Welcome to the final 2023 edition of the Global Employment Tax and Compliance Newsletter. This year has been a journey of discovery and adaptation in the world of global employment, and our 12th edition is no exception. We’ve consistently strived to bring cutting-edge insights and analysis to the forefront, empowering global employment professionals to navigate the complexities of an ever-evolving landscape.

As we culminate this year’s series, this edition encapsulates the latest legislative updates and reflects on the strides we’ve collectively made in shaping effective global employment strategies. The diverse changes and challenges we’ve examined throughout the year, from tax reforms to visa policies, have enhanced our collective expertise.

Our ambition has always been to transcend beyond mere compliance updates. We aim to provoke thought, foster innovation, and inspire strategic thinking in managing global workforces. The remarkable increase in our LinkedIn community and subscriber base is a testament to the value we’ve created together.

As we enter a new year, we carry insights, experiences, and lessons from 2023. Let’s continue to collaborate, innovate, and elevate the standards of global employment practices.

🇧🇪-🇳🇱 Clarifying Permanent Establishment in Remote Work: New Belgium-Netherlands Agreement

Legislation Adopted

On 23 November 2023, Belgium and the Netherlands ratified a Competent Authority Agreement to interpret Article 5 of their Income Tax Treaty, specifically addressing the impact of remote working on establishing a permanent tax presence.

Key Provisions in a Nutshell

• Scope of Agreement: Guidelines on how remote working affects the creation of a permanent establishment for taxation. Determining if home-working leads to a permanent establishment is crucial, impacting cross-border employees’ corporate and income tax calculations.
• Home-Working Scenarios: Differentiation between occasional, regular, and consistent home-working and their impact on establishing a permanent establishment.
• Practical Guideline: Working from home 50% or less of the time does not constitute a permanent establishment. Over 50% may lead to a permanent establishment, dependent on certain conditions.
• Effective Date: Applicable from 8 December 2023.

Understanding the Impact

This Agreement marks a crucial development in the growing hybrid work model, offering clarity on tax obligations and permanent establishment related to remote working for cross-border employees between Belgium and the Netherlands.

Implications for Employers & Immediate Actions

• Policy Review: Assess remote working policies in light of these new guidelines.
• Tax Compliance: Adjust tax reporting and compliance strategies for employees working remotely.
• Individual Assessment: Examine the working patterns of cross-border employees to understand potential tax implications under the new Agreement.
• Ongoing Discussions Monitoring: Stay informed about ongoing discussions between Belgium and the Netherlands, particularly regarding income tax implications for cross-border employees. These talks may lead to future changes that could impact cross-border employment arrangements.
• Assessment of Permanent Representative Status: The Agreement does not address situations involving a permanent representative. Employers must assess if employees working from home with the authority to conclude or negotiate employment contracts could be classified as permanent representatives. This is crucial as it has significant implications for establishing a permanent establishment and the related tax obligations.

🇨🇿 Czech Republic’s Revisions in Taxation of Employee Stock Plans

Legislation Adopted

The Czech Republic is considering a bill to revise the taxation on employee stock options and shares. Set for potential implementation on 1 January 2024, if passed, the bill is directed at employer-provided stock benefits.

Key Provisions in a Nutshell

• Scope of the Bill: Adjusts taxation on employee stock options and shares, focusing on those acquired in a business corporation that is the employer or a related entity.
• Taxation Timing: The amendment specifies when the non-monetary benefit, i.e., employment income from these plans, becomes taxable for the employee.
• Defined Taxable Events: Includes termination of employment, changes in tax residency, share or option transactions, option exercises, and reaching a 10-year limit from acquisition.
• Option Type Applicability: The bill’s current form does not specify a distinction between transferable and non-transferable options.
• Transferable vs. Non-Transferable Options: The amendment does not distinguish between freely transferable and non-transferable options in its current wording.

Understanding the Impact

This legislative change is significant, particularly regarding when and how employee stock options and shares are taxed, affecting both employers and employees, especially in cross-border employment situations.

Implications for Employers & Immediate Actions

• Review Employee Plans: Examine existing stock options and share plans for alignment with the new taxation rules.
• Inform Employees: Clearly communicate the changes in taxation timing to employees to help them understand the impact on their income.
• Legislative Monitoring: Keep track of the bill’s progress to adapt swiftly and ensure compliance.
• Seek Clarification on Ambiguities: Consult local tax and employment experts to understand how the lack of distinction in option types affects plan administration.

🇨🇾 Cyprus 2024 Update: Social Insurance Contribution Rates Rise

Legislation Adopted

Effective 1 January 2024, Cyprus has mandated an increase in the Social Insurance Fund contribution rates, per the Social Insurance Law of 59(I)/2010 and its amendments.

Key Provisions in a Nutshell

• Employed Persons: Contribution rates for both employers and employees will rise from 8.3% to 8.8% on insurable earnings.
• Self-Employed Persons: The contribution rate will increase from 15.6% to 16.6% on insurable earnings.
• Insurable Earnings Ceiling: For 2024, the maximum insurable earnings are set at €1,209 per week, €5,239 per month, and €62,868 per annum.
• Contribution to Other Funds: Rates for the Redundancy, Training and Development Funds, along with the Social Cohesion Fund (which has no cap on earnings).

Understanding the Impact

These changes will affect cost projections and budgeting for international assignments to and from Cyprus. Employers must consider these rate increases in payroll adjustments and hypothetical tax calculations, particularly for tax-equalised assignees.

Implications for Employers & Immediate Actions

• Payroll Adjustment: Update payroll systems to reflect the new contribution rates for both employed and self-employed individuals.
• Budget Revisions: Revise budgeting for international assignments in Cyprus to account for increased social insurance contributions.
• Communication: Inform stakeholders, including assignees, about the changes to ensure understanding and compliance.
• Consultation: Employers and self-employed individuals should seek advice from tax professionals for optimal management of these changes.

Social Insurance Contribution Rates for 2024

Fund	Employer Rate	Employee Rate	Cap
Social Insurance	8.80%	8.80%	€5,239/mo
Redundancy	1.20%	–	€5,239/mo
Training and Development	0.50%	–	€5,239/mo
Social Cohesion	2.00%	–	No Cap
Total	12.50%	8.80%	–

🇸🇰 Slovakia’s Tax Legislation Overhaul Post-Government Change

Legislation Adopted

Following its recent formation, the Slovak government rapidly introduced a tax reform, leading to the passage of the Amendments Act on 19 December 2023. This act revises several existing tax laws, including the Slovak Income Tax Act, and is set for implementation from the start of 2024, pending presidential approval.

Key Provisions in a Nutshell

• Dividend Income Tax Hike: Tax on dividends rises from 7% to 10% for profits accruing in tax periods beginning 1 January 2024 onwards.
• Revocation of Tax Exemptions: Specific exemptions on securities sales, company shares disposals, and virtual currency transactions are eliminated.
• Adjustment in Self-Employed Taxable Income Cap: The threshold for a 15% tax rate for self-employed individuals increases from €49,790 to €60,000.
• Higher Health Insurance Contributions: Employer health insurance contributions are set to rise from 10% to 11% (5.5% for employing disabled persons).

Understanding the Impact

These rapid legislative developments introduce significant changes in Slovakia’s tax landscape. Employers, particularly those under the Slovak social security regime, and individuals with investment income will face higher taxation.

Implications for Employers & Immediate Actions

• Prepare for Increased Operational Costs: Factor in the raised healthcare insurance rates in budgeting and payroll.
• Investment Income Reassessment: Reevaluate the financial impact due to the removal of specific tax exemptions and increased dividend taxation.
• Policy Revision: Update internal tax-related policies, including for international assignees, to align with the new tax regime.
• Individual Tax Planning: Advise employees to review their tax situation, especially those with investments affected by the changes.

🇨🇳 China’s Expanded Visa Exemption for Select Countries

Legislation Adopted

China’s Ministry of Foreign Affairs announced an expansion of its unilateral visa exemption policy, effective from 1 December 2023 to 30 November 2024, for travellers from six additional countries.

Key Provisions in a Nutshell

• Beneficiary Countries: Germany, France, Italy, the Netherlands, Spain, and Malaysia.
• Eligibility Criteria: Visa exemptions apply to citizens holding ordinary passports visiting for business, tourism, visiting relatives, and transit for up to 15 days.
• Existing Exemptions: This expansion builds on existing visa exemptions for Singapore and Brunei citizens.

Understanding the Impact

These visa exemptions ease entry into China for short-term stays from the specified countries, promoting business, tourism, and cultural exchanges. However, the duration under visa exemption cannot be extended within China.

Implications for Employers & Immediate Actions

• Inform Relevant Stakeholders: Update mobile employees, frequent travellers, and students about the new visa exemption opportunities.
• Compliance: Ensure understanding and adherence to the visa exemption conditions, including duration limitations.
• Monitor Updates: Stay informed about further immigration policy changes in China and reciprocal visa policies from the affected countries.

Reciprocal Visa Policies

• France’s Policy for Chinese Citizens: France now offers a five-year multiple-entry visa for Chinese citizens who have completed a master’s degree and at least one semester of study in France.
• Malaysia’s Visa Exemption for Chinese Citizens: From 1 December 2023, Chinese citizens with ordinary passports are exempted from needing a visa for tourism visits to Malaysia for up to 30 days.
• China-Singapore Visa Waiver Agreement: An agreement for visa waivers for ordinary passport holders of China and Singapore is under finalisation, with specifics yet to be announced.

🇧🇷 Brazil’s Comprehensive Tax Reform: Impacting Income and Overseas Investments

Legislation Adopted

Brazil’s government has enacted Law No. 14.754/2023, bringing significant changes to the taxation of individual income, including earnings from employment and financial investments abroad, effective from January 1, 2024. This law also includes key reforms in the trust regime and alters the valuation and taxation of foreign assets for Brazilian tax residents.

Key Provisions in a Nutshell

• Trust Regime Reforms: Introduces important changes to how trusts are handled for tax purposes.
• Valuation of Foreign Assets: Alters rules for valuing foreign assets held by Brazilian tax residents, impacting their tax liabilities.
• Broad Tax Treatment Changes: Affects various forms of income, including employment and overseas investments.

Understanding the Impact

The Law marks a significant shift in Brazil’s tax policy, affecting individuals with diverse income sources and investments overseas. The new valuation rules for foreign assets are especially noteworthy.

Implications for Employers & Immediate Actions

• Inform and Prepare Assignees: Discuss the applicable tax rates, thresholds, exemptions, and changes in the valuation and reporting of overseas assets with new Brazil-inbound assignees.
• Review Assignment Policies: Employers should reassess assignment policies, considering the increased tax responsibilities and potential impacts on assignees.
• Seek Expert Guidance: It’s crucial for employers and employees to consult with tax professionals or a Global Mobility Services team to understand the implications and ensure compliance with the new laws.

🇨🇿 Comprehensive Tax and Social Security Reforms in the Czech Republic

Legislation Adopted

The Czech government has enacted significant personal income tax and social security reforms, effective January 1, 2024. These changes come as part of a government consolidation package to address financial imbalances.

Key Provisions in a Nutshell

• Income Tax Rate Changes: The threshold for a 23% tax rate is lowered, impacting higher earners.
• Non-Monetary Benefit Limits: Introduction of limits on exemptions for non-financial benefits, including managerial accommodations and meal allowances.
• Tax Deductions Removed: Removal of specific tax deductions and credits affecting students, families, and union members.
• Cap on Securities and Share Exemptions: Restriction on tax exemptions for sales of securities and shares, with a new cap set.
• Social Security Contribution Adjustments: Increase in employee and self-employed contribution rates.

Understanding the Impact

These reforms will likely lead to increased taxation for employees, especially international assignees, and heightened social security contributions, affecting the Czech Republic’s employees and self-employed individuals.

Implications for Employers & Immediate Actions

• Budget and Policy Adjustments: Employers should reassess their budgeting for assignments and consider revising policies to accommodate increased tax and social security costs.
• Employee Communication: Clearly communicate these changes to employees, especially those on international assignments, to manage expectations and ensure compliance.
• Monitor Further Developments: Stay alert to any additional guidance or modifications to these reforms.

🇪🇺 EU’s New Directive on Platform Work: Ensuring Fair Employment Status

Legislation Adopted

The European Parliament and Council reached a provisional agreement on the Platform Work Directive on 13 December 2023. This directive, pending formal adoption, targets improved working conditions for individuals engaged in tasks through digital platforms.

Key Provisions in a Nutshell

• Employment Status Clarification: Presumption of employment based on certain control indicators.
• Algorithmic Transparency: Mandated disclosure of algorithmic decision-making impacting workers.
• Human Oversight in Decision-Making: Requirement for human involvement in significant platform decisions.
• Data Protection Enhancements: Restrictions on processing sensitive personal data of platform workers.
• Intermediary Regulation: Measures to prevent circumvention of rules through intermediaries.

Understanding the Impact

The proposed EU Platform Work Directive can significantly transform the platform economy’s landscape. It’s poised to shift the classification of a substantial number of workers from self-employed to employee status. This change isn’t just a label alteration; it has profound implications for taxation and social security contributions. The directive’s reach extends across various segments of the gig economy, notably impacting sectors like food delivery services. With this shift, many individuals operating as independent contractors could gain full employee rights and protections, altering the financial and operational dynamics for workers and platform operators.

Implications for Employers & Immediate Actions

• Reassess Employment Classifications: Review and update employment status in line with new criteria.
• Adapt to Transparency Requirements: Revise systems to ensure algorithmic decision-making is transparent.
• Incorporate Human Review in Decision Processes: Establish procedures for human oversight in critical decision-making areas.
• Monitor and Prepare for Compliance: Keep abreast of developments and prepare for the directive’s effective implementation.

Additional Considerations

• Potential Directive Adoption: The directive, likely to be adopted, addresses the employment status of platform workers, with court cases often leading to reclassification from self-employed to employed.
• Economic Implications: Observations highlight that the directive may align with the financial strategies of certain member states where service provision taxes are less than those for employment. The anticipated shift from self-employed to employed status for many workers could increase overall tax and social security contributions.
• EU Commission’s Analysis: Over 5 million platform workers might be misclassified, and reclassification could significantly increase state revenues.

🇬🇧 United Kingdom HMRC Releases Guidance on Digital Platform Reporting Rules

New Reporting Obligations for Digital Platforms

HMRC’s updated guidance, detailed in the International Exchange of Information Manual (IEIM), outlines the UK’s implementation of the OECD’s model reporting rules for digital platforms. These new requirements, effective from 1 January 2024, compel UK-based digital platforms to gather and report to HMRC annual income information for sellers providing personal services, selling goods, or renting out property or transport on their platforms. The initial data reporting is scheduled for January 2025.

Compliance for UK and EU Platforms

The guidance is particularly relevant for UK digital platforms that are also active in the EU. These platforms must be aware of their dual reporting responsibilities, as the EU’s Directive on Administrative Cooperation (DAC7) enforces similar rules from 1 January 2023, a year earlier than the UK’s timeline. The first EU reporting deadline falls in January 2024. Platforms operating in both regions should prepare for each jurisdiction’s nuanced requirements and timelines.

🇬🇧 New UK Tax Treaties with Luxembourg 🇱🇺 and San Marino 🇸🇲

Legislation Adopted

The UK has recently ratified new double tax treaties with Luxembourg and San Marino. The UK-Luxembourg treaty, signed on 7 June 2022, and the UK-San Marino treaty, signed on 17 May 2023, have both been formally ratified and entered into force on 22 November 2023 and 30 November 2023, respectively.

Key Provisions in a Nutshell

• UK-Luxembourg Treaty
  • Takes effect for UK and Luxembourg withholding taxes from 1 January 2024.
  • Applies to other Luxembourg taxes on income or capital from 1 January 2024.
  • Affects UK corporation tax (including on chargeable gains) from 1 April 2024.
  • Impacts UK income tax and capital gains tax from 6 April 2024.
• UK-San Marino Treaty
  • Effective for San Marino taxes and the UK withholding taxes from 1 January 2024.
  • Applies to UK corporation tax from 1 April 2024.
  • Influences UK income tax and capital gains tax from 6 April 2024.

Understanding the Impact

These treaties are pivotal in preventing double taxation and fiscal evasion and enhancing trade and investment between the UK and these countries. They provide clarity on tax obligations for businesses and individuals engaging in cross-border activities.

Implications for Employers & Immediate Actions

1. Review International Transactions: Employers with cross-border transactions between the UK and Luxembourg or San Marino should review their structures and transactions to align with the new treaty provisions.
2. Tax Planning: Consider tax planning opportunities under the new treaties, particularly regarding withholding taxes, capital gains, and corporate taxes.
3. Update Tax Compliance Protocols: Ensure that payroll and taxation systems are updated to reflect the changes, especially regarding withholding tax obligations.
4. Communicate with Employees and Stakeholders: Inform employees and relevant stakeholders about how these changes might affect their tax liabilities.
5. Seek Expert Advice: Consult with tax professionals to understand the detailed implications of these treaties on your business operations.
6. Monitor Implementation: Keep abreast of how these treaties are implemented in practice, especially in their initial years, to ensure full compliance and to take advantage of potential benefits.

🇺🇸 U.S. Visa Bulletin January 2024: Key Updates

Legislation Adopted

The U.S. Department of State’s January 2024 Visa Bulletin announces significant updates in employment-based visa categories, particularly for EB-1 and EB-3 visas for certain nationalities.

Key Provisions in a Nutshell

• EB-1: Progression in cut-off dates for China and India.
• EB-2 and EB-3: Changes in cut-off dates for China, India, and other countries.
• Other Categories: Adjustments in EB-4, Certain Religious Workers, and EB-5 categories.

Understanding the Impact

These updates reflect ongoing adjustments to the U.S. immigration system, addressing the backlog and demand for employment-based visas. The shift in cut-off dates is a response to changing immigration trends and the need to manage visa allocations efficiently.

Implications for Employers & Immediate Actions

• Monitoring Visa Bulletins: Employers should closely monitor monthly bulletins for changes affecting their workforce’s visa status.
• Planning and Compliance: Adjustments may be required in workforce planning and compliance strategies, especially for those employing a significant number of employees from China and India.
• Communication with Employees: It’s essential to keep affected employees informed about their visa status and potential eligibility or application timeline changes.

Cut-Off Dates for Dates of Final Action Chart for January 2024

This table concisely summarises the cut-off dates for the final action per visa category, as per the January 2024 Visa Bulletin. It’s a helpful guide for employers and individuals planning their visa applications.

Visa Category	All Countries (except China & India)	China	India
EB-1	Current	July 1, 2022	September 1, 2020
EB-2	November 1, 2022	January 1, 2020	March 1, 2012
EB-3 (Professional & Skilled)	August 1, 2022	September 1, 2020	June 1, 2012
EB-3 (Other Workers)	September 1, 2020	January 1, 2017	June 1, 2012
EB-4	May 15, 2019	–	–
Certain Religious Workers	May 15, 2019	–	–
EB-5	Current	December 8, 2015	December 1, 2020

🇬🇧 United Kingdom HMRC’s New IR35 Off-Payroll Working Rules Guidance

Legislation Adopted

• Guidance Released: HMRC has published “Help to comply with the reformed off-payroll working rules (IR35) — GfC4,” as part of their Guidelines for Compliance (GfC) program.

Key Provisions in a Nutshell

• Target Audience: Aimed at businesses managing IR35, involving workers who provide services through their own intermediaries. Note: IR35 off-payroll working rules are a set of tax legislation in the UK designed to combat tax avoidance by workers supplying their services to clients via an intermediary, such as a limited company, but who would be an employee if the intermediary was not used. These workers are often referred to as ‘disguised employees’ by HMRC.
• Structure: The guidance is divided into 14 distinct sections, each detailing aspects of IR35 compliance.

Understanding the Impact

• Purpose: The guidance is designed to clarify good practices for IR35 compliance, helping organisations understand HMRC’s expectations.
• Format: Features practical examples of systems and processes deemed effective for adhering to IR35 rules.

Implications for Employers & Immediate Actions

• Complementary Nature: These guidelines are to be read alongside existing HMRC off-payroll working guidance, not in isolation.
• Integration with Current Practices: Employers should incorporate the guidance into their existing IR35 compliance strategies.
• Review and Implementation: Thoroughly review the GfC4 guidelines and integrate the recommended practices for a comprehensive IR35 compliance approach.
• Ongoing Compliance: Regularly update and refine IR35 compliance processes in line with HMRC’s evolving guidelines and practices.

A-Z Guide to Global Employment

Ready to empower your global journey? Dive into our new A-Z Guide to Global Employment!

From A to Z, we’ve covered it all – from international hiring strategies to visa processes, cultural diversity, and tax reporting. Whether you’re an HR professional, a business owner, or a global executive, this guide is your ultimate resource for success in the global workforce.

• Explore expert insights on managing a diverse global team.
• Navigate the complexities of international employment with ease.
• Leverage the strength of Global EOR for streamlined operations.
• Achieve compliance, quality, and efficiency on a global scale.

Embracing the Future of Global Employment

As we draw the curtains on this year’s final edition of the Global Employment Tax and Compliance Newsletter, we want to extend our heartfelt gratitude to each one of you. Your engagement, insights, and feedback have been the driving force behind our continuous evolution and success.

Looking ahead, the landscape of global employment continues to evolve at an unprecedented pace. The challenges and opportunities it presents will undoubtedly require us to stay agile, informed, and proactive.

We eagerly anticipate continuing this journey with you in 2024, further expanding our horizons and deepening our understanding of global employment intricacies. Until then, we wish you a successful wrap-up of this year and a fantastic start to the next.

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!

Global EOR vs. Local Legal Entity

Explore the “Global Employer of Record vs. Local Legal Entity” Guide

Navigating the complexities of international expansion requires a strategic approach. Our guide, “Global Employer of Record vs. Local Legal Entity,” offers a comparative analysis and strategic insights. It’s an invaluable asset for decision-makers weighing the advantages of an Employer of Record against setting up a local legal entity. Access this essential resource for your global expansion plans here.

🇬🇧 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.

Tax Category	2023/24	2024/25
Personal Allowance	£12,570 (0%)	£12,570 (0%)
Basic Rate	£0 – £37,700 (20%)	£0 – £37,700 (20%)
Higher Rate	£37,701 – £125,140 (40%)	£37,701 – £125,140 (40%)
Additional Rate	Over £125,140 (45%)	Over £125,140 (45%)

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 tax liabilities and compliance changes 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.

Understanding the Impact

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 global employment landscape.

We encourage you to reach out with any questions or for further discussions on how these changes might 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.