Tax equalisation & protection policies — how much of this can I do myself?
Some of it, yes — and we will say so on the call if that is the honest answer. The parts that are worth paying for are the ones where a missed election, a missed deadline or an unverified threshold costs more than the fee: under equalisation the employer bears the actual host and home tax and deducts a hypothetical home tax from the employee; under protection the employee keeps any windfall.
What if I have already filed and got it wrong?
That is a common starting point. We re-derive the position, identify whether an amendment or a disclosure route is the right vehicle, and tell you which one preserves the relief that is still available. The order matters more than the speed.
How long will it take?
It depends on the documents rather than on us. Once the pack is complete most filings turn around inside a fortnight; anything that needs a certificate from a tax authority runs on that authority's timetable, which we tell you at the start rather than at the end.
What is the difference between tax equalisation and tax protection?
Equalisation keeps the employee in the same position as if they had stayed home. The employer bears the actual home and host tax, and deducts a hypothetical home tax from the employee's pay instead. If the assignment location taxes more heavily, the employer absorbs it; if it taxes less, the employer keeps the saving. Protection is weaker and cheaper. The employee pays their own tax, and the employer tops them up only if they end up worse off than they would have been at home. Where the host country taxes less, the employee keeps the windfall under protection and does not under equalisation.
What is hypothetical tax and why is it being deducted from my salary?
It is the tax you would have paid had you never moved, calculated on your ordinary home-country pay and circumstances. Under an equalisation policy the employer takes that figure from your pay and then meets your real home and host tax bills directly. The deduction is not tax and is not remitted to any authority; it is the employer recovering the share of the cost the policy says is yours. It is normally estimated at the start of the year and settled once the actual returns are filed, which is why an equalisation settlement can produce a payment in either direction long after the year has closed.
Who keeps the saving if the host country's tax is lower than home?
That single question is the main reason the two policies cost different amounts. Under equalisation the employer keeps it, because the employee has already been placed in their home-country position through the hypothetical tax deduction. Under protection the employee keeps it, because protection only promises they will not be worse off. Assignments into lower-tax locations are therefore much cheaper for the employer under equalisation, and assignments into higher-tax locations cost the employer the same under either policy. A policy that does not state this plainly tends to be argued about at settlement, when the amounts are already known.
Why does our assignment cost far more than the salary we budgeted?
Because tax paid on an employee's behalf is itself usually taxable pay, so meeting the bill increases the bill. Covering that increase increases it again, and the calculation has to be iterated until it settles. That gross-up cycle is where assignment budgets are lost, and it compounds with social security, benefits and any housing or schooling provided. The effect is largest on assignments into high-rate locations, which is exactly where a policy is most likely to be applied for the first time. Modelling it before the assignment letter is signed is the difference between a known cost and a discovered one.
Do we need a written policy before we sign the assignment letter?
It is far cheaper than agreeing terms afterwards. The assignment letter creates the obligation; the policy decides what it costs and who bears each part. Without one in place, the questions that arrive later have no agreed answer: whether equity, bonus and investment income are covered, who keeps a host-country refund, what happens if the assignment ends early, and how the settlement is calculated. Once the employee is abroad and the numbers are known, every one of those becomes a negotiation with an individual rather than a policy applied consistently across a population.
How is the equalisation settlement calculated when the assignment year ends?
Once the home and host returns are filed, the actual tax the employer has borne is compared with the hypothetical tax already withheld from the employee. If too much hypothetical tax was taken, the employee is repaid; if too little, they owe the difference back. The calculation has to pick up everything the policy covers and exclude what it does not, which is why the scope of personal income matters so much. Settlements are frequently delayed by a late host-country return or a refund that has not yet arrived, so the policy should say how an unsettled balance is treated when someone leaves.
How many days can I spend in a country before I become tax resident?
It depends on the country, and a day count is only ever the start. Many use a threshold in a tax year, some also look at averages across several years, and some have no day test at all and decide on where your home and life are. Two countries can both conclude you are resident, which is what the treaty tie-breaker exists to settle. Counting days without checking the tie-breaker is how people end up filing as resident nowhere. See the residency tie-breaker.
Can an accountant in one country file my return in another?
Yes, where they are authorised to represent you with that tax authority and the filing is done electronically. What matters is not where the adviser sits but whether they can lawfully act for you and are competent in both systems — a return prepared with no knowledge of the other country is where the relief gets missed. We file on both sides, from offices in India, the USA, Canada and the UAE. See how we work.
