What is the difference in cost of living between countries?

When trying to determine the cost of living in a country or in a specific city, many factors have to be taken into consideration: actual costs for accommodation, food, clothing, entertainment etc; level of salaries; deductions for taxes and social security; currency exchange rates.

Two well-known surveys, the Mercer Cost of Living Survey and the UBS Prices and Earnings Survey (follow Special Information and click on Prices and Earnings, 2008 update), give interesting indications.  See also our guides to international tax legislation.

The monthly rent for an unfurnished, two bedroom luxury apartment, for example, varies from EUR 711.67 in Johannesburg to over EUR 2’100 in Paris up to EUR 3’483.79 in Tokyo. On the other hand a cup of coffee is cheapest in Buenos Aires at EUR 1.40 and most expensive in Moscow at nearly EUR 7.

The cost of living index alone, though, does not give the whole picture. An important factor is whether you are paid in the local or in a foreign currency. In the latter case you need to establish the risks of currency fluctuation for you. When comparing levels of salaries, bear in mind the deductions for taxes and social security. The highest salaries may be paid in Oslo and Copenhagen but in Zurich you will have the highest net earnings. Zurich is also top of the list in regards to purchasing power.

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