

Ask yourself the question: Why don't I spike my savings rate to 70-80% for the next ~5 years, build up a seven figure nest egg, then live where ever I want to live indefinitely, on your own time table?

Regardless what you decide, congrats on getting yourself to this point in time. You've done a great job.

"Sloth, like rust, consumes faster than labor wears, while the used key is always bright" ~Benjamin Franklin, The Way to Wealth

slowsynapse

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Re: Move to Barcelona for Job that Pays 25% Less?
« Reply #6 on: April 18, 2017, 12:07:41 PM »
Congrats on the great opportunity.  As you are younger, I am not sure how much you have managed to save in current assets, but when considering taxes in Spain, also account for the wealth tax also called Patrimonio.  If you have a lot of savings outside of a personal residence, you can end up owing a little bit more in tax.  While it is most likely a trivial amount, it is good to know about so you can plan before hand.

golden1

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Re: Move to Barcelona for Job that Pays 25% Less?
« Reply #7 on: April 18, 2017, 12:10:06 PM »
With your compensation level I would without a doubt take the position.  Barcelona is straight up amazing. 

merula

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Re: Move to Barcelona for Job that Pays 25% Less?
« Reply #8 on: April 18, 2017, 01:37:26 PM »
Normally I would vote yes to this type of question but for your specific situation, I voted no. Here's why:

Ask yourself the question: Why don't I spike my savings rate to 70-80% for the next ~5 years, build up a seven figure nest egg, then live where ever I want to live indefinitely, on your own time table?

Regardless what you decide, congrats on getting yourself to this point in time. You've done a great job.

The problem with this is immigration issues and the patrinomio slowsynapse mentioned, which is payable on *worldwide* assets for Spanish residents. https://www.blevinsfranks.com/news/blevinsfranks/article/wealth-tax-spain-2017

Part of my FIRE dream is spending 3-4 months per year in Northern Spain, but I don't think I could afford to be a Spanish resident.

I studied abroad in Barcelona in college. It's such an amazing city.

sequoia

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Re: Move to Barcelona for Job that Pays 25% Less?
« Reply #9 on: April 18, 2017, 02:42:08 PM »
It doesn't necessarily improve future career prospects but probably will as long as I do well in the position.

It is an indefinite move where I don't have a guaranteed return date, but I see myself doing it for 2-4 years then coming back to the states.

When I come back to the states, I'll get bumped back up to my original compensation.

Company doesn't provide for a housing allowance or anything, but they set me up with tax advisors, immigration support, and someone to help find a housing.

Thanks for the input so far!

If this was me, I would want this in writing:
1. How long will I be staying in Barcelona. I would set up a definite time instead of open ended. Something like I want to return in 2 years, but with option to renew every year if things works out. Not sure if this is possible with your company.   
2. When I return to US, will I have my old job? Will I have my compensation back? This is important because what happen you return, and they offer you at a reduced salary, or your present job is not available - they have hire someone. Now what will you do?

Understand that company moves on, and people moves on. In 2-4 years, your boss in the US may not be with the company anymore, so now you are dealing with a new boss/manager. New manager said yeah your deal 2 years ago was with so and so, and since it is not written, I do not need to honor it. Too bad we already hire this new kid to replace you. Heck, this company maybe bought out by another company, and you are dealing with a new management team.

Sounds like a great opportunity, but think long term and make sure you have plan B incase it does not work out.

"It doesn't necessarily improve future career prospects but probably will as long as I do well in the position."
Personally, I would not do it if it does not improve future career. I will need something very solid in return before taking a 25% paycut. Such as after this Barcelona adventure in 2 years, I am not coming back to my old position, instead I will be the manager that comes with higher compensation.
 
« Last Edit: April 18, 2017, 02:50:06 PM by sequoia »

NathanDrake

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Re: Move to Barcelona for Job that Pays 25% Less?
« Reply #10 on: April 18, 2017, 10:19:26 PM »
how are you earning that much at 26? HCOL area?

MrSal

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Re: Move to Barcelona for Job that Pays 25% Less?
« Reply #11 on: April 18, 2017, 11:45:28 PM »
Hey Everyone,

I'm considering a job move that would bring me to Barcelona from USA for a job that pays less and looking for some input. It's the same company but they do a market-based compensation review, which results in roughly 25% less. The reason I want to move is life experience and the chance to get true Spanish immersion to become fluent (and Catalan.) Thankfully, company pays all moving expenses. However, I'm having some doubts about the move because I'm 26 and in the best years to contribute financially to my investment accounts to compound into the rest of my life.

Current financial situation is really good with projected total compensation of ~170,000 USD of which 95,000 is salary and the rest being stock grants vesting (which is why it's projected, assuming price stays the same). I'd take an immediate hit on the salary and then the stock grants would be granted at a lesser amount in future years while in Spain. Effective tax rate for tax year 2016 was 20% and taxes in Spain would be 24%. I was on track to max out 401K this year but don't yet understand how contributions work while living abroad. I have 50,000 in retirement accounts between Roth, 401K, and general taxed account.

Am I crazy for considering a job that pays that much less, or do I seize the opportunity to live abroad?

TL;DR: 26 years old, make $170,000, do I take job in Spain that pays 25% less plus 4% more in taxes?

That amount of $ in Spain you are rich... believe me!

Your costs will be much lower most likely other than gas ... I would do it in a heartbeat... you might get 25% less but might actually get to save more in the end while still enjoying life.

englyn

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Re: Move to Barcelona for Job that Pays 25% Less?
« Reply #12 on: April 19, 2017, 01:47:26 AM »
Do eeet! We save money so we can live more life. Don't pass up an opportunity that it sounds like you'd love, just to save more.

MMMaybe

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Re: Move to Barcelona for Job that Pays 25% Less?
« Reply #13 on: April 19, 2017, 03:13:41 PM »
You could live like a king in Barcelona on that amount. Most people there make far less than you and costs are correspondingly less.

Do it! Its a wonderful city. I spent 6 months there and loved it.

KisLivingAbroad

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Re: Move to Barcelona for Job that Pays 25% Less?
« Reply #14 on: April 23, 2017, 03:31:42 AM »
18 months ago we moved from the US to Germany for a job with my existing employer. It has been a great experience and we are happy we made the move but we did so knowing the higher tax rate and losing the ability to invest in our 401k plans would be a short term financial hit. To us the travel benefits and life experiences have far outweighed the financial downsides.

I do not know what type of flexibility your company is willing to offer but you can potentially negotiate tax equalisation terms to offset the impact of an asset tax or any recurring differences. I'd also see if they are willing to pay your bonus or some portion of your annual comp in dollars to offset any fx risk you are taking. I had co-workers make the move when 1 Euro : 1.35 USD and now they  struggle to pay US based liabilities (mortgage, student loans, etc...) because 100% of their comp is in Euros.

Best of luck in making your decision.

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Grogounet

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Re: Move to Barcelona for Job that Pays 25% Less?
« Reply #15 on: April 23, 2017, 04:15:39 AM »
Let me get straight:
I know guys that are earning less then 60k euros per annum (couples) and still leave comfortably in barcelona.
The only question I would ask my self is: How will I invest my euros back to the US? Will Interactive brokers or similar do that?

Some have already said it, an experience abroad is not only an experience. this will change your life, give you a different prospective on your goals, the way you work, the way you interact with people, and even maybe your FI goals and the way you want to live while FIRE.

I can only tell you that, should you take this opportunity, your life is going to change!

Doubleh

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Re: Move to Barcelona for Job that Pays 25% Less?
« Reply #16 on: April 23, 2017, 04:22:46 AM »
Expat tax is complicated and real professional advice is generally worth while in these situations. However some of the objections being kicked up on here are likely not anything to worry about.

For example immigration should be taken care of by the company so should not have a concern to you. Patrimonio is fully exempted for the first EUR700k of assets per person, so unless you have significant taxable savings or home equity you are probably not going to be troubled by it. Your ability to return to USA in two or four years at something comparable to or better than you current salary should probably not be a concern. Salaries are based to local markets and COL, that's why you are being offered less in Spain - it is not a demotion. If the old job is not here for you in 4 years - how likely is it at your age that you would still want the same job with same company in 4 years anyway? Do you think having a track record of living and working in a whole different society, being fully bilingual in a major world language and all the soft learnings you would get from the experience will make you more or less employable?

Remember when planning the impact on your Stache you need to consider how much you have left after expeneses to save, not how much you earn. In Europe it may well be similar or better than if you stay. Also remember it is not an apples to apples comparison - consider that in Spain you will have in the order of 6 weeks paid holiday, and can travel extensively round Europe for very low cost. Give me a shout when you fly to London! In terms of quality of life experience it sounds like a no brainer!

Regarding foreign earned income exclusion bear in mind that if you take this you cant make IRA contributions out of excluded income. But it sounds like you may not need to do this anyway, as if your rate of tax in Spain is likely higher than in US then you wont pay any extra tax to Uncle Sam, as you get a credit for taxes already paid. My wife is a US expat and we have found Greenback Taxes great for explaining these complicated issues in a simple way and use them to file all her tax returns, can strongly recommend.

Good luck!



Regarding foreign earned invcome

Bucksandreds

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Re: Move to Barcelona for Job that Pays 25% Less?
« Reply #17 on: April 23, 2017, 06:11:57 AM »
I would for sure do it but my dream has always been to live in Western Europe so I'm biased. Living in a culture that shares my values would be worth immense amounts of money to me. There is no right or wrong answer to this question, however.

eddie

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Re: Move to Barcelona for Job that Pays 25% Less?
« Reply #18 on: April 23, 2017, 06:27:22 AM »
I vote move.  It will probably delay your FI by a couple years given the salary drop, but you still make a ton and Barcelona is an incredible city.  My wife and I spent a week there four years ago. 

I don't make near as much as you, but combined my wife and I have made about 200k gross the past 2 years.  So we're in the same financial ballpark.  If one of us got a job making 150k in Barcelona and the other couldn't work we would take that in a heartbeat.  Yes, it would delay our FI, but living in Barcelona would seem a little like a working retirement to us.