Financial News makes an interesting point about Goldman Sachs: It apparently pays its European staff extraordinarily well. Employees at Goldman Sachs International--a rough proxy to the U.K. and European business--earned on average more than twice as much as their peers at the rest of the firm last year.

Goldman Sachs International paid $4.87 billion in pay, benefits and social security payments last year; the average for the 5,956 employees was $818,999. That's 90 percent more than the equivalent average compensation cost of 35,700 employees at Goldman Sachs around the world. It's two-thirds more than the equivalent figure of $492,050 cost per employee at Deutsche Bank's corporate and investment banking unit last year, the highest paying bank on Wall Street.

The mystery is what accounts for this apparent discrepancy. "The difference is not down to the $465 million paid by the bank for the U.K.'s bonus tax last year: that is stripped out of these calculations," Financial News reports. "Higher social security charges may account for some of it, or perhaps adjusting pay to address higher personal tax rate. And a large number of staff on expensive expatriate package may account for the rest, although none of these factors would seem to explain a gap of $465,000 per employee."

It may come down to some complex transfer pricing moves to ensure an optimal effective global tax rate. Big companies have become adept at this, though it remains an opaque phenomenon to most of us.

For more:
- here's the article

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