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AGENDA

U.S. Secondments to Europe Current Trends and Planning Ideas Clive Fathers, Partner - London Linette Barclay, Senior Manager - Houston. AGENDA. U.S. considerations Planning for assignments around Europe The forgotten tax – social security. U.S. Considerations. Pre-assignment planning

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AGENDA

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  1. U.S. Secondments to EuropeCurrent Trends and Planning IdeasClive Fathers, Partner - LondonLinette Barclay, Senior Manager - Houston

  2. AGENDA • U.S. considerations • Planning for assignments around Europe • The forgotten tax – social security

  3. U.S. Considerations • Pre-assignment planning • Treaty networks and • Totalization agreements • Frequent travelers • Stealth expatriates • Tax rate arbitrage

  4. Planning for assignments around Europe • why it is important • some common planning techniques • the "forgotten" tax • areas where employers can get it wrong • questions

  5. Why it is importantTop rates of tax for 2011

  6. Why it is important • assignment allowances add cost • gross up on these magnifies the impact • without planning an international assignment can cost between 3 and 4 times that of hiring a local national • … so, planning is important, what still works?

  7. Planning for international assignments • cash will generally be taxable in full • as will lump sum allowances • consider • country specific expat provisions • whether delivery method makes a difference

  8. Examples of country specific tax effective structures • Belgium • expat tax (non resident) regime • must register within specified time frame • individuals are only taxable on Belgium source income / earnings but the Belgian authorities are making it more difficult to qualify

  9. Examples of country specific tax effective structures • The Netherlands • 30% rule • available for up to 10 years • care needed for individuals who have been Dutch resident previously

  10. Examples of country specific tax effective structures • Spain • "Beckham ruling" • flat rate of tax of 24% • for up to six years • also potential tax breaks for individuals resident in Spain but working in other countries

  11. Examples of country specific tax effective structures • France • executive status • certain expat allowances can be paid tax free for up to five years • French tax may be restricted to French source earnings only

  12. Examples of country specific tax effective structures • UK • "NOR" status • tax effective delivery of housing • tax effective delivery of per diems but a recent series of tax cases underline HMRC current focus on this area

  13. The forgotten tax - Social Security2011 rates

  14. Who the rules apply to • within the EU, EEA and Switzerland (31 countries in total) • Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Republic of Ireland, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom, plus Iceland, Liechtenstein, Norway and Switzerland. • to EU nationals and Third Country Nationals (TCN's) • to the employed and self employed (some countries treat directors as self employed)

  15. The new EU Regs 987/2009 • how they broadly compare to the old rules • but the devil is in the detail

  16. The detail - Article 12 • posted workers can remain liable in home country system if: • posted for 24 months or less (up from 12) • not replacing another person • you carry out your duties in the other country • the home country employer "normally carries out it's activities" in the home country • a direct relationship will continue throughout the posting • they then get an "attestation" that they are covered in the home country system. It will look and feel like and E101 but electronic version is planned

  17. The detail - Article 13 • if you work in two of more countries, then • you pay where you reside if you pursue a substantial part of your duties in that country (or if you have various employers in different countries) • you pay in the country where you are employed if you do not pursue a substantial part of your duties in the country in which you reside • what does "substantial" mean

  18. The detail - Article 16 • two or more member states may agree to override the Regs in the interests of any person • this requires both states to agree which state collects • could be used where a known assignment of say 5 years to one country is going to create benefits in the wrong country • makes sense for cross frontier workers to get a home based pension but less of an issue if both states are in Euro currency • EU now aware that "tax planners" have been avoiding social security based upon cost so may be harder to get

  19. Areas where employers can get it wrong • pay in two countries simultaneously or in neither • forget to get a certificate of coverage / E101 / A1 • assume that the base for social security is the same in both countries • assume that tax and social security will be on the same earnings • assume the employee has paid it. • forget to include payments made in the other country (housing, schooling, foreign taxes, share based reward) • ignore compensation that overlaps a transfer from one country to another eg bonuses and deferred compensation

  20. WIN AN IPAD2! Take the Quiz Booth B7

  21. Questions? Generali presentation draft 1.ppt

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