Tax Equalization Methodology Sample Clauses
The Tax Equalization Methodology clause establishes a framework to ensure that employees on international assignments do not experience a tax burden greater or less than what they would have incurred in their home country. Typically, this involves the employer calculating a hypothetical home-country tax and adjusting the employee’s compensation so that any additional foreign tax liabilities are covered by the employer, while any tax savings are returned to the employer. This clause is essential for promoting fairness and predictability in expatriate compensation, preventing tax disparities from influencing employees’ willingness to accept international assignments.
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Tax Equalization Methodology. The BKC-designated tax consultant will determine the appropriate method to ensure the executive and BKC pay their fair share of the taxes incurred during the assignment. The executive’s share of the tax burden is called “hypothetical tax” (see below). The appropriate approach will depend on whether there are multi-jurisdictional tax liabilities as a result of the executive’s employment relationship with the Company and its Affiliates. Whether or not there will be tax liabilities in more than one (1) jurisdiction will depend on the locations and circumstances involved, such as whether there is a tax treaty between the two countries. The methodology chosen will involve one or more of the following: • The executive continues to have actual home-country taxes deducted from their pay; • “Hypothetical tax” (see below) is deducted from the executive’s pay; or • BKC pays the USA tax liability and/or Canadian tax liability on “tax-equalized income” (see below).
Tax Equalization Methodology. The Company-designated tax consultant will determine the appropriate method to ensure the executive and the Company pay their fair share of the taxes incurred during the executive’s employment relationship with the Company and its Affiliates. The executive’s share of the tax burden is called “hypothetical tax” (see below). The appropriate approach will depend on whether there are multi-jurisdictional tax liabilities as a result of the executive’s employment relationship with the Company and its Affiliates. Whether or not there will be tax liabilities in more than one (1) jurisdiction will depend on the locations and circumstances involved, such as whether there is a tax treaty between the two countries. The methodology chosen will involve one or more of the following: n The executive continues to have actual home-country taxes deducted from their pay; n “Hypothetical tax” (see below) is deducted from the executive’s pay; or n The Company pays the U.S. tax liability and/or Canadian tax liability on “tax-equalized income” (see below).
Tax Equalization Methodology. The BKC-designated tax consultant will determine the appropriate method to ensure the expatriate and BKC pay their fair share of the taxes incurred during the assignment. The expatriate’s share of the tax burden is called “hypothetical tax” (see below). The appropriate approach will depend on whether there are home-country and/or host-country tax liabilities as a result of the international assignment. Whether or not there will be tax liabilities in the home and host countries will depend on the locations involved and the circumstances of the assignment, such as the length of the assignment and whether there is a tax treaty between the two countries. The methodology chosen will involve one or more of the following: • The expatriate continues to have actual home-country taxes deducted from their pay; • “Hypothetical tax” (see below) is deducted from the expatriate’s pay; • BKC pays the home-country tax liability and/or host-country tax liability on “tax-equalized income” (see below); or • BKC reimburses the expatriate for the tax he or she paid on assignment-related allowances and benefits. Note that the expatriate will have either actual tax withholding or hypothetical tax deducted from a particular paycheck, and in general, not both. However, it is possible in the year when the assignment begins, and in the year when the assignment ends, both actual tax withholding and hypothetical tax deductions may be appropriate at different times during the year.