Conducting activities overseas requires budgeting for specific programmatic costs that may not factor into similar planning for domestic projects. Budget considerations can include expenses related to foreign currency fluctuations, local tax schemes, employment compliance and contracting support, shipping fees and customs duties, local professional advisory and support services, insurance requirements, safety and security needs, and travel and accommodation.
Contact the IRSO Office when planning a budget for short and longer-term international activities to ensure foreign implementation costs are adequately considered and addressed.
Currency Fluctuations
Program budgets are developed in U.S. dollars, but many foreign transactions occur in local currency. Departments should frequently monitor exchange rates to better prepare for the impact of significant currency fluctuations and consider revising your budget, as needed and allowed by the award sponsor.
Local Tax Liabilities
Although UCSF is a public nonprofit education institution that is tax-exempt in the U.S., this exemption does not carry over to foreign jurisdictions. Program revenue, donations, payments, and international fund transfers may be taxed, depending on the local tax code. Common taxes abroad include those related to purchasing good and services, shipping or hand carrying items across borders, and employing staff.
Value Added Tax (VAT) is a common consumption tax levied on goods and services in many countries. Each country has its own policy regarding whether VAT is charged, and if so, whether and how it can be reclaimed. VAT recovery can be a lengthy process and it may take 12 months or more to receive a refund. VAT cannot be included as a direct charge in a federal grant for an international project. Departments are advised to explore processes to either waive or recover VAT. If exemption or recovery is not feasible, unallowable VAT should be transferred to an appropriate non-federal funding source.
Employment & Contracting
Employing or contracting staff in an international setting comes with additional costs associated with compliant local hiring practices. Separate of UCSF’s employee compensation structures, international employees or contractors’ compensation and benefits may be determined by the local market and local labor laws. Additionally, services such as local sponsorship, payroll processing or tax withholding requirements may increase costs of international hiring beyond employee/contractors’ compensation fringe benefits.
Import & Export Duties
The costs related to exporting equipment, goods, or services to other countries varies significantly depending on circumstances. In addition to potentially significant shipping charges, there are often export or customs fees to consider. The shipping or hand-carrying of technology, information, currency, or tangible goods across borders, may incur duties and customs brokerage fees.
Legal & Professional Services Fees
International projects may require in-country legal counsel or other professional services, especially when not collaborating with a local partner. Projects may need to engage local experts to advise and support during the set-up phase (e.g., researching local tax requirements) or for routine management (e.g., paying an accounting firm to manage local tax compliance throughout the life of the project). These expenses can be difficult to estimate during the planning phase, but allocating some portion of the project budget for these costs could help prevent future budget shortfalls.
Insurance
International activities may need additional, and sometimes local, insurance coverage. The most common insurance requirements abroad range from travel, health, and evacuation insurance to property (digital and physical), liability, and workers compensation. Even if a project or employee has a policy to cover claims in the U.S., it may not apply under another country’s laws, and project/employee may need to purchase a local policy to protect from financial and legal liability. For help determining how these requirements may apply to a planned activity or project, please contact Risk Management and Insurance Services.
Safety & Security
Depending on location and planned activities, projects may need to budget for physical security for lodging and research sites, transportation and travel security, and access to medical care.
Travel
Engagement with partners and communities, along with project oversight, may require significant foreign travel for international project support and implementation. Consider the usual travel expenses (e.g., flights and hotels), and those unique to international travel (e.g., immigration fees and vaccines). The University of California has contracts with several major airline, hotel and car rental companies to provide discounts and other benefits to travelers. Use the UC travel web portal ConnexUC or the UC travel agencies (BCD Travel, UC Travel Center) to take advantage of these programs including a range of booking options and potential discounts.
The Unexpected
When operating in a less familiar location, unexpected costs will likely arise. While you may be able to plan for foreseeable events that can cause program disruption (e.g. weather patterns and political elections), you also need to be mindful of unpredictable costs (e.g. emergency funds for disasters or attacks). If allowed by your funding source, have a contingency budget for these less foreseeable events. If it is not allowable, be prepared to draw on other unrestricted funds or potentially revise the program activities to stay within your original budget.