Now that the UK has officially left the EU, many employers have started to see travel and work restrictions apply to certain categories of employees who, before Brexit, could have travelled and worked freely within the EU. What do employers need to do to prepare for these new restrictions and ensure compliance for their employees and indeed for their own organisations?
Ireland is in a somewhat unique position insofar as the free movement of UK and Irish nationals between both countries has been retained under the Common Travel Area agreement. The status quo around the free movement of people for Irish and other EU nationals within the EU 27 also remains. There may therefore be an assumption that Brexit really has no immediate impact on the people agenda for Irish employers and for many organisations this will indeed be the case. For others, however, particularly those with UK or EU national employees, Brexit throws up a completely new conundrum, with immigration and global mobility concerns now something that many employers may find themselves needing to navigate, often for the first time.
The bottom line is that, since 1 January, freedom of movement of UK and EU nationals between the UK and the rest of the EU has ended. If you have either UK national employees who need to travel to another EU member state, or EU national employees who need to travel to the UK, these individuals are now subject to potential work permission requirements. There may also be restrictions and time limits on the activities they can carry out as business travellers. This is likely to have a major impact on employers with an existing globally mobile workforce and those with future expansion plans. Where once a UK national could simply move to another EU member state at short notice, and vice versa, attention and planning now need to be given to such travel arrangements. Not only does consideration need to be given to any new movement of people, EU nationals already resident in the UK as of 31 December 2020 will need to secure their right to live in the UK under the European Settlement Scheme. Similarly, UK nationals resident in the EU will need to secure their status and regularise their position under the specific rules for that country.
If you haven’t already done so, undertake a thorough review of your workforce and identify any frequent business travellers or those who are likely to be affected by immigration restrictions.
Plan ahead and build potential immigration requirements and robust pre-travel processes into your Global Mobility Policies.
Do your key stakeholders understand the impact the new requirements will have on the business? Identify who these stakeholders are and, if necessary, promote upskilling on immigration requirements.
Communicate with your employees and make them aware of any new pre-travel requirements or steps to secure settlement that they may need to undertake.
Consider the potential cost impact of obtaining necessary immigration clearance.
There are two aspects to consider. First, the actual changes brought about by the Brexit Trade Agreement in the context of Social Security. Secondly, dispelling some misconceptions around the application of Irish PAYE rules to Short Term Business Visitors.
The Social Welfare (Convention on Social Security between the Government of Ireland and the Government of the United Kingdom of Great Britain and Northern Ireland) Order 2020 came into effect on 1 January 2021. The purpose of the convention was to ensure that the social security rights and entitlements enjoyed by Irish and UK citizens under the Common Travel Area arrangements were maintained post Brexit. The Convention mimics the previous EU regime thereby ensuring that social security need only be paid in one jurisdiction. One key aspect of the Convention is that it applies to Irish or UK citizens only, who may work in either one or both territories.
Thankfully, supplementary provisions were included in a new protocol on Social Security Coordination as part of the Brexit Trade and Cooperation Agreement. This protocol ensures that EU or UK citizens who move between Member States will continue to be liable to pay social security contributions in one State at a time, typically where the work is undertaken. Special provision is made for ‘commuters’ and ‘posted/detached workers’ which provides such individuals may be retained within their home country social security system, subject to the appropriate applications being made and certain other conditions being met. This is particularly welcome in the case of EU citizens living in the UK who commute or are posted to Ireland to work and who would not have been able to avail of the Social Security Convention provisions above.
Action point: The key issue for employers is to understand where their workforce undertakes duties, their citizenship status and to make the appropriate applications under the revised rules to the relevant social security authority. Such applications are due from 1 January 2021 (any pre-existing applications/exemptions no longer will apply if made under EU rules while the UK remained a member of the EU).
There is no change to the underlying tax rules in Ireland as a result of Brexit. However, there is likely to be increased short term business travel between Ireland and the UK, largely due to our geographic proximity and the fact Ireland is the only English speaking member of the EU.
One myth that often exists is the belief that, provided an individual spends less than 183 days in Ireland, there are no tax implications for their UK employer. This is far from the truth - Ireland has a comprehensive set of rules applicable to Short Term Business Travellers/Visitors, which can quite easily give rise to an obligation to operate Irish PAYE based on an individual’s Irish workdays. Equally it is possible to avail of some concessions in respect of STBVs whereby Irish PAYE does not need to be applied, but only if the appropriate due diligence is undertaken in advance of the move as tight timelines to avail of these concessions are in place.
Action point: UK employers need to understand the travel patterns of their staff, the nature of the duties they are undertaking and the intended duration of those activities. Advice should be sought regarding the potential Irish PAYE (payroll withholding obligations) and whether there is a way to mitigate that obligation. This may require the submission of dispensation applications within 30 days of the individual’s arrival in Ireland. Furthermore, the employer should implement a robust system of tracking an employee’s Irish workdays and general Irish presence, in order to mitigate any potential breaches.
Brexit has now happened and the range of issues that continue to arise goes to underline how complex the issue of personnel movement has become - particularly having the right people, in the right place, at the right time. We have been at the forefront in assisting clients address these challenges and identifying tax savings where possible. We will continue to keep you updated on any developments as they arise.
Should you have any queries regarding the above issues or indeed any immigration or employment tax related matter, please reach out to your PwC contact or the Brexit team below.