Yes, in high-tax jurisdictions, imputed income can substantially raise an employee’s tax liability, especially if the benefit is significant (e.g., company-paid housing in expensive cities). Since the employee receives no cash from the benefit, they might face a higher tax bill without the liquidity to cover it. This can lead to dissatisfaction or even attrition in sensitive roles.
1EOR advises clients on how to structure compensation packages to balance benefits and tax exposure. For example, offering tax-equalization policies or cash allowances may ease the burden. Their expertise helps businesses design globally attractive compensation without unexpected tax fallout for the employee.