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Hey PE.JR, I'm here to break the silence...any of these links help you?:
I hope those threads give you a bit more insight.
Bump
When you jump from banking to PE you usually have to take a paycut, at least if you‘re coming from a top bank or EB. That gap gets smaller but you will not earn as much cash comp as your counterparts that are still in banking on associate or VP level.
Associate base will be somewhere between EUR80-120k in the first year post banking (note that many don‘t give you credit if you stayed longer in banking, i.e. the guy who left as A2 or 3 will get the same initial PE pay as the guy that left as AS1 or 2), plus bonus of 50-120% (appreciate it is a wide range, but this include MM as well as LC). There‘s some that give you carry after Y1, others only once you get VP (or beyond).
What should be noted is that carry in Germany is quite attractive due to the lower tax rate vs income so ideally you want to be at a place that doesn‘t wait too long with giving carry (ie I would take a place with somewhat lower immediate cash pay and early carry vs. a higher cash pay place, but that’s just me). Cash pay is just taxed too high in Germany to make it worth it (almost 50% is going to the tax man).
50%??? My god no wonder european gdp growth is 0% - no incentive to work hard. I thought the effective rate of 35% in nyc @ 300k was too high! Not to mention no national sales tax /vat unlike europe
Yes deductions are terrible in countries like Germany or the Nordics for high paying jobs. That's why I mentioned that carry is the way to go (taxed 30%) in e.g. Germany.
Just to be sure that is not only taxes but full deductions incl. national insurance, pension, etc. but yes what ends up in your pocket is ~50%. Only upside is you get a functioning social safety net and healthcare system (+free) as you can now see during Covid and not the clusterfuck you have in the US or the UK. But 50% deductions is a heavy price to pay for it.
What does GDP mean to you as a person? Not much. So the US has more GDP growth than in Europe... and at the same time in the US income inequality is massively larger than in Europe. I'd argue individually this is more important / palpable than "hurr durr GDP".
You have a marginal taxrate of 42% at 60k and 45% at 280k . Effective taxrate is always below 50%
Thank you that is helpful. I am coming from a PE fund in NYC moving back to Germany. So wanted to get a feel.
Would make ~250k all-in in NYC as 1st Yr Associate. Was expecting ~100k Base + 80k Bonus (Euro) in Germany. May be a bit high.
Thanks again!
I would not say that is unrealistic tbh, but depends on the fund. Are you in the LC or MM space?
Also need to take into account the full equation with all deductions but also cost of living (which as you know is much cheaper in GER than in NYC) for all of this so comparing headline value is not that meaningful.
Run the numbers after taxes and expenditures instead of straight up pay+bonuses. You said "back to Germany", so I suspect you are German and/or lived there for at least some duration - do the numbers add up in your favor? Do they at least get really close? That's when you can start making arguments for non-pay related trade-offs, like medical coverage, surrounding community (family & friends?), working hours, maybe even prestige.
MM in Germany pays around 150k all in UMM/ LC around 180-200k all in
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