As the UK approaches its proposed exit date from the European Union later this month, businesses around Europe are busy contingency planning for life after Brexit. Whether it’s a hard or soft Brexit or somewhere in between, there are key issues that global mobility (GM) professionals will need to consider, while they await the details of the UK’s future relationship with Europe. CONTRIBUTOR Emanuela Boccagni, Commercial Director EMEA at ECA International
Brexit has undoubtably added an extra layer of complexity in terms of compliance for GM teams. If not already in place, robust policies and processes will need to be established in order to track assignees and business travellers.
For any employee that could potentially be impacted by Brexit, GM teams will need to:
> Organise visas and necessary work permits further in advance for affected assignees, and be aware of possible delays to the application process caused by Brexit
> Review all cross-border working arrangements, including any existing or future commuter or posted worker agreements. Check for compliance in order to avoid any immigration, social security or tax repercussions for the assignee
> Global Mobility and Talent Management teams should identify third party nationals in advance of Brexit in order to apply for necessary visa or work permit applications.
> Consult assignees working towards gaining UK citizenship, as it is not yet clear if any temporary absences from UK on long-term, short-term, commuter or rotator assignments will create a roadblock in attaining permanent residency. Due to uncertainties, EU nationals may understandably be reluctant to accept any assignments out of UK.
Social security and tax implications
One area of international mobility that is likely to be affected by Brexit is tax and social security. As uncertainty remains, businesses need to budget for all eventualities – including possible non-reciprocity of existing social security treaties.
If the terms of the existing treaties are not reciprocated, assignees may be forced to contribute to both their home and host country social security schemes.
It is not yet clear whether new applications for A1 certificates will be considered by social security authorities within the EU 27 after Brexit; therefore, GM teams should audit their assignees’ A1 certificates and make necessary applications ahead the UK’s exit from the EU.
Similar uncertainty surrounds the status of tax treaties and double tax arrangements (DTAs), which may also be affected once the UK leaves the EU. All tax-related changes need to be reviewed and accounted for so that assignees and business travellers are not subjected to double taxation. Consequently, GM teams may need to review their tax calculations between EU and UK countries as Brexit could have a significant impact on any estimates made prior to Britain’s exit.
Exchange rates and additional costs
It is impossible to predict how Brexit will affect foreign exchange rates and currencies; however, it is prudent for GM teams to prepare for all possibilities. Judging by the volatility of the pound over the three years since the referendum, it is highly likely that the pound and euro will be impacted, at least in the short-term. To best prepare, GM teams should monitor the situation to assess any need for interim reviews of cost of living adjustment (COLA) and revisit the business’s company policies in response to exchange rate volatility.
Reimbursement may also be required for any additional costs that assignees may to absorb once the UK has left the European Union. Although this may cover a range of miscellaneous costs, the conversion of driving licences and additional local registrations should be considered. Private medical insurance is also something that GM teams should review, particularly if European Health Insurance Cards are discontinued.
Assignees that have repatriation guarantees in existing assignment documentation will need to have these guarantees reviewed immediately to ensure compliance with any new immigration restrictions brought in a as a result of Brexit, particularly if the UK crashes out without a deal.
Assignment documentation will also need to be reviewed following any changes brought into employment legislation due to Brexit. Companies will need to ensure that both they and the assignee are wholly compliant with any new changes in the law.
Although it’s impossible to predict how the future relationship between the UK and European Union will impact global mobility, immigration, exchange rates, tax and social security are certainly the areas which are most likely to be immediately affected by Brexit. Regardless of whether Britain leaves with or without a deal, GM teams must actively engage and communicate with assignees and the wider business to plan for all potential outcomes.