Brexit Tax Talk: Brexit and globally mobile employees
The treaty Articles relating to dependent workers, determining an individual’s place of tax residence under treaty rules and claiming foreign tax credits will remain as they are.
Social security for existing mobile employees who have certificates of coverage/E101s/portable documentsThese certificates will remain valid until their expiry date as per the Withdrawal Agreement, provided the employee continues in the same or a similar role in the same country.
Social Security for newly posted workersThe social security coordination provisions in the Withdrawal Agreement ensure workers who move between the UK and the EU only have to pay into one country’s social security scheme at a time. However, the country to which payments are made will depend on whether the EU country has agreed to apply the ‘detached worker’ rules.
Historically, it has been possible to remain in your home country social security scheme if you work in the UK/EU temporarily. However, the bi-lateral and reciprocal agreements that the UK previously had with the EEA and EU are no longer valid and social security coordination between the UK and EU countries is now governed by the Withdrawal Agreement for those in scope and by the Trade and Cooperation Agreement for others. There are additional bilateral arrangements in place with Ireland reflecting the Common Travel Area.
The UK has negotiated with individual countries in the EEA/EU to determine whether a separate social security agreement will be agreed, applying the ‘posted worker’ provisions.
Countries that have not yet indicated whether they are agreeable to continuing with the posted worker provisions are: Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, The Netherlands, Poland, Romania, Slovakia, Slovenia, Spain.
The deadline for the decision from each country is 1 February 2021. If no agreement is reached, when you send workers overseas from the UK you will need to contact the overseas territory to determine what needs to be done. Each country will have its own rules but essentially any person working in an EU member state that has not signed up to a new agreement with the UK on posted workers will be immediately subject to the social security legislation of the country they are working in
If you currently have employees temporarily working in Norway, Iceland, Liechtenstein or Switzerland then different rules apply and you should seek specific advice.
Cross border activities involving the UK and the EEA/EFTA countries and Switzerland as well as the EU will be covered by the separate agreements in place at the time of activity.
Frontier workers (people who live in one country and work in another) are protected by the Withdrawal Agreement and are able to apply for a permit to continue their pattern of work/social security contributions.
9 February update: HMRC has confirmed that the EU has notified the UK that all Member States have expressed their wish to opt-in to apply the detached worker provision. This means that workers moving temporarily between the UK and the EU will continue to pay social security contributions in their home state, and receive necessary healthcare treatment in the country where workers are temporarily posted
HMRC online applicationsAdditional information will be required to determine eligibility for a certificate of coverage from HMRC. The following will be needed:
- Nationality and place of birth
- Whether the individual and/or their employer has EU Settlement Scheme status
- If the individual or their employer has more than one nationality including details about each one and how they were acquired.
- If the individual or the employer has a family member who is a national of the EU, Norway, Iceland, Switzerland or Liechtenstein with details about the relationship
- Details of any duration of work/Stay in the EU/EFTA including any gaps or interruptions in their work detailing the reason and including all key dates.
ResidenceHolding a Certificate of Coverage for social security purposes does not entitle a person to remain living in a foreign country and you should check the immigration rules.
If you are a national of the EU, Iceland, Liechtenstein, Norway or Switzerland and were living in the UK before 1 January 2021 you must apply for EU settled status by 30 June 2021 if you want to protect your right to stay in the UK as well as your social security rights.