Hypotax
The tax equalization is the notional tax on income (possibly plus all state taxes) of workers posted to Germany the employee that would have to be paid in his home country of workers if he had continued to reside there. The purpose of this special form of the net wage agreement is that the employee does not receive a lower or higher net wage than in his home country during his posting to Germany. The agreed gross wage in the home country minus the hypotax determined by the employer is the agreed net wage.
If the German taxes are higher than the foreign ones, the difference between the German taxes on the one hand and the Hypotax on the other hand is borne by the employer, which increases the wages. In the opposite case, the difference to be reimbursed to the employer is a negative income for the employee. However, the final amount of the Hypotax can usually only be determined after the end of the calendar year, so that changes in the level of wages may result in the assessment process.