Compensation and benefits

Costing & Budgeting - Balance sheets and assignment costings

IPM calculates the cost of each assignment on an individual assignee basis which means that you can see the true cost of each and every assignment, year by year


Tax and social security calculations

We understand the complicated tax and social security rules, requirements, and laws. The individual assignees’ tax status will dictate how much tax they pay and to whom. It may entitle them to capital gains or even income tax breaks.

We use our expert knowledge to incorporate these complicated issues and plan for every eventuality. We ensure you are fully compliant, by ensuring your requirements are fulfilled in both the home and host country.

Calculations of Hypothetical Taxes
Many of our clients have adopted the tax equalisation approach to pay and benefits. We prepare the balance sheet calculations for you; we take into account all components of tax and social security planning. As part of the balance sheet preparation, we will calculate hypothetical taxes for both the home and host country. Generally, an employer will try to ensure their employees are no worse off as a result of an overseas assignment, in relation to tax.
Where a home-based or HQ salary is the starting point, the two main options for a tax reimbursement structure are tax protection and tax equalisation:

Tax protection: employee pays all home and host country taxes, however as part of the year-end tax reconciliation the company reimburses any excess tax over and above that which they would have paid had they stayed at home (i.e. will be no worse off)
Tax equalisation: employee pays hypothetical tax via withholding based on the home country tax they would have paid had they stayed at home, with the company paying actual worldwide tax via gross-up or direct tax payment (i.e. will be no worse or better off).

Where a host-based salary structure is utilised, the assignee is usually liable to deductions for actual host country tax.

Need to find out more?

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