Which term describes the practice of increasing expatriate base pay to offset taxes due to overseas compensation?

Which term describes the practice of increasing expatriate base pay to offset taxes due to overseas compensation?

• A. Global team
• B. Grossed-up income
• C. Globalization
• D. Greenfield operation

Answer: (B)

Focusing on how to keep an expatriate’s net pay stable when overseas taxes change the take-home amount, the term is grossed-up income. Employers raise the base pay so that after income taxes are withheld in the host country, the employee ends up with the intended net amount. This approach is often tied to tax equalization practices, where the goal is to keep the employee’s after-tax financial position similar to what it would be at home, despite differing host-country tax rates. The other terms don’t fit: a global team is just a dispersed group of employees, globalization is about worldwide integration, and a greenfield operation refers to building new facilities abroad—not compensation adjustments.

Focusing on how to keep an expatriate’s net pay stable when overseas taxes change the take-home amount, the term is grossed-up income. Employers raise the base pay so that after income taxes are withheld in the host country, the employee ends up with the intended net amount. This approach is often tied to tax equalization practices, where the goal is to keep the employee’s after-tax financial position similar to what it would be at home, despite differing host-country tax rates. The other terms don’t fit: a global team is just a dispersed group of employees, globalization is about worldwide integration, and a greenfield operation refers to building new facilities abroad—not compensation adjustments.