General Procedure and Computation of Hypothetical Tax Clause Samples

The "General Procedure and Computation of Hypothetical Tax" clause defines the method for calculating a hypothetical tax liability, typically for the purposes of determining payments, reimbursements, or adjustments between parties in a contract. This clause outlines the steps and assumptions to be used in the calculation, such as applying specific tax rates, considering certain deductions, or ignoring particular tax attributes that may not be relevant to the hypothetical scenario. Its core function is to provide a clear and consistent framework for tax-related calculations, thereby preventing disputes and ensuring fairness when actual tax outcomes may differ from those assumed in the agreement.
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General Procedure and Computation of Hypothetical Tax. The Company will bear the overall worldwide tax burden of Employee to the extent it exceeds Employee's hypothetical tax liability pursuant to procedures and guidelines set forth in the Company's Tax Equalization Policy ("Tax Policy") attached hereto as EXHIBIT A. As a result, the Company, with the advice of third party tax consultants, reserves the right to recommend that certain tax filing positions be taken and that various elections be made on Employee's home and host-country individual income tax returns in order to reduce Employee's tax burden. If Employee decides not to accept these tax filing recommendations, Employee will then bear the additional tax cost related to not taking the tax positions and/or elections recommended by the Company. Any home and host-country tax liabilities incurred by Employee, with respect to his compensation, bonus and benefits provided by the Company, in excess of the hypothetical tax liability will be paid by the Company. Conversely, to the extent that any tax benefits (e.g., exclusions, deductions, exemptions or credits) resulting from the international assignment reduce the Employee's worldwide tax liabilities below the hypothetical tax liability, the difference will benefit and be paid to the Company pursuant to the Tax Policy. The Company reserves the right, at any time, to change its Tax Equalization Policy in any way it deems necessary to accomplish tax equalization in the most efficient manner.
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General Procedure and Computation of Hypothetical Tax. The Company will bear the overall worldwide tax burden of Employee to the extent it exceeds Employee's hypothetical tax liability upon advice of third party tax consultants, which tax consultants reserve the right to recommend that certain tax filing positions be taken and that various elections be made on Employee's home and host-country individual income tax returns in order to reduce Employee's tax burden. If Employee decides not to accept these tax filing recommendations, Employee will then bear the additional tax cost related to not taking the tax positions and/or elections recommended by the Company. Any home and host-country tax liabilities incurred by Employee, with respect to his compensation, bonus and benefits provided by the Company, in excess of the hypothetical tax liability will be paid by the Company. Conversely, to the extent that any tax benefits (e.g., exclusions, deductions, exemptions or credits) resulting from the international assignment reduce the Employee's worldwide tax liabilities below the hypothetical tax liability, the difference will benefit and be paid to the Company pursuant to the Tax Policy. The Company reserves the right, at any time, to change its Tax Equalization Policy in any way it deems necessary to accomplish tax equalization in the most efficient manner.
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