Global Employment Tax and Compliance Newsletter. 11th Edition. November 2023

Press Release from Acumen International: Global EOR/PEO

Welcome to our November 2023 Global Employment Tax and Compliance Newsletter. This edition is crafted for forward-thinking employers and global employment solution providers, offering a lens into the latest shifts and trends in the global employment landscape.

November 2023 has been a month of pivotal changes and strategic adaptations. The global employment domain continues to evolve rapidly from Italy’s revamped expatriate regime to Australia’s innovative pathways to permanent residency and Belgium’s updated salary thresholds. 

These changes, crucial insights from the ILO’s digital employment guidelines, and more are dissected here to provide you with actionable intelligence.

Join us as we navigate these developments, understanding their impact, and exploring strategies for effective compliance and operational agility in the global marketplace.

Thank you for choosing us as your guide in the dynamic world of global employment. Let’s dive in!

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🇬🇧 United Kingdom Autumn Statement 2023: Key Updates on National Insurance and Tax Rates

Legislation Adopted

Chancellor Jeremy Hunt’s Autumn Statement, delivered on 22 November 2023, introduces several changes impacting both employees and employers in the UK. Among the most significant is the reduction in National Insurance rates.

Key Provisions in a Nutshell

  1. National Insurance Contributions (NIC): A reduction for employees from 12% to 10% starting 6 January 2024. Employer NIC rates remain unchanged.
  2. Income Tax Rates and Thresholds: No changes have been announced; rates and thresholds remain as previously set.
  3. Scotland and Wales Tax Rates: Updates for 2024/25 to be announced in December 2023.
  4. Self-employed NIC: Class 2 contributions were abolished, and Class 4 was reduced from 9% to 8% from 6 April 2024.
  5. Other Tax Measures: Implementation of Making Tax Digital for Income Tax Self-Assessment in April 2026, abolition of the pension lifetime allowance from April 2024, and adjustments to capital gains and dividend allowances from April 2024.

Understanding the Impact

These changes are crucial for employers managing globally mobile employees in the UK. While the overall tax burden in 2024/2025 is expected to remain stable, individuals liable for UK National Insurance will see a noticeable reduction in contributions.

Implications for Employers & Immediate Actions

  • Budgeting: Employers should adjust their financial planning and payroll systems to accommodate the new NIC rates.
  • Communication: It’s vital to inform employees, especially those on international assignments, about these changes and their potential impact on net pay.
  • Compliance: Ensure alignment with the updated tax and NIC rates to maintain compliance and avoid penalties.
  • Consultation: Consider consulting with tax professionals to understand the broader implications of the Autumn Statement on your business operations.

To ensure full compliance with the evolving UK tax landscape, employers should stay vigilant for further announcements, especially regarding Scottish and Welsh tax rates.

🇬🇧UK Introduces Electronic Travel Authorisation for Non-Visa Nationals

Legislation Adopted

The UK government is rolling out an Electronic Travel Authorisation (ETA)requirement for non-visa nationals planning to visit, transit, or enter the UK for short stays, including up to three months as a Creative Worker.

Key Provisions in a Nutshell

  1. ETA Requirement: Non-visa nationals need an ETA before travelling to the UK.
  2. Exemptions and Initial Roll-Out: Irish residents are exempt. Qatari nationals require an ETA from 15 November 2023, with other non-visa nationals following in 2024.
  3. Cost and Validity: An ETA costs GBP 10 and is valid for two years or until the passport expires, whichever comes first.

Understanding the Impact

This change marks a significant shift in the UK’s travel and immigration policy to enhance security and streamline entry processes.

Implications for Employers & Immediate Actions

Inform and Prepare Travellers: Employers should inform non-visa national employees of this new requirement, especially those frequently travelling to the UK.

Plan for Additional Costs and Time: Factor in the ETA cost and application process time into travel plans and budgets.

Monitor Roll-Out Dates: Stay updated on the phased implementation dates for different nationalities in 2024.

🇪🇺EU Takes Action Against Greece and Italy for Non-Compliance with Family Benefits Rules

Legislation Adopted

The European Commission (EC) has initiated infringement procedures against Greece and sent a reasoned opinion to Italy for failing to comply with EU rules on family benefits.

Key Provisions in a Nutshell

🇬🇷Greece: Current laws require EU nationals to reside in Greece for at least five years and non-EU nationals for 12 years to qualify for family benefits.

🇮🇹Italy: Italy’s law, introduced in March 2022, mandates a minimum two-year residence for eligibility for the new family allowance for dependent children.

EU Regulation Violation

Both countries’ requirements contravene EU rules prohibiting residence conditions for social security benefits, including family benefits.

Understanding the Impact

Amendments to these laws in Greece and Italy would be retroactive, allowing mobile workers previously disqualified due to residence requirements to claim family benefits retrospectively.

Implications for Employers & Immediate Actions

  • Monitoring Legislative Changes: Stay informed on Greece and Italy’s legislative responses to the EC’s actions.
  • Advising Mobile Workers: Keep mobile employees updated on potential changes and assist them in filing for retroactive family benefits claims.
  • Compliance Readiness: Prepare for the administrative aspects of supporting claims if legislative amendments occur.

🇮🇪 Ireland Streamlines Stamp 4 Immigration Permission Process

Legislation Adopted

In collaboration with the Department of Enterprise, Trade and Employment, Ireland’s Department of Justice has announced changes to the Stamp 4 immigration permission process, effective 30 November 2023.

Key Provisions in a Nutshell

  1. Elimination of Stamp 4 Support Letter: The need for a Stamp 4 support letter from DETE for certain permit holders will be discontinued.
  2. Direct Application Process: Applications for Stamp 4 immigration permission can be made directly to the Registration Office, ISD.
  3. Eligibility Requirement: Applicants must complete 21 months under an IRP Stamp 1 card in Ireland.
  4. Application Timeline: Applications for Stamp 4 can be submitted 12 weeks before the current IRP Stamp 1 permission expires.

Understanding the Impact

This change simplifies the transition from Stamp 1 to Stamp 4 immigration permission for critical permit holders, making it a single-step process. Stamp 4 permission allows holders to work and live in Ireland without a separate employment permit.

Implications for Employers & Immediate Actions

  • Inform Relevant Employees: Alert employees holding Critical Skills Employment Permits, Researchers on Hosting Agreements, and Non-Consultant Hospital Doctors about the new process.
  • Guide Through Application Changes: Assist eligible employees in understanding the streamlined application process and its timeline.
  • Monitor Application Submissions: Ensure applications are submitted within the new 12-week window before IRP Stamp 1 expiry.
  • Stay Updated on Processing: Keep track of any further updates from the Department of Justice and the Department of Enterprise, Trade and Employment.

🇫🇮 Finland Responds to Security Concerns with Eastern Border Closure

Legislation Adopted

The Finnish government has announced the closure of specific border-crossing points along its eastern border, effective from 18 November 2023 to 18 February 2024, as a security measure against illegal entries.

Key Provisions in a Nutshell

  1. Closed Border Points: Key entry points at Vaalimaa, Nuijamaa, Imatra, and Niirala are closed.
  2. Alternative Crossing Points: Four northeastern border points remain open (Rajajooseppi, Salla, Kuusamo, and Vartius).
  3. Asylum Application Processing: Applications for international protection are now concentrated at Vartius and Salla crossing points.

Understanding the Impact

This closure is a response to the rise in illegal entries, particularly in southeastern Finland. It affects individuals and employees who frequently travel between Finland and Russia, requiring them to adjust to the remaining open border points.

Implications for Employers & Immediate Actions

  • Communicate Changes: Inform employees, especially those frequently travelling or commuting between Finland and Russia, about the border closures and alternative routes.
  • Adjust Travel Plans: Reorganize travel logistics and schedules for employees affected by the closures, considering alternative border crossings.
  • Stay Informed: Keep updated with Finnish government announcements and border security measures, as the situation is subject to ongoing evaluation and potential changes.

🇪🇺 Council of the EU Approves Digitalisation of Schengen Visa Application Process

Legislation Adopted

The EU Council has endorsed new regulations to digitalise the Schengen visa application process, allowing travellers to apply online for visas to the Schengen area, which comprises 27 European countries with minimal internal border controls.

Key Provisions in a Nutshell

  1. EU Visa Application Platform: A centralised platform for Schengen visa applications where applicants can submit data, upload documents, and pay fees.
  2. Reduced In-Person Requirements: In-person consulate visits are mainly required for first-time applicants or those with expired biometric data or new travel documents.
  3. Digital Visa Format: Replacing traditional visa stickers with a cryptographically signed barcode.

Understanding the Impact

This digital transformation streamlines the visa application process, making it more efficient for travellers and national administrations. It enhances the speed and effectiveness of application processing.

Implications for Employers & Immediate Actions

  • Update Travel Policies: Employers should revise their travel policies and guidelines to reflect these new digital visa procedures.
  • Inform Travelers: Communicate these changes to employees who travel frequently to the Schengen area, emphasising the new platform and reducing the need for in-person visits.
  • Monitor Implementation: Stay updated on the rollout and implementation timeline of the new digital visa platform to ensure seamless travel planning.

🇺🇸 United States Advances U.S — 🇹🇼Taiwan Double-Tax Mitigation Bill

Legislation Adopted

The “United States-Taiwan Expedited Double-Tax Relief Act” has been approved by the U.S. House Committee on Ways and Means as of November 30, 2023, signalling a significant step towards resolving double taxation issues between the U.S. and Taiwan.

Key Provisions in a Nutshell

  1. Primary Focus: The bill specifically targets permanent establishment, income from employment, and residency issues to mitigate double taxation.
  2. Bilateral Cooperation Required: The bill’s effectiveness hinges on Taiwan’s enactment of reciprocal legislation.

Understanding the Impact

This legislative move is pivotal in alleviating double taxation challenges for American and Taiwanese tax residents. It aims to streamline cross-border financial activities and provide clarity for businesses and individuals engaged in U.S.-Taiwan exchanges.

Implications for Employers & Immediate Actions

  • Anticipate Taxation Changes: Employers should prepare for potential changes in tax liabilities and compliance for U.S. and Taiwanese employees.
  • Advisory Consultation: Consulting with tax professionals is advisable to understand the implications of the bill’s provisions on your organisation’s operations.
  • Inform Stakeholders: Keep relevant stakeholders, especially those involved in U.S.-Taiwan operations, updated on this legislation’s progress and potential impacts.

🇨🇱 Chile Approves Tax Treaty with the 🇺🇸 United States

Legislation Adopted

The Chilean Senate has approved the income tax treaty with the United States, completing its legislative journey. This followed its prior approval by the Chilean Chamber of Deputies.

Key Provisions in a Nutshell

  1. Final Approval: The treaty received final legislative approval on November 15, 2023.
  2. Ratification Process: Awaiting ratification by the President of Chile and the exchange of diplomatic letters between Chile and the U.S.
  3. Expected Enforcement: Anticipated to be in force by January 2024.

Understanding the Impact

The approval of this tax treaty marks a significant development in the economic relationship between Chile and the United States. It is expected to ease cross-border commerce and mobility of employees between the two nations.

  • Double Taxation Mitigation: The treaty aims to alleviate double taxation issues faced by international assignees, enhancing tax efficiency for individuals and businesses.
  • Pension Plan Relief : Potential relief for contributions to pension plans, benefiting globally-mobile employees.

Implications for Employers & Immediate Actions

  • Policy Review: Employers should review their tax and payroll policies for employees working between Chile and the U.S. to align with the new treaty provisions.
  • Communicate Changes: Inform affected employees, especially those on international assignments, about how the treaty may impact their taxation.

🇨🇭Switzerland Upholds Protection for Ukrainians Until March 2025

Legislation Adopted

Following the European Union’s decision, the Swiss Federal Council has extended protection status for Ukrainians until 4 March 2025, aligning with the EU’s temporary protected status.

Key Provisions in a Nutshell

  1. Extension of Protection Status: Switzerland will maintain protection status S for Ukrainian displaced people until 4 March 2025, subject to changes in the situation.
  2. Current Beneficiaries: Approximately 66,000 Ukrainians hold protection status S in Switzerland.
  3. Labour Market Integration: The Federal Council aims to increase the employment rate of Ukrainians from 20% to 40% by the end of 2024.
  4. Cantonal Policy Updates : Cantons will face stricter requirements in utilising federal funding, including providing language support and assessing individual support needs.

Criteria for Discontinuing Temporary Protection S Status

Temporary Protection S Status may not be renewed when there is no longer a significant risk for the individuals upon their return to their home countries. This applies when conditions in their country of origin have substantially and lastingly improved, allowing for their safe repatriation.

Understanding the Impact

This extension provides stability and clarity for Ukrainian citizens and Swiss employers. It ensures continued access to education, labour market opportunities, and language courses for Ukrainians in Switzerland.

🇨🇿 Czech Republic Enacts Comprehensive Personal Income Tax and Social Security Reforms

Legislation Adopted

The Czech Republic has passed new legislation impacting personal income tax and social security contributions. The changes, approved by the president and the Czech Senate, are set to take effect from 1 January 2024.

Key Provisions in a Nutshell

  1. Income Tax Rate Changes: The threshold for the higher tax rate of 23% is lowered to CZK 1,582,812 annually.
  2. Adjustments in Exemptions and Reliefs:
  3. Limits set on non-monetary benefits exemption to half the average wage (CZK 21,983 per year in 2024).
  4. Abolition of the exemption for managers’ accommodations. Restriction on monetary meal allowances and benefits from the cultural and social fund.
  5. Tax Credit Changes: Abolition of certain tax credits, including for students and child pre-school facilities.
  6. Sales of Securities and Shares: Exemptions capped for sales of securities and shares meeting the time test, with an annual limit of CZK 40 million per taxpayer from 1 January 2025.
  7. Other Income Exemption Limit: An annual limit of CZK 50,000 for other income exemptions.
  8. Social Security Contributions: For employees, reintroduction of sickness insurance paid at 0.6%, increasing total contributions to 7.1%. For self-employed persons, an increase in the minimum assessment base and percentage for insurance contributions.

Understanding the Impact

These reforms aim to address financial imbalances in the Czech economy. They will notably impact the taxation of employees, including international assignees, potentially leading to higher taxation and affecting the cost of assignments.

Implications for Employers & Immediate Actions

  • Review Payroll Policies: Employers should update their payroll systems to accommodate the new tax rates and social security contributions.
  • Inform Employees: Communicate these changes to employees, particularly those affected by the altered exemptions and increased tax burden.
  • Tax Planning: Reassess tax planning strategies, especially for tax-equalised assignees, to account for the changes in tax credits and reliefs.
  • Compliance Check: Ensure all practices comply with the new legislation, paying close attention to the revised thresholds and exemptions.

🇧🇪 Belgium Announces 2024 Minimum Salary Requirements for Non-EEA Nationals

Legislation Adopted

Belgium’s Flemish, Walloon, and Brussels Regions have set new minimum salary thresholds for 2024, applicable to non-European Economic Area (EEA) nationals working in these regions.

Key Provisions in a Nutshell

  1. Effective Date: The new salary requirements are enacted on 1 January 2024.
  2. Regional Variations : Each region has specified different salary thresholds for various categories of employees.
  3. Categories and Salary Thresholds:
  •  Highly-Skilled Employees: €50,310 (Brussels, Wallonia); €46,632 (Flanders)
  • Management Personnel: €83,936 (Brussels, Wallonia); €74,611 (Flanders)
  • Intra-corporate Transferee (Specialist): €52,042 (Brussels, Wallonia); €46,632 (Flanders)
  • Intra-corporate Transferee (Trainee): €32,526 (Brussels); €32,327 (Wallonia); €46,632 (Flanders)
  • Intra-corporate Transferee (Management): €65,053 (Brussels, Wallonia); €74,611 (Flanders)
  • EU Blue Card: €65,053 (Brussels, Wallonia); €55,958 (Flanders)
  • Medium-Skilled Employees in Bottleneck Professions: Minimum salary as per the sector (Flanders).

Understanding the Impact

Meeting these minimum salary requirements is crucial for obtaining legal work permits for non-EEA nationals in Belgium. Non-compliance can result in significant penalties, including fines and possible imprisonment.

Implications for Employers & Immediate Actions

Review Salary Structures: Employers must ensure their pay scales meet or exceed these new thresholds for non-EEA employees.

Budgeting: Plan for potential salary increases to maintain compliance.

Stay Informed: Keep abreast of any further regional variations or updates to these requirements.

Risk Management: Understand the consequences of non-compliance and implement measures to avoid legal and financial penalties.

ILO Releases Guidelines for Assessing Digital Employment

Key Document Published:

The International Labour Organization (ILO) has published comprehensive Digital Employment Diagnostic Guidelines for evaluating and understanding the complex nature of digital employment.

Key Provisions in a Nutshell

  1. Purpose of Guidelines: To provide a structured approach for policymakers, researchers, statisticians, and practitioners to assess the impact of digitalisation on employment.
  2. Scope of the Document: Covers various aspects, including data collection, impact measurement, and policy development for decent work conditions in the digital economy.
  3. Research and Collaboration: Developed through extensive research, global consultations, and expert collaboration, including a pilot study.

ILO’s Digital Employment Diagnostic Guidelines: Significance and Strategic Response

  • Awareness and Education: Employers and stakeholders should familiarise themselves with the nuances of digital employment as outlined by the ILO guidelines.
  • Strategic Planning: Utilise the guidelines to inform strategic planning and decision-making in adapting to the digital economy.
  • Policy Implementation: Develop or revise internal employment policies and practices per the guidelines to ensure fair and decent working conditions in the digital employment sector.
  • Data-Driven Approach: Leverage the methodologies suggested by the ILO for accurate data collection and analysis to assess the impact of digitalisation on employment.
  • Collaboration and Consultation: Engage in multi-stakeholder dialogues and consultations to address the challenges and opportunities presented by digital employment.

🇳🇬 Nigeria Announces Increase in Visa-on-Arrival Biometric Fees

Legislation Adopted

The Nigeria Immigration Service (NIS) has implemented an increase in biometric fees for Visa-on-Arrival (VOA) applications.

Key Provisions in a Nutshell

  1. Biometric Fee Increase: A flat rate increase of USD 80 for VOA biometric fees.
  2. Exemption for U.S. Nationals: U.S. nationals are exempt from this fee increase due to the visa fee reciprocity agreement with Nigeria.
  3. New Total Fee: Non-U.S. nationals will now pay USD 170 for VOA, excluding other visa and transaction fees.

The Significance Explained

This fee increase affects the overall cost for foreign nationals (except U.S. nationals) seeking to enter Nigeria via the VOA program, impacting business travel expenses for individuals and organisations.

Implications for Employers & Immediate Actions

  • Budget Adjustments: Employers should prepare for increased costs associated with sending representatives to Nigeria.
  • Inform Travellers : Update travelling employees about the new fee structure to avoid surprises or delays.
  • VOA Approval Process: Ensure that travellers know the documentation and approval process for VOA, including extensions and associated fees.

🇮🇹 Italy Modifies Expatriate Regime Effective January 2024

Legislation Adopted

The Italian government has announced changes to the expatriate regime, set to take effect from 1 January 2024, as outlined in a new Legislative Decree.

Key Provisions in a Nutshell

  1. Reduced Relief: Relief under the expatriate regime will be limited to 50%, with a maximum income eligibility cap of EUR 600,000.
  2. Residency Requirements: Beneficiaries must have been non-residents for three years prior and commit to a five-year residency in Italy.
  3. Eligibility Criteria: The relief is now restricted to highly qualified or specialised individuals, similar to those eligible for a Schengen Blue Card.
  4. Duration of Relief: The relief applies from the year of establishing tax residency in Italy and for the next four fiscal years.
  5. Condition for Extension: The facility to extend the relief for an additional five years appears to apply only to residents in Italy as of 31 December 2023.

Implications for Employers & Immediate Actions

  • Policy Review: Employers should reassess their assignment policies for Italy, considering the altered tax relief and residency requirements.
  • Employee Briefing: Inform current and potential expatriates about the new conditions and how they might affect their tax liabilities.
  • Eligibility Checks: Establish procedures to ascertain the eligibility of employees for the revised expatriate regime.
  • Tax Planning: Update tax planning strategies for expatriates in Italy to align with the new regime and avoid potential financial surprises.

🇦🇺 Australia Enhances Employer-Sponsored Permanent Residence Pathways

Legislation Adopted

Following a year-long review and consultations, the Australian government has announced changes to its Migration Program, particularly affecting the Temporary Skill Shortage (Subclass 482) Visa and the Employer Nomination Scheme (Subclass 186). 

These changes aim to provide more flexibility and certainty for employers and visa holders, enhancing Australia’s ability to attract and retain skilled workers amid skills shortages.

Key Provisions in a Nutshell

Temporary Skill Shortage (TSS) Visa (Subclass 482) Changes

  1. Removal of the limit on onshore applications under the Short-Term Skilled Occupation List stream.
  2. Previous holders of two Short-Term stream TSS visas must apply outside Australia for a third visa before 25 November 2023.
  3. Onshore renewal is now possible for more than one TSS visa under the Short-Term stream.

Employer Nomination Scheme (Subclass 186) Adjustments

  • Open to all TSS visa streams, including the Short-Term stream.
  • Nominated occupations must be listed in the ANZSCO without requiring skilled migration occupation list assessment.
  • Employment requirement with the nominating employer reduced to two years within the three years before nomination.
  • Age exemptions are modified for regional medical practitioners and high-income earners over 45 years, with a two-year pathway to permanent residence.
  • Certain COVID-19-related age exemptions will be phased out.

Implications for Employers & Immediate Actions

Policy Review: Employers should reassess their immigration and workforce strategies in light of these changes.

Inform and Assist Employees: Update current and potential TSS visa holders about the new application and renewal processes.

Prepare for Permanent Residence Applications: Plan for nominating eligible TSS visa holders under the modified Employer Nomination Scheme.

Stay Updated: Keep abreast of the full details of the changes, especially regarding age exemptions and other adjustments, as they are released.

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Wrap-Up

As we conclude this November 2023 edition of our Global Employment Tax and Compliance Newsletter, we hope the insights and updates provided have been enlightening and valuable in guiding your strategic decisions in the ever-evolving landscape of global employment.

We encourage you to reach out with any questions or for further discussions on how these changes might specifically impact your business. Stay tuned for our next edition, where we will continue to bring you the latest and most relevant information on global employment.

Thank you for joining us on this informative journey. Until next time, we wish you successful and compliant business operations in the dynamic world of global employment.