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I have an EU citizen who is an employee (based in UK for last 10 yrs, has settled status all good). They are worried a parent's health is declining and at some point in the not-too-distant future (perhaps next year or so) might want/need to move back to their home country to help care for them. They do a job that can 99% be remote - and where flexible working around care commitments is perfectly viable. Really good employee who would want to keep if we possibly can. If the situation arises I would want to be armed with the facts before I talk to HR (who IME would be keen to look supportive but in reality not that helpful for anything which might create paperwork!).
So how would it work if a "home working" employee moved their home outside the UK? There must be tax implications for both the employee and company? If that was temporary (say 12 months) is that any better? We do have offices in mainland Europe but not in the country they would move to. Obviously, one option would be to move the relative here, Brexit has probably made that more complex but they don't speak English so I'm not sure that's sensible anyway.
One possibility might be to switch to a contractor type relationship - IR35 understandably makes HR paranoid about that - but how does that apply to overseas people?
Anyone dealt with this sort of thing?
Do you take contractors from any agencies that have an international division? Ask them if they have any options?
Can't help, other than to say I wish more line managers were as conscientious as you clearly are!
Best of luck!
Oh, the country they are looking to go back to doesn't do a digital nomad visa/scheme thing? That avenue may help with tax implications.
We do have offices in mainland Europe but not in the country they would move to
If both office and relative are in the EU, then employee can be employed by EU office and live / work anywhere else in EU I think?
I think tax issues will kick in after a period of time - six months from memory but check that of course - you can't be resident overseas but pay tax in UK for very long. My work (public sector) have said a flat no to working from a location outside of the UK.
You would also have to consider security and data protection if your employee handles personal data, and that will depend on what country it is.
Even making them a contractor would not solve your problem, they would have to be contracted to another organisation who gives your company staff on a service supply basis (or something - again not my field). I have looked into this, and as a direct employee it is pretty much impossible.
Aside from tax there would be local employment rights to consider.
not 100% sure on this point, but I've heard that if you don't have an office in that country and the employee then goes to work there, it may be construed that you now have an operation there and may be liable to local taxes.
I know that this is no specific help, but my employer (a large company, with proper knowledgable HR, who are generally very good and accommodating about this stuff) have said that even though we can all pretty much work where we want now, it has to be in the UK, cos tax, employment law, data protection, all the stuff listed above.
Had a similar situation with one of my team recently. Thanks to Brexit, your employee has a maximum period of 6 weeks period working in the EU without any tax implications. Depending on which country they are based in will determine which tax laws are applied - and they can be significant to both employee and employer.
Mrs kilo has had similar, employing people who either wish to be based or employed via a company setup overseas. The crux for her is usually the employment law in the overseas territory (hiring, firing, sick leave, maternity etc,etc) rather than any Uk tax implications. So a lawyer versed in that country’s employment law is probably more use than HR, who if they are any good wouldn’t answer the question with our recourse to legal advice.
What's been said - bit of a tax nightmare that needs working through - so better get cracking with HR.
If they were to retain an address in the UK and you've told them they should be in the UK then how will you ever know or care where they are?
My employer doesn't ask me where I am, ever.
Their IT security department will know - they have ways...
We're a small company (sub 100 people) and have had people working remotely all over the world for 20+ years, so can't be that hard! France, Spain, Dubai, USA, Kenya, South Africa, Russia, Oz, Poland etc. I think a lot of them are contractors, which probably makes it simpler.
Some started remotely (Sales & support), others moved home (as in the OP's case) and we just kept them on even though they left the UK. One guy want back to Oz, another to Poland etc.
Sorry I don't know about uk but as a perm Spanish resi I can spend 2 years away from Spain and not break spain resi rights. 're tax in 99% cases it follows residency. Good for elderly parent care, job, kids education etc.
These deals are usually reciprocal.
Well done looking after your staff.
Spanish gov website say they will do spot checks and Chuck anyone off who has resi status and is breaching it.
Not an employment lawyer, but I am an accountant.
Agree with Poolman, we have an Irish Ltd company and employ one brit locally in Dublin to handle some import export work and admin etc. She works from home. They are paid paye from the irish ltd co. Zero issue with IR35.
Our problem is that 99% of the income comes from work done in the UK, and both UK and Irish revenue agree we should pay corp tax in the UK. Which is a bummer as Irish corp tax is much lower...
So I see no issue with them invoicing you monthly as a contractor (ie with them as an EU ltd co), no IR35 issues at all as they do not fall under these rules as not a UK resident or taxpayer. Note local law may not allow them to be Ltd Co but it won't matter, whatever entity that they are is offshore and not subject to IR35.
Tax is one of a number of issues to consider as will employment law in the territory the employee is resident. Simplest solution is for employee to go contract and establish own company in territory of residence to provide services via a Master Services Agreement.
Alternative is to set up a division of the company in the territory but this does lead to complications for HR as they’ll need to familiarise local laws and regulations and changes in future (this is actually the painful bit). You’ll also need to establish director(s) of the company in the territory.
I’ve done this previously with a takeover with a high level of IP provided by the employees but I’d counsel against for a single employee.
Which country, and are they admin staff or customer-facing?
Insurance, social security and pension are all things that could be affected from the employee perspective; for the company, social security could be a problem, and there’s a possibility that the company could become liable to tax there as well.
Employee income tax tends to be the easy bit…
Thanks folks. There's some useful information to work with there.
doesn't matter where you are working if you are an MP, right?
(good luck with and kudos for your efforts)