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Remote workers and Expatriate Tax – It’s not as simple as you might think

2 October 2017


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Many of us have been in a situation where we have an excellent employee, based in the UK, who wants to move overseas. With approximately 1.2 million brits living abroad it is becoming increasingly common . It should be a simple transition, they remain with the company but relocate, after all it’s just a change of address isn’t it? 
Think again.
Unfortunately, things are not that easy when it comes to the tax liabilities for international workers, but don’t worry, we’re here to guide you through the pitfalls.

What problems could arise when an employee relocates?

Depending on the employee’s work, tax liabilities may be triggered for the company back in the UK; you could now have compliance obligations overseas. For example, you may need to start running payroll to calculate PAYE overseas, for both income tax and social security; the employee may trigger corporate tax issues for the UK company.

If social security is due it is likely that the company, as well as the employee, will need to contribute, and the amount could be significantly higher than in the UK. A prime example is if your employee were to move to France; their employer equivalent of NI is approximately 45% of gross salary, a significant leap in costs from the UK rate of 13.8%.

Not being compliant with new tax liabilities could land you in hot water, and lose you a great team member, so make sure that you’re fully aware of the rules.


What else should I be considering?

You should also be aware of the different laws which may apply should you wish to part ways with the employee in the future. It’s vital that you have a good understanding of employment laws in their country of residence because they may differ significantly. This is also true in terms of maternity and paternity leave and holiday entitlement; don’t get caught out by not knowing what your responsibilities are.


Next steps

Sending an employee overseas may look daunting but don’t be put off, there are benefits. Having someone working abroad could help you expand your business, gain new clients and much more.
It is essential that you do your research so you know what will be expected once your employee moves and that’s where we can help. James Cowper Kreston have advised many of our clients on expatriate tax matters and kept them compliant whilst also supporting their employees overseas.


For more information on expatriate tax and remote workers contact us by making an enquiry.