Welcome to the September 2023 Global Employment Tax and Compliance Newsletter edition. This newsletter is tailored for employers operating across jurisdictions and global employment solution providers who play a pivotal role in their success.
In the dynamic landscape of global employment, governments worldwide aim to enhance, streamline, harmonise, and customise labour, tax, and immigration laws to align with the evolving needs of their populations and adapt to global trends, such as the rise of remote work. This ongoing process unfolds as employers navigate the complexities of international employment, seeking agile solutions to meet compliance requirements and an ever-changing workforce's demands.
This edition focuses on the latest developments in employment tax, labour, and immigration laws that emerged by September 2023. Each country's spotlight dissects these changes, examines their implications for employers, and provides actionable steps for compliance and operational excellence.
Whether you are an employer seeking clarity on a new regulation or a global employment solution provider looking to enhance your client services, this newsletter is designed to meet your needs.
Poland: Home Office and Permanent Establishment (PE) Concerns 🇵🇱
Legislation Adopted
Polish tax authorities (PTA) and administrative courts have recently addressed the risk of creating a Polish permanent establishment (PE) by a Polish employee working in a home office model. This issue has led to key developments in Polish tax regulations.
Key Provisions
In recent individual tax rulings, the PTA has argued that an employee's private home address, when used as a consistent place of work, could be deemed a fixed place of business at the disposal of a foreign enterprise. This interpretation hinges on the intent to work from home regularly. Additionally, the PTA is actively pursuing PE exposure under the dependent agent concept, especially when Polish employees are involved in contract negotiations, offer presentations, or marketing functions on behalf of the enterprise.
Why It Matters
Understanding the implications of home office arrangements on PE status in Poland is crucial for foreign enterprises. This interpretation by the PTA and supported by recent court judgments underscores the material risk of Polish PE exposure for businesses employing Polish workers.
Implications for Employers & Immediate Actions
Read our Guide on Preventing Permanent Establishment Risk
United Kingdom: Immigration and Nationality Fee Increases 🇬🇧
Legislation Adopted
Legislation was introduced in the UK Parliament on September 15, 2023, paving the way for a series of immigration and nationality fee adjustments scheduled for October 4, 2023.
Key Provisions
These fee adjustments, ranging from 15% to 20%, impact various visa application fees and Certificate of Sponsorship fees in the UK.
The UK government's decision to increase these fees is a response to the recommendations of independent pay-review bodies, accepted following the Public Sector Pay debate in Parliament. This decision includes raising visa and Immigration Health Surcharge (IHS) fees to support public sector pay rises.
Why It Matters
For employers recruiting and employing foreign nationals in the UK, these fee increases affect multiple immigration and nationality "routes," encompassing individuals coming to the UK for work, study, and residence.
Assessing the impact of these fee hikes on recruitment, talent acquisition, and budgetary considerations is essential for employers.
Implications for Employers & Immediate Actions
Employers should evaluate the financial implications of the fee increases on their recruitment and talent management strategies.
Considerations include budget adjustments to accommodate higher immigration and nationality fees and potential effects on workforce planning.
Keep a close eye on forthcoming increases to the Immigration Health Surcharge (IHS) and prepare for potential changes in autumn.
Further Details
The fee adjustments, effective from October 4, 2023, vary based on visa categories, with the IHS increases scheduled for later in the autumn due to the associated legal process.
Impacted visas include those for short stays (up to 6 months), longer-term visits (2-, 5-, and 10-year visas), work, study, and residence. The changes also affect fees for indefinite leave to enter or remain, travel documents, health and care visas, Certificate of Sponsorship, and more.
Be aware of adjustments to priority service fees and reduced fees for the "settlement priority" service. Individuals seeking British citizenship through registration and naturalisation and users of the User Pays Visa Application service will also encounter fee changes.
U.S.-Taiwan Tax Relief: A Step Towards Cross-Border Harmony 🇺🇸 - 🇹🇼
Legislation Adopted
On September 14, 2023, the U.S. Senate Committee on Finance unanimously passed the U.S.-Taiwan Expedited Double-Tax Relief Act, marking a significant development in cross-border taxation.
Key Provisions
This bipartisan bill aims to mitigate double taxation challenges faced by American and Taiwanese tax residents while addressing permanent establishment and residency issues.
It contains a critical reciprocity clause, requiring Taiwan to enact reciprocal legislation to activate its measures.
Why It Matters
The bill promotes cross-border commerce, relieving businesses, investors, and workers of international tax complexities. Including the reciprocity clause ensures fairness in tax treatment for U.S.-based companies and individuals investing and working in Taiwan.
Implications for Employers & Immediate Actions
Employers engaged in cross-border activities between the U.S. and Taiwan should closely monitor this legislation's progress.
If the bill becomes law, businesses operating in these regions should be prepared to adapt their tax strategies to benefit from reduced double taxation.
Italy Extends Remote Work Provisions 🇮🇹
Effective July 2023, Italy has extended remote work provisions to provide support and flexibility to specific groups of employees:
Vulnerable Employees: Individuals suffering from specified illnesses or conditions are now entitled to work remotely or be assigned different duties based on their job until 30 September 2023. A list of these conditions can be found in the Decree of the Minister of Health from 4 February 2022.
Parents with Children Under Age 14 : Parents with children under 14 whose job duties allow remote work can continue working remotely until 31 December 2023. This provision applies when no other parent is available to care for the child. Parents who are unemployed or receiving income support benefits are considered available for this purpose. Unlike the 2022 regulations, these parents must not sign an individual remote work agreement.
Compliance Requirements: Employers must provide these employees with health and safety information annually. Additionally, they must inform the Ministry of Labor about which employees will be working remotely.
Czech Republic's 'Digital Nomad' Program: Simplifying Work Visas 🇨🇿
The Czech Republic has launched a 'Digital Nomad' program, effective from July 1, 2023, to facilitate the entry and stay of highly-skilled IT professionals from specific countries, including Australia, Japan, Canada, South Korea, New Zealand, the United Kingdom, the United States, and Taiwan.
What Employers and IT Professionals Should Know
Previously, digital nomads faced a conundrum when seeking visas to work remotely from the Czech Republic. The absence of a dedicated visa category meant relying on business visas, which often didn't align with the nature of their work. This led to frequent rejections from Czech authorities due to insufficient justification for their stay or non-compliance with stringent conditions.
The 'Digital Nomad' program seeks to simplify the entry and work processes for specific worker categories, aligning them more accurately with their intended purpose of stay. The new program aims to streamline this process.
Changes and Aims of the Digital Nomad Program
The program differentiates between two types of digital nomads: those employed by foreign companies working remotely through telecommunications and computerised means and self-employed freelancers holding a Czech trade license.
In both cases, IT specialists must demonstrate a higher education degree in natural sciences, engineering, technology, mathematics, or three years of relevant IT experience. Additionally, they need to prove a minimum income equivalent to 1.5 times the gross annual salary in the Czech Republic.
This initiative ushers in a new era of economic migration in the Czech Republic, providing a streamlined pathway for IT professionals to contribute their skills while embracing the flexibility of the digital age.
France Enhances Bereavement and Parental Leave 🇫🇷
The French government has recently made significant amendments to the Labor Code, focusing on government-paid bereavement and parental leave. These changes, which took effect on 19 July 2023, aim to support employees during challenging times better.
Key Details
Bereavement Leave: Government-paid bereavement leave after losing an employee's child has been extended. Parents with children under 25 now receive 14 days of leave, while parents aged 25 years or older are entitled to 12 business days. This extension acknowledges the diverse needs of parents facing this difficult situation.
Leave for Child's Diagnosis: The government-paid leave that can be taken following the diagnosis of a child's disability or serious health condition, such as cancer or neuromuscular diseases, has also been extended. This leave, designed to support parents in managing medical and administrative matters, has increased from two to five business days. It complements the current compassionate leave, which can go up to 310 working days.
Teleworking and Flexible Arrangements: The new law grants working parents the right to request teleworking and flexible working arrangements. While employers can refuse these requests, such refusals must be justified in writing.
Next Steps for Employers
Employers are encouraged to review these changes and ensure compliance by adjusting their HR internal policies, employment agreements, company-level collective bargaining agreements, and family-related benefits and policies as necessary. It's essential to stay informed and adapt to these enhancements in leave provisions.
European Commission Proposes Digitalization of EU Social Security Coordination 🇪🇺
Legislation Adopted
On September 6, 2023, the European Commission unveiled a dedicated Communication proposing advancements in the digitalisation of social security coordination within the European Union (EU). The primary objective of this proposal is to streamline access to cross-border social security services, making the process faster and more straightforward.
Why It Matters for Employers
The digitalisation of EU social security coordination aims to alleviate administrative burdens linked to social security for individuals and businesses. This initiative is expected to enhance information exchange between national administrations, including healthcare providers and labour inspectorates, especially when processing claims for benefits across borders.
Implications for Employers & Immediate Actions
Companies with employees who frequently travel across EU countries for business or leisure should consider revising or establishing compliance processes for social security. One key point of the digitalisation effort is the issuance and verification of documents like A1 certificates for social security coverage.
Proposed Key Measures
The European Commission has called upon member states to take several actions:
Employee Benefits Guide
Unlock the world of employee benefits with our 'Employee Benefits Guide for Global Employers.' This resource is your compass for understanding and optimising employee benefits on a global scale.
UK Announces Tripling of Penalties for Employers and Landlords on Illegal Migrants 🇬🇧
Legislation Adopted
On August 7, 2023, the U.K. Home Secretary unveiled plans to triple fines for employers and landlords who knowingly hire or house illegal migrants in the United Kingdom, effective early 2024.
Key Provisions
This announcement is a significant step in the government's efforts to combat illegal employment and housing of migrants. Minister for Immigration Robert Jenrick emphasised the need for proper checks, stating, "There is no excuse for not conducting the appropriate checks."
Why It Matters for Employers
Businesses employing overseas nationals in the U.K. will face substantially increased penalties for hiring illegal workers. The consequences include larger fines, potential downgrading or revocation of their sponsorship licenses, and damage to their reputation as offending employers' details will be made public by the Home Office.
It's essential to note that illegal workers encompass employees, business travellers, students, and others working in violation of their visa conditions. To mitigate these risks, robust compliance systems must be in place, including conducting thorough pre-travel due diligence and correct right-to-work checks.
Implications for Employers & Landlords
Action Steps for Employers
Employers must prioritise compliance with the Home Office right-to-work checking requirements. This includes conducting proper checks on all prospective employees before employment begins and retaining relevant information in the prescribed format.
Ensuring compliance with these measures is essential to avoid the significant penalties associated with employing illegal workers in the U.K.
Employment Contracts Guide
We're excited to introduce our 'Employment Contracts Guide for Global Employers.' This invaluable resource is designed to assist HR professionals, legal teams, and business leaders in understanding the intricacies of employment contracts across different jurisdictions.
Inside this guide, you'll find:
🌍 Insights into key elements of employment contracts, including terms and conditions, termination clauses, and more.
Whether you're expanding your workforce into new territories or simply seeking to enhance your understanding of global employment practices, our Employment Contracts Guide is an indispensable tool.
Conclusion
As we conclude this September 2023 edition of our Global Employment Tax and Compliance Newsletter, we hope that the insights and updates provided have been valuable in navigating the ever-evolving landscape of employment laws and regulations around the world.
As we look ahead to the final months of 2023, we encourage you to reach out to our experts for personalized guidance on specific compliance challenges your organization may face. We're here to support your global employment needs, offering solutions that empower your business to succeed.
Thank you for choosing Express Global Employment as your trusted partner in global workforce management. We look forward to continuing this journey together and assisting you in achieving your international employment goals.
Stay compliant, stay competitive, and stay connected with Express Global Employment.
