Global Mobility News: Permanent Establishment – Risk Mitigation and Set-up
One of the key concerns for most Global Mobility professionals is the risk for triggering a Permanent Establishment (PE) in the host country based on the activity of the mobile and remote workforce.
A PE is when there is no presence of a physical office/entity in the host country and a taxable presence is triggered in respect of Corporation Tax and other local taxes.
Financially, this could also present the business with a heavy and unexpected tax bill/liability.
In order to mitigate these risks, businesses need to review and consider many factors such as the following that will require expert guidance from related technical professionals:
- Employment Contracts
- Labor Laws
- Visa & Immigration requirements
- Payroll taxes (including Social Security contributions)
- Tax rates and residency
As a way forward, businesses could set-up their own local entity as this would give the company complete control over the entire process. However, the company would then need to engage and heavily rely on legal/accounting specialists locally. This could be more time-consuming and complicated.
The other option is to engage the services of a GEO (Global Employment Organisation) that uses a local Employer of Record (EoR). The latter is a third-party organization set up locally that can quickly hire and manage the entire payroll process legally and be compliant with local regulations without having to set up a local entity or risk violating local employment laws.
Immigration News: EU Settlement Scheme
The deadline for the EU Settlement Scheme is fast approaching. Applicants are reminded to apply by 30 June 2021. The scheme is intended to offer EU citizens and their eligible family members, living in the UK before the end of the transition period. It is an opportunity to protect their residence in the UK after the transition period has ended.
EU nationals residing in the UK on or before 31 December 2020 with an intention to remain in the UK, can apply for either settled or pre-settled status under the EU Settlement Scheme.
- Settled Status – EU nationals are eligible for Settled Status if they have lived in the UK for a continuous 5-year period which includes permitted gaps of up to six months in any 12-month period. ‘Settled Status’ is also referred to as ‘Indefinite Leave to Remain’.
- Pre-Settled Status – EU nationals who do not have 5 years’ continuous residence when they apply will usually get Pre-Settled Status, with the condition that they have started living in the UK by 31 December 2020. They can then apply to change this to Settled Status once they have 5 years’ continuous residence. This must be done before their Pre-Settled status expires.
EU nationals usually need to prove how long they have lived in the UK when they apply for settled or pre-settled status through their National Insurance number. The Home Office may request further documents if applicants are unable to provide a National Insurance number or have gaps in employment.
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