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EU citizens are free to move, live and work in any EU member state. This free movement of people was created with the aim to promote a mobile workforce across the EU.

The UK Government has announced that it wants to terminate the arrangement of free movement as part of the Brexit process, which will have a significant impact on how multi-national companies operate with their staff in the EU. 

Rules surrounding wage taxation and social security are dependent on each EU member state, subject to common rules, such as EU social security regulations. It will be important to follow developments in this area to understand the impact of the end of free movement on multi-national employers and their employees.

We can provide expert advice and support on:

  • Reviewing your workforce arrangements to identify any potential issues with regards to wage taxation or social security rules
  • Responding to any critical questions that your employees might have regarding their tax, social security or pension position
  • Identifying key aspects to consider when employing new staff members from outside the UK

Typical questions from our clients:

Will EU citizens be taxed differently in the UK post Brexit?

The taxation of employment income should not change as a result of Brexit, regardless of whether employees are EU nationals working in the UK or UK nationals working in the EU. Employees will not face double taxation as a result of Brexit.

Which social security regime will apply to workers being posted to the UK after Brexit?

Where EU citizens are seconded to the UK and hold a valid A1 certificate, employers will continue to be exempt from operating National Insurance Contributions. The UK Government has specifically stated that it will continue to follow the EU regulations for EU (and EEA) Nationals coming on assignments initially.

Which social security regime will apply for UK workers posted to EU states after Brexit?

Issues could arise, however, where UK companies send people to other EU/EEA countries. Whilst no changes should happen initially, if the interim agreement is agreed between the UK and EU, on a longer term basis, it will be up to the individual EU countries how they treat British individuals, who are assigned to their locations, from a social security perspective.  It is possible in some cases that individuals and employers could be liable to double social security and specialist advice should be sought in these cases.

Will there be any changes to pension obligations for EU workers posted to the UK?

Pensions auto-enrolment obligations for internationally mobile workers will not change. This is governed by UK pensions and employment law and EU Nationals seconded to the UK should typically remain exempt from any pensions auto-enrolment liability, as they are not “ordinarily working” in the UK.

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