Contractors’ Questions: Which foreign cities cost contractors the most?

Contractor’s Question: Does it always follow that high-end contracting destinations pay contractors the most to compensate for the high cost of living there?

I’m asking because this Q&A implies cost of living to be a relevant consideration when weighing up where to contract abroad. I know clients in London tend to pay more to offset the costliness of the city; do the capital’s overseas rivals do the same?

Expert’s Answer: You do not say in your question which country you are looking at as a potential destination in which to professionally freelance.

So in Table 1.0 (below) we have ranked countries in order of how much they pay UK contractors annually on average, and in Table 2.0, we have ranked countries in order of their annual, average cost of living.  

In both tables, we have also provided each featured country’s overall ‘lucrative ranking.’ This allows you to see where each nation charts in terms of the average disposable income that a contractor will end up with. It is this factor -- how much the contractor tends to take-home after factors like tax and cost of living are deducted from their headline pay -- that usually interests professional consultants the most.

From looking at the table, you can see that a high salary can indeed be a good indicator of high take-home pay; as opposed to high-cost of living which appears to be a less reliable indicator.

In terms of cost of living if that’s your sole consideration as a UK contractor, in Europe, you could do a lot worse than Austria where the cost of living is very competitive, while beyond the continent, Malaysia has a very low cost of living.

Table 1.0 - Top-paying overseas work-destinations for UK contractors

    Salary Level (EUR) Lucrative ranking
1 India 185,000 1
2 Singapore 143,620 2
3 Switzerland 135,000 3
4 Belgium 120,000 11
5 Hong Kong 117,820 5
6 New York/USA 110,705 12
7 California/USA 108,451 9
8 Malaysia 101,000 4
9 France 100,000 10
10 Australia 92,561 7

Table 2.0 - Highest cost of living work-destination for UK contractors

    Cost of Living (EUR) Lucrative ranking
1 New York/USA 42,144 12
2 Switzerland 34,320 3
3 Hong Kong 32,160 5
4 California/USA 30,312 9
5 Singapore 27,384 2
6 UAE 23,256 8
7 Netherlands 22,788 13
8 Australia 20,700 7
9 Belgium 18,672 11
10 France 18,396 10

The expert’s answer is based on 2018 tax year data exclusively provided to ContractorUK by Access Financial, an advisory to Britons contracting overseas.

Monday 10th Dec 2018
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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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