Lump sum assignment packages: tax considerations
A lump sum payment from your company for your move is treated as fully-taxable income. When employees have questions about tax issues, some companies provide support through their tax departments. Others pay a so-called "gross-up", increasing the gross payment to ensure that the net amount is equivalent to the agreed sum. And others provide no support at all on tax issues.
The simplest solution is when the company pays the agreed lump sum straight to the move management company. This direct billing agreement between employer and moving company is simpler because you do not need to declare the lump sum as taxable income. Conversely, if no direct billing agreement is arranged, you will be taxed on the lump sum payment. Of course, you can reclaim these costs in your tax return, but that will be a year later.
Please be aware that Henk International cannot give advice on income tax returns or taxation regulations. The information on this page should be considered as general advice only. Please contact a tax advisor for specific advice on tax issues regarding moving and international assignments.
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