What are payments called that offset differences in day-to-day expenses between a host and parent country?

Payments that offset differences in day-to-day expenses between a host and parent country are known as cost-of-living allowances. These allowances are designed to ensure that employees who are relocated to a different country do not suffer a decrease in their purchasing power due to differing costs for goods and services.

When employees move from a country with a lower cost of living to one with a higher cost of living, the adjustments this allowance provides help preserve their financial status. This is particularly important for international assignments, where employees need to maintain their standard of living despite changes in economic conditions.

In this context, equity allowances are typically associated with providing compensation related to ownership interests rather than cost adjustments. Overseas premiums often refer to additional pay for accepting an overseas position, but they do not specifically address day-to-day living cost differences. Tax differentials would involve compensations related to tax liability rather than everyday expenses. Therefore, cost-of-living allowances are the most appropriate designation for payments made to balance everyday expense disparities.