What does Gross-Up Clause mean?
Gross-Up Clause refers to a provision in contracts where the employer or production company agrees to increase an individual’s compensation to cover additional taxes or fees, ensuring that the person receives a specific net income after deductions. This clause is often used in the entertainment industry when actors, directors, or crew members work in different tax jurisdictions and are subject to multiple taxes. The gross-up clause protects the talent from bearing the financial burden of these extra costs.
Example:A film producer agrees to include a gross-up clause in the actor’s contract to cover foreign taxes, ensuring the actor takes home the same net earnings as if they were working in their home country.
Example: A director working on an international co-production has a gross-up clause in their contract to offset the tax liabilities from multiple countries.
Did You Know?
Gross-up clauses are commonly used in international contracts to protect actors and directors from double taxation!
