'New Reality' - UK Employee working remotely overseas
Discussion
Do you have a legal entity in the country in question. I told my employer (pre-covid) that I wanted to move o Ireland. They had to set up a legal entity here, pay me in euros and pay the appropriate local taxes (that applies to both myself and the employer).
It is likely that the country that this person wants to work from will want to receive their tax, but also some form of employers tax.
Also, have you considered the way that this may impact the persons comp. If I had a London based employee wanting to work from say, Warsaw, I would want to benchmark the salary with the Warsaw market, after all the cost of living is lower and the reason you get paid well in London is because the cost of living is so high.
EDIT - sorry I should have read the rest of the thread, to see that this is now irrelevant, prior to posting.
It is likely that the country that this person wants to work from will want to receive their tax, but also some form of employers tax.
Also, have you considered the way that this may impact the persons comp. If I had a London based employee wanting to work from say, Warsaw, I would want to benchmark the salary with the Warsaw market, after all the cost of living is lower and the reason you get paid well in London is because the cost of living is so high.
EDIT - sorry I should have read the rest of the thread, to see that this is now irrelevant, prior to posting.
dibblecorse said:
All of that and also the fact that since Brexit a UK citizens ability to reside / work in the EU has been massively curtailed, they are effectively working as aliens, will potentially have zero benefits that they are not in violation of the terms of and the employer has a liability to make up the tax liability / social welfare payments etc that come with having a remote employee, the work being for UK customers from UK servers is irrelevant.
Put this another way Joe & Pepe Databasios S.p.A has Luigi in the UK, haven't old anyone, he only works for Italian customers via Italian servers but is resident in the UK for a period of time outside of that that is given as 'grace' usually 90 days or so, Joe & Pepe Databasios S.p.A are then liable to HMRC for relevant taxation purposes and to all intents and purposes post Brexit young Luigi us working here illiegally ... thats the crux of of, if they want Luigi here legally they need to register an entity and get Luigi a UK Work Permit as Brexit has f***ed young Luigis ability to build his career in the UK without one.
People can't just choose where they want to live / work .... there are rules, some apply to the individual and others to the employer.
PS - The tongue in cheek Italian references are allowed, I am one ...
From a tax point of view this was the case pre-Brexit. UK citizens living in EU countries with EU passports were equally obliged to comply with local tax requirements. Obviously there's a work permit / visa requirement now, but its a fallacy to suggest that whilst members of the EU we could move and work anywhere in the bloc whilst paying tax in our home country. A lot of UK contractors working in Germany etc learned this the hard way.Put this another way Joe & Pepe Databasios S.p.A has Luigi in the UK, haven't old anyone, he only works for Italian customers via Italian servers but is resident in the UK for a period of time outside of that that is given as 'grace' usually 90 days or so, Joe & Pepe Databasios S.p.A are then liable to HMRC for relevant taxation purposes and to all intents and purposes post Brexit young Luigi us working here illiegally ... thats the crux of of, if they want Luigi here legally they need to register an entity and get Luigi a UK Work Permit as Brexit has f***ed young Luigis ability to build his career in the UK without one.
People can't just choose where they want to live / work .... there are rules, some apply to the individual and others to the employer.
PS - The tongue in cheek Italian references are allowed, I am one ...
Granted, it's now necessary to arrange work permits / visas as well - but the tax bits were never that simple to begin with.
theboss said:
From a tax point of view this was the case pre-Brexit. UK citizens living in EU countries with EU passports were equally obliged to comply with local tax requirements. Obviously there's a work permit / visa requirement now, but its a fallacy to suggest that whilst members of the EU we could move and work anywhere in the bloc whilst paying tax in our home country. A lot of UK contractors working in Germany etc learned this the hard way.
Granted, it's now necessary to arrange work permits / visas as well - but the tax bits were never that simple to begin with.
Indeed, and maybe I over simplified it but the bar was a lot lot lower to enable an employees ability to work out of an EU 3rd party country, now the EU is no different to wanting to work in the US / Oz ...Granted, it's now necessary to arrange work permits / visas as well - but the tax bits were never that simple to begin with.
dibblecorse said:
Indeed, and maybe I over simplified it but the bar was a lot lot lower to enable an employees ability to work out of an EU 3rd party country, now the EU is no different to wanting to work in the US / Oz ...
It's one that I never really fully understood - before or after if I'm honest.A few years ago I had to go over to Belgium for a few weeks consultancy work. This was me acting for my Ltd Co, engaged by the UK arm of a US multi-national, for the Belgian office of a UK multi-national. I jumped in my car, drove over and turned up on the Monday morning as if it were in Kent or Yorkshire or anywhere else in the UK.
What I hadn't expected was that the Belgians expected me to have registered with the municipal authority and informed them I was working there, provided an address and complied with any other necessary formalities. They ended up turning a blind eye and I carried on working remotely for them for a few months after. So much for freedom of movement, I thought.
Similarly right now I'm working for a US client. When restrictions are off its clear they want me and a few others to come over. I understand its allowable under the current visa waiver system to travel for business purposes such as meetings, but I'd be reluctant to suggest to the border authorities that I was intending to stay there for 90 days and would be working onsite for a US client for some of that time.
I also suspect that what you described happened all the time and will continue to. I certainly know EU nationals who have 'gone home' in the pandemic to be near family but kept their UK salaried job and have stayed there will little expectation they will return. I don't know how that will pan out in the longer term but it's obviously a nice arrangement for anyone who gets away with it.
theboss said:
Similarly right now I'm working for a US client. When restrictions are off its clear they want me and a few others to come over. I understand its allowable under the current visa waiver system to travel for business purposes such as meetings, but I'd be reluctant to suggest to the border authorities that I was intending to stay there for 90 days and would be working onsite for a US client for some of that time.
That’s another ‘is the risk worth it?’ question for me. If you know you shouldn’t be working on the ESTA & VWP, but you know you will be, then you know the risk of being found out is (probably) being barred from entry to the US in the future. The authorities are going to be more than a little grumpy with the engaging business too, but of course they’ll just wash their hands of you.brickwall said:
Countdown said:
brickwall said:
One month will almost never trigger nothing so as said above…hardly merits a press release.
In my company the big one we’re worried about is being deemed to be employing someone in country X by virtue of them working from there, then suddenly being liable for employers payroll/social security taxes.
Just out of interest -In my company the big one we’re worried about is being deemed to be employing someone in country X by virtue of them working from there, then suddenly being liable for employers payroll/social security taxes.
1. Does your Company have a base in Country X?
2. Do you pay your Employee's salary into a UK bank account or into an account in Country X?.
3. What would you do if your employee spent 6 months in the UK and 6 months in Country X every year?
I can see how the individual might get prosecuted by the Tax Authorities (of the Country they are based in) if he was earning income from abroad and not declaring it (in exactly the same way as if i was receiving income from my dad's business which is incorporated broad). However I cannot understand how tax authorities in one country can pursue a Company registered in another country when the company isn't doing any kind of business in the foreign country.
Re (3) above; one of our Non Exec Directors is no longer domiciled in the UK. They've got permission from HMRC to be paid gross (without deducting tax/NI). They're based in France but have homes elsewhere in the World. "We" would not be prosecuted for nots deducting taxes or social security payments by whichever country they decided to work from.
Let’s say
1. I am an entirely U.K. based company - I have no legal entity outside the U.K., all my business is done under U.K. law., most of my customers are U.K. based, and what few suppliers I have are also overwhelmingly U.K. based.
2. Country X has some rule in their tax code that says “if an individual conducts work from this country for more than 90 days a year, then they fall under employment regulations of this country for the duration of their time here.”
In this instance - yes the employee may be liable for income tax etc and that’s their problem. But suddenly the employer is liable for whatever employers payroll/social security taxes there are, employment regulations, working visas,…it all gets complicated.
For the employer I can completely say “we do not want to burden ourselves with the costs and hassle of having to comply (or even check whether we need to comply) with the employment regulations and tax codes of foreign countries” - and putting policies around this for their employees.
We are still in the land of 'potentially' and 'may be a claim' I guess.
aka we have no idea and the chance of Spanish HMRC taking Bill and Bobs 10 man company to court is immeasurably tiny but as we have internal legal teams and HR who in a lot of cases are exceptionally risk averse (rather than stating the risk and letting the business decide), we will never know
bigandclever said:
theboss said:
Similarly right now I'm working for a US client. When restrictions are off its clear they want me and a few others to come over. I understand its allowable under the current visa waiver system to travel for business purposes such as meetings, but I'd be reluctant to suggest to the border authorities that I was intending to stay there for 90 days and would be working onsite for a US client for some of that time.
That’s another ‘is the risk worth it?’ question for me. If you know you shouldn’t be working on the ESTA & VWP, but you know you will be, then you know the risk of being found out is (probably) being barred from entry to the US in the future. The authorities are going to be more than a little grumpy with the engaging business too, but of course they’ll just wash their hands of you.I'm representing a a UK business supplying services to a US end client
If I go over there for 5 days, rock up at their office to say hi to everyone, have a round of golf with one of the bosses and get a contract extension signed that seems like a reasonable interpretation of the rules.
What if I go over there and perform the services by working on a project for a few weeks or a month collaboratively with some of the clients staff and socialise with them outside work, all in the interests of delivering the service and securing ongoing business.
What if I decide I want to stay out there for longer but obviously not beyond the allowed 90 days.
Where do you draw the like between going out there on business and going out there to work.
theboss said:
The problem is defining what constitutes business travel
I'm representing a a UK business supplying services to a US end client
If I go over there for 5 days, rock up at their office to say hi to everyone, have a round of golf with one of the bosses and get a contract extension signed that seems like a reasonable interpretation of the rules.
What if I go over there and perform the services by working on a project for a few weeks or a month collaboratively with some of the clients staff and socialise with them outside work, all in the interests of delivering the service and securing ongoing business.
What if I decide I want to stay out there for longer but obviously not beyond the allowed 90 days.
Where do you draw the like between going out there on business and going out there to work.
The answer is in your post above, its 90 days, 'on business' and 'to work' are the same thing.I'm representing a a UK business supplying services to a US end client
If I go over there for 5 days, rock up at their office to say hi to everyone, have a round of golf with one of the bosses and get a contract extension signed that seems like a reasonable interpretation of the rules.
What if I go over there and perform the services by working on a project for a few weeks or a month collaboratively with some of the clients staff and socialise with them outside work, all in the interests of delivering the service and securing ongoing business.
What if I decide I want to stay out there for longer but obviously not beyond the allowed 90 days.
Where do you draw the like between going out there on business and going out there to work.
Taita said:
Interesting thread thanks for responses.
We are still in the land of 'potentially' and 'may be a claim' I guess.
aka we have no idea and the chance of Spanish HMRC taking Bill and Bobs 10 man company to court is immeasurably tiny but as we have internal legal teams and HR who in a lot of cases are exceptionally risk averse (rather than stating the risk and letting the business decide), we will never know
How do you ensure that the person making the decision is at the right level, represents all of the business, etc etc? We are still in the land of 'potentially' and 'may be a claim' I guess.
aka we have no idea and the chance of Spanish HMRC taking Bill and Bobs 10 man company to court is immeasurably tiny but as we have internal legal teams and HR who in a lot of cases are exceptionally risk averse (rather than stating the risk and letting the business decide), we will never know
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