Acumen Global Employment Tax and Compliance Newsletter. 2nd Edition. February 2023

Businesses need to stay on top of global employment and tax regulations. Maintaining a current understanding of global regulations is critical for HR and compliance professionals.

The Global Employment Tax and Compliance Intelligence Newsletter is a comprehensive solution that helps businesses comply with global regulations and offers expert analysis of changing legislation in 190 countries.

At Acumen International, we make regulatory and legislative changes easy to understand so you can stay on top of changes that may impact your business. Address legal questions on employment and tax topics efficiently and accurately to ensure you confidently surface the information you need and your business proactively anticipates and understands how regulations impact your organization.

Subscribe today to stay current on the latest global employment legal and compliance information and discover how to proactively benefit from regulatory changes and insight.

1. Mongolia

Effective 1 January 2023, progressive rates of personal income tax are introduced that apply to employment income:

– 10% on annual income up to MNT120,000,000

– 15% on annual income above MNT120,000,000 and up to MNT180,000,000

– 20% on annual income above MNT180,000,000

Effective 1 January 2023, the national minimum wage is increased from MNT420,000 to MNT550,000.

The maximum monthly base (payroll cap) for calculating the employee social security contributions is increased from MKT4,200,000 to MNT5,500,000. As a result, the employee social security contributions are capped at MNT 632,500 per month for 2023.

2. Luxembourg

Effective 1 February 2023, a new wage indexation applies. Wages and pensions must be raised by 2.5%. The next wage indexation is scheduled for 1 April 2023.

3. France

For 2023, the personal income tax thresholds are increased as follows:

– exempt from PIT annual income up to EUR10,777

– 11% on annual income above EUR10,777 and up to EUR27,478

– 30% on annual income above EUR27,478 and up to EUR78,570

– 41% on annual income above EUR78,570 and up to EUR168,994

– 45% on annual income above EUR168,994

The maximum amount for a standard deduction of 10% of employment income is increased to EUR13,522

Effective 1 January 2023, the monthly social security ceiling is increased from EUR3,428 to EUR3,666 for Bracket A, and from EUR27,424 to EUR29,328 for Bracket B.

The maximum monthly base (payroll cap) for calculating the employer unemployment insurance contribution is increased from EUR13,712 to EUR14,664.

4. Germany

For 2023, the personal income tax thresholds are changed as follows:

– exempt from PIT annual income up to EUR10,909

– 14% — 24% (geometrically progressive rates) on annual income above EUR10,909 and up to EUR16,000

– 24% — 42% (geometrically progressive rates) on annual income above EUR16,000 and up to EUR62,809

– 42% on annual income above EUR62,809 and up to EUR277,825

– 45% on annual income above EUR277,825

Effective 1 January 2023, the maximum annual base for calculating the pension and unemployment insurance contributions is increased to EUR85,200 (East) and EUR87,600 (West) for the health and long-term insurance contributions — to EUR59,850.

The standard deduction for employment-related expenses is increased from EUR1,000 to EUR1,230 annually.

The deduction for pension expenses is increased from 94% to 100% of the pension insurance contributions, up to a limit of EUR25,639.

5. Poland

Effective 1 January 2023, the maximum annual base for calculating the retirement and disability insurance contributions is increased from PLN177,660 to PLN208,050.

6. Singapore

Commencing 1 January 2024, a significant announcement was made in Singapore — Government-funded paternity leave will be extended from two weeks to four with a voluntary extension of an extra two weeks.

To provide increased assistance to lower- and middle-income working mothers, revisions have been made to the Working Mother's Child Relief program. Accordingly, eligible individuals may receive further support through this revised initiative.

1. First child:

• From 14 February to 31 December 2023: 15% of the mother's earned income
• From 1 January: S$8,000

1. Second child:

• From 14 February to 31 December 2023: 20% of the mother's earned income
• From 1 January: S$10,000

1. Third child:

• From 14 February to 31 December 2023: 25% of the mother's earned income
• From 1 January: S$12,000

As part of the updated parental leave regulations, parents can access 12 days of unpaid leave per year to care for their infants. This is an increase from the previous six-day allowance.

Business Immigration: News & Compliance

1. Israel

In a move to modernize its business immigration system, the Israeli government has recently introduced digital work visas for certain categories of employees. Those eligible may obtain B-1 Expert, B-1 Hi-Tech, SEA 90-day, and STEP 90-day visas online when entering the country. Dependents, however, must still adhere to traditional means with a physical B-2 visitor visa stamp on their passports. Despite this transformation, no alterations were made to the overall application process.

2. United Kingdom

As the UK's immigration landscape continues to change, many small businesses are taking a closer look at the potential benefits sponsorship offers in 2023. A Home Office sponsor license is now required for companies that wish to recruit non-EU employees through the Skilled Worker visa route. Obtaining sponsor license status grants employers unrestricted access to a vast pool of international talent from around the globe.

When it comes to addressing skills shortages in the future, a survey conducted by the Federation of Small Businesses of the UK has revealed that twice as many small businesses are now turning to sponsorship. Some consider this path undesirable due to its potentially high costs and complex process for gaining and maintaining a sponsor license — yet these employers are taking this route nonetheless.

Regardless of size or industry, any organization can apply for a sponsor license provided all the Home Office's eligibility requirements are met. Qualifying businesses must have

1. an established UK base with a fixed address, the capacity to offer jobs that meet Home Office skill and salary criteria;
2. Availability of systems in place to monitor any sponsored immigrants and personnel who manage sponsorship;
3. no criminal convictions involving immigration offenses or other transgressions like fraudulence or money laundering.

Sponsor Licence Application Procedure

The requirements for obtaining a sponsorship license include completing an online application form, submitting supporting corporate documents, demonstrating that the company has adequate HR practices to fulfill its licensee duties, appointing personnel who will manage the process, and paying fees. All of these steps comprise the application process for a license.

New Startup Law in Spain to Facilitate Talent Acquisition

The Spanish Congress of Deputies approved new legislation called the Law for the Promotion of the Startup Ecosystem, or Startup Law. During one of their plenary sessions, this law was passed on December 1, 2022.

According to the Spanish Tech Ecosystem Report, the value of the Spanish Startup Ecosystem was 46 mln Euros in 2021.

The new Startup Law in Spain is an ambitious attempt by the government to address the unique challenges that startups encounter when raising capital and recruiting high-skilled workers.

The Startup Law seeks to create a favorable regulatory environment for Spanish startups to foster innovation, create jobs, and spur economic growth. It includes provisions to reduce bureaucracy, offer tax incentives to investors, and make it easier for firms to access financing and global talent.

Objectives of the Startup Law in Spain

• Encourage launching or relocating startups in Spain.
• Facilitate administrative procedures.
• Attract and retain specialized talent to startup companies through more favorable tax considerations for stock options.
• Promote the rapprochement between vocational training institutions, universities, and emerging companies.
• Support the development poles or centers of attraction for companies and investors in peripheral cities and rural areas.
• Promote innovative public procurement with emerging companies.
• Bridge the gender gap in the startup ecosystem.

Requirements for Creating a Startup in Spain

According to new legislation, certain criteria must be met to be classified as a startup.

1. Businesses must have been established no more than five or seven years ago in the biotechnology, energy, and industrial production sectors.
2. Businesses should have their operations base and most of their staff based in Spain.
3. Startups cannot issue dividends nor be listed on any stock market.
4. Their annual turnover must not exceed 5 million euros.

New Work Visa for Remote Talent in Spain

A new visa program has been created to enable foreign nationals to take up residence in Spain while working for a company based elsewhere. Independence professionals can perform part of their work for Spanish businesses, with no more than 20% of their time devoted to such activity. This is not open to regular employees, however.

Qualification Criteria for New Spanish Visa Program

1. The applicant should have a degree from a prominent university, business school, or professional training program; alternatively, they should demonstrate three years of professional experience.
2. The employer abroad must have been registered as a business entity for more than one year
3. Full-time employees must prove that they worked at the company for at least three months before application submission.
4. Applicants must prove that the foreign employer allows them to work remotely. For independent contractors, it is required that they demonstrate an existing business relationship with one or more companies outside the country, which stretches back over at least three months before applying.
5. Finally, applicants should prove financial self-sufficiency by having an income double the national minimum wage plus any additional revenue required for family members associated with them.

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