Permanant establishment
Inadvertently establishing a taxable presence of the employing company in the host jurisdiction and potential exposure to the host’s corporation tax regime. This could include working from a home office overseas.
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In an increasingly connected world, employers need to get the best out of their employees for them to remain competitive and thrive. Remote and international working has become the norm. Employers must handle UK and overseas tax obligations, whilst providing the best working environment to attract and retain talent.
Common global mobility considerations for employers
Our global mobility specialists take the time to understand your businesses objectives and align them your employees goals. We provide support across all aspects of international employment tax.
Ideally, advice should be sought before any cross-border working begins. We can help:
We can help with the following:
Inadvertently establishing a taxable presence of the employing company in the host jurisdiction and potential exposure to the host’s corporation tax regime. This could include working from a home office overseas.
Managing overseas employment tax and social security compliance obligations such as registration, running a local payroll, applying local withholding tax and (employee and/or employer) social security.
Both reporting and payment, often depending on the employees’ tax residence status.
Employees may find themselves subject to tax in their home and in the host country on the same income. It may be possible to minimise double tax (but not always).
For both the employee and the employer. If no action is taken, double social security charges could apply.
There are stringent UK tax compliance rules for ‘non-resident directors’ (potentially even just for one UK day/meeting a year).
Any expenses and benefits may also be subject to the home and host country’s tax and social security unless an exemption applies.
Overseas employment law, immigration and insurance.
Yes. Whether the employee is working from their own overseas home or in an overseas office, the employment tax implications will be the same. The legislation is designed to look at where the employees’ duties are physically being performed (be that in an employer’s office or at home).
This depends on where the individual is working, how long for and what they are doing. Under the Organisation for Economic Coordination and Development’s (OECD) model tax convention, employment income may remain taxable in the UK, and avoid overseas tax, for a UK treaty resident individual (this will need to be established) if they meet specific conditions. Advice from an experienced global mobility professional should always be obtained in the first instance.
A1 certificates (different to a Certificate of Coverage) are usually issued by an individual’s home tax authority which provides formal evidence that the individual should remain within the scope of their home social security system and outside that of their temporary working location.
Professional advice should be obtained as the relevant social security legislation needs to be explained.
A section 690 (S.690) direction is a PAYE relaxation agreement, issued by HMRC.
It refers to an employee’s earnings for UK work if they are non-resident, UK resident but treaty non-resident or UK resident but entitled to Overseas Workday Relief. Specific conditions apply and obligations follow (e.g. submitting a UK tax return).
We’ll provide expert tax advice to support your international operations – and as part of the PKF global network we can call on members in 150 countries to make sure you get the best advice.