So HR just informed us that my wife will not be on the expat package due to budget constraints. Therefore, the housing allowance that was promised is no longer offered. However, HR did say that they can work with us and raise the salary to make up for this.
My question: Why can't they just reallocate the compensation to offer housing? If she gets a salary of $124,000 USD/year, why not offer her $100,000 + $24,000 in housing? We'd much prefer that as it would save us a bit on taxes.
Are there corporate tax issues that would make a company prefer to compensate everything as salary rather than salary + allowance?