½Û×ÓÊÓƵ

Tax equalisation

Tax equalisation is an agreement that the employee will receive a guaranteed net salary which is comparable to their normal home country income. The tax that the employee would have hypothetically paid at home is deducted from gross earnings to calculate the taxable earnings and kept in a special company account. The employee receives the guaranteed net income (which is the contractual income) and does not personally pay any UK or non-UK tax during the assignment.

The UK and non-UK tax is paid by the employer as necessary from the hypothetical tax account and the employer also pays any tax in excess of the hypothetical tax. If there are any UK or non-UK tax refunds during the assignment, these are credited to the hypothetical tax account and retained by the employer (rather than repaid to the employee). See Tax equalisation: HS212 Self Assessment helpsheet for HMRC's guidance on tax equalisation.

The fact that the individual's net income