The UK government in April 2019 published practical guidance [1] on social security contributions for UK and EU internationally-mobile workers in the event that the UK leaves the EU without a deal. This guidance also includes actions UK employers would need to take for outbound employees to the EU.
This follows draft legislation published in December 2018 by the Department of Work and Pensions (DWP) regarding the UK’s proposals to retain EU social security law in the event there is no withdrawal agreement and no future relationship agreement with the EU as part of the government’s plan for a no-deal Brexit outcome.
UK outbound assignees with an A1/E101 certificate in place at UK exit date
- Assignees with an end date of 12 April 2019 (or the exit date if later),on the A1/E101 certificate may face a double social security charge with likely ongoing UK liability. Host country authorities should be approached to confirm their positions.
- The exception to this is UK or Irish nationals working in Ireland under an A1/E101 certificate where it has been confirmed that the current treatment will continue.
New UK outbound assignees moving post UK exit date
- Individuals assigned from the UK to another EU member state would remain subject to UK social security for at least the first 24 months of their assignment.
- Individuals who fall within the current EU multi-state working rules would remain subject to UK social security if this would have been the case under the current rules.
- A replacement for the existing A1/E101 certificate will be issued for new moves. The existing application form (CA3822) should be used to make applications after the UK has left the EU.
- If the host country has not adopted a reciprocal approach there may be a double social security charge.
UK inbound assignees
Individuals assigned from an EU member state to the UK generally would be exempt from UK social security for at least the first 24 months of their assignment provided they meet certain conditions.
- Individuals who fall within the current EU multi-state working rules should be exempt from UK social security if this would have been the case under the current rules.
- HM Revenue & Customs expect to publish additional information on this after 12 April.
The UK government recognizes that this approach could result in dual social security liability and says that it is working to protect UK nationals in the EU if there is a no-deal scenario by reaching reciprocal arrangements with the EU or individual member states that will allow assignees to maintain existing arrangements for a transitional period until 31 December 2020. Individuals would pay social security contributions in one country at a time during this transitional period.
Belgium and Spain have stated that they are prepared to offer reciprocity in these types of scenarios to avoid potential double charges, while Cyprus and the Netherlands have confirmed that they are not. Other member states are yet to confirm their official positions.
Existing Bilateral Social Security Agreements between the UK and certain EU/EEA countries would not come back into force to determine an individual’s social security liability and access to benefits. Moves to and from other member states would therefore be regarded as “rest of the world” moves.
No mention is made in the guidance regarding the Citizens’ Rights Agreements the UK has negotiated with Switzerland and the European Economic Area countries (Iceland, Liechtenstein and Norway) in the event of a no-deal Brexit (which include provisions regarding social security contributions coverage).
While the outcome remains unclear, employers should consider the following primary areas in a no-deal Brexit scenario:
- Communications: Around the potential impact on employees’ social security position, access to benefits and steps being taken to mitigate this impact;
- Additional costs: Either directly through additional social security costs or the need to compensate staff for reduced access to state benefits; and
- Payroll compliance: Additional complexities owing to the fact that social security contributions may become due in the host location.
Employers operating internationally should review and adapt any contingency plans they have developed for a no-deal Brexit as necessary.
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