Brexit headache ahead for business travellers

Brexit to cause headaches for business travel and work permissions for certain employees of Irish firms, warns Doone O’Doherty from PwC.

Now that the UK has officially left the EU, many employers have started to see travel and work restrictions apply to certain employees who, before Brexit, could have travelled and worked freely within the EU.

Employers need to prepare for these new restrictions and ensure compliance for their employees and indeed for their own organisations.

“For those with UK or EU national employees, Brexit throws up a completely new conundrum”

Ireland is in a somewhat unique position insofar as the free movement of UK and Irish nationals between both countries has been retained under the Common Travel Area agreement.

The status quo around the free movement of people for Irish and other EU nationals within the EU 27 also remains. There may therefore be an assumption that Brexit really has no immediate impact on the people agenda for Irish employers and for many organisations this will indeed be the case.

For others, however, particularly those with UK or EU national employees, Brexit throws up a completely new conundrum, with immigration and global mobility concerns now something that many employers may find themselves needing to navigate, often for the first time.

Work permission required  

The bottom line is that, since 1 January, freedom of movement of UK and EU nationals between the UK and the rest of the EU has ended. If you have either UK national employees who need to travel to another EU member state, or EU national employees who need to travel to the UK, these individuals are now subject to potential work permission requirements.

There may also be restrictions and time limits on the activities they can carry out as business travellers.

Where once a UK national could simply move to another EU member state at short notice, and vice versa, attention and planning now need to be given to such travel arrangements.

Not only does consideration need to be given to any new movement of people, EU nationals already resident in the UK as of 31 December 2020 will need to secure their right to live in the UK under the European Settlement Scheme.

Similarly, UK nationals resident in the EU will need to secure their status and regularise their position under the specific rules for that country.

Thorough review needed

Businesses need to undertake a thorough review of their workforce and identify any frequent business travellers or those who are likely to be affected by immigration restrictions.

This includes building potential immigration requirements and robust pre-travel processes into their Global Mobility Policies.

Communicating with employees is also important to make them aware of any new pre-travel requirements or steps to secure settlement that they may need to undertake. Consider the potential cost impact of obtaining necessary immigration clearance.

There are two aspects to consider: First, social security and second, the application of Irish PAYE rules to Short Term Business travellers.

Social security

The Social Welfare Order 2020 came into effect on 1 January 2021. Its purpose was to ensure that the social security rights and entitlements of Irish and UK citizens under the Common Travel Area arrangements were maintained post-Brexit and that social security need only be paid in one jurisdiction. One key aspect is that it applies to Irish or UK citizens only, who may work in either one or both territories.

Thankfully, supplementary provisions were included in a new protocol on Social Security Coordination to ensure that EU or UK citizens who move between Member States will continue to be liable to pay social security contributions in one State at a time.

Special provision is made for ‘commuters’ which provides such individuals may be retained within their home country social security system.  This is particularly welcome in the case of EU citizens living in the UK who commute or are posted to Ireland to work and who would not have been able to avail of the Social Security provisions above.

Action point: Employers need to understand where their people work, their citizenship status and how to make the appropriate applications under the revised rules to the relevant social security authority. Such applications are due from 1 January 2021. 

Irish PAYE and short-term business travellers 

There is no change to the underlying tax rules in Ireland as a result of Brexit. However, there is likely to be increased short term business travel between Ireland and the UK, largely due to our geographic proximity and the fact Ireland is the only English speaking member of the EU.  

One myth that often exists is the belief that, provided an individual spends less than 183 days in Ireland, there are no tax implications for their UK employer.

This is far from the truth – Ireland has a comprehensive set of rules applicable to Short Term Business Travellers/Visitors, which can quite easily give rise to an obligation to operate Irish PAYE based on an individual’s Irish workdays.

Equally it is possible to avail of some concessions in respect of STBVs whereby Irish PAYE does not need to be applied, but only if the appropriate due diligence is undertaken. 

Action point: UK employers need to understand the travel patterns of their staff, the nature of the duties they are undertaking and the intended duration of those activities.

Advice should be sought regarding the potential Irish PAYE (payroll withholding obligations) and whether there is a way to mitigate that obligation. Furthermore, the employer should implement a robust system of tracking an employee’s Irish workdays in order to mitigate any potential breaches.

Brown-haired woman in mustard top.

Doone O’Doherty is Partner for People & Organisation at PwC in Ireland

Published: 16 February