Dr. Brexit - Webinar by The Hague & Partners with Blue Turtle Tax and FD Legal Services
With Brexit going ahead massive changes are expected in all areas of business and trade. Our team has talked to two experts in law, tax, GDPR and Brexit matters to help you get a better understanding of the new rules and navigate through this change.
You can watch the webinar recording here.
Who is it for?
- A UK/EU company that still wants to run their business in the EU/UK post Brexit;
- A non-EU company that considers to set-up an office in Europe.
What was covered?
- Current challenges for EU-UK businesses;
- How Brexit will affect your operations and ambitions;
- A strategic eye on the timeline and effects of Brexit in a broad perspective;
- Practical guidance on Brexit related challenges;
- Q&A session at the end of the webinar, where you can ask your questions.
Famke van Dam graduated from Utrecht University in 1999 and is a seasoned lawyer with both big firm as in-house experience. She worked at the Council of State, Loyens & Loeff and the Port of Rotterdam and is specialized in civil and administrative law matters. During her career Famke gained experience in strongly regulated industries such as the aerospace, energy, mining, waste and chemical industry. Now, as owner of a boutique firm, she works on claims management, advises on regulatory compliance and assists in drafting and negotiating commercial agreements. In 2020 Famke completed the post-academic Grotius education on national and international contracting. She has a very hands-on approach and her style is solution-orientated and precise.
Duy is the founder and CEO of Blue Turtle Tax and practicing international tax law since 2007. Prior to Blue Turtle Tax he worked at Deloitte, PwC and EY. He has hard-nosed experience in all kinds of tax law matters including litigation, set-up and restructuring of international business models, tax effective supply chain management, M&A, negotiating deals with the Tax Authorities, ERP-systems implementations and general tax management. His style is client-centric and practical taking into the equation the business and organizational drivers of the client.
Since the outcome of the Brexit referendum in 2017, Duy has been heavily involved in advising businesses on the Brexit impact on various subjects, e.g. Customs, VAT, supply chain, regulatory, people, logistics, IT, legal contracts, etc.
- 👨🏻💻 Dennis von Oven - EXTERUS
E-mail: firstname.lastname@example.org ; Phone: +31 88 185 00 01
- 👨🏻💻 Jahir Dijks - EXTERUS
E-mail: email@example.com ; Phone: +31 88 185 00 21
Q&As regarding work and residence permits
(answers are provided by EXTERUS experts)
Question: If a UK owned group with a Dutch subsidiary has UK based workers that do work remotely for the Dutch subsidiary (example: desktop reports / professional analysis), then what are the implications?
Answer: That depends on several factors, such as who employs the workers and where the work is physically performed. Assuming that the workers will not physically work in the Netherlands, they would be subject to UK taxation, social security and labour law. In case they are employed by the Dutch subsidiary this may lead to compliance obligations in the UK for the Dutch subsidiary, such as running a payroll. Furthermore, UK based workers could give raise to permanent establishment issues, in case the workers e.g. perform sales activities or in case the Dutch subsidiary has an office available in the UK to facilitate the workers. The presence of a permanent establishment may lead to corporate tax liability of the Dutch subsidary in the UK.
In case the workers are employed by the UK company they would also be subject to UK taxation, social security and labour law. There could be obligations from a transfer pricing perspective, as related parties should cooperate on an ‘at-arms-length’ basis. Therefore, it could be necessary that the UK company charges the related costs for the work performed to the Dutch
Question: Are local payroll taxes due in relation to the workers who are not resident in The Netherlands but effectively working there?
Answer: That depends on the situation and if the worker is employed with a Dutch company or a UK company. In the first situation generally payroll taxes will be due for each and every working day in the Netherlands in case the workers spends 10% or more of his time in the Netherlands. In the latter situation payroll taxes will only be due in case the company has a permanent establishment in the Netherlands. This could also be the case ‘fictitiously’ in case the company is engaging activities in relation to ‘hiring out of labour’, in which case payroll taxes will be due as well.
Please be aware that if the worker is subject to compulsory Dutch social security there also are withholding obligations through payroll, in most cases.
Question: Is the Dutch subsidiary required to invoice the UK with Dutch VAT applied?
Answer: After Brexit the European VAT-Directive will no longer be applicable and the UK will be considered a third country. Transactions with the UK will be treated in accordance with/ the same way as transactions with e.g. Switzerland or any other non-EU country for VAT purposes. It will depend on the type of transaction (good or services) and VAT position of the recipient (business or private individual) if Dutch VAT will be due or not. The general place of supply rule for B2B services is that these are taxable in the country where the recipient of that service is established or has a permanent establishment to which the services are rendered. This means that if a Dutch company renders services (that fall under the general rule) to a company established in the UK, no Dutch VAT will be due, both pre- and post-Brexit. The only difference will be that post-Brexit this service no longer will be considered as an intra-community transaction that requires an EC sales listing. Both pre- and post-Brexit, services (that fall under the general rule) acquired by UK companies from abroad will be subject to UK VAT rules (self-assessment of UK VAT).
Question: If working offshore outside the 12 mile zone do you have to be registered for example if the UK trades with Norway we have to pay Norwegian VAT within the 12 mile zone, but outside the zone we don't.
Answer: There are some special rules concerning the place of supply of certain types of B2B services, such as services connected with immovable property. These services are not taxable where the recipient is established, but where the immovable property is located. In case the work is performed offshore, for example on a rig/platform the question could rise whether the fixed or floating rig/platform qualifies as an immovable property, but also whether it qualifies as a permanent established from which or to which the services are rendered. In these cases the location (within or outside a 12 mile zone) can be relevant for determining the place of supply, and under which jurisdiction the activity is taxable. Since the UK will adopt all place of supply rules relating to B2B services from the EU VAT directive, after Brexit there will be limited changes for UK companies involved in B2B services.
The impact of Brexit on VAT (and customs) will be more significant for UK international trading companies that ship from the UK to Europe.
Question: Is visa required to work offshore Netherlands for UK personnel, i.e. flight to Netherlands then onto offshore vessel?
Answer: There is a difference between short stay (<90 days in a 180 day time frame), long stay (>90 days in a 180 day time frame) and working in the Netherlands.
Depending on the nationality of the employee, an entry visa in order to enter and temporarily stay in the Netherlands could be required either for short stays or long stays. In addition, when staying/ residing in the Netherlands for more than 90 days in a 180 day time frame may require a residence permit.
Depending on the activities to be performed, the location where they will be performed and the duration thereof, a work permit or other work authorization may be needed.
UK nationals are exempt from requiring an entry visa. As of 1 January 2021 (i.e. the end of the transition period for Brexit) a residence permit will be required for stays exceeding the 90 day time limit. However, in case the Netherlands is solely used as a ‘stopover’ to an offshore location it is highly unlikely the 90 day time limit will be exceeded. A work permit may be required should the activities be performed in the Netherlands. What is considered to be ‘the Netherlands’ for the purpose of the ‘Foreign Nationals Employment Act’ (in Dutch: ‘Wet arbeid vreemdelingen’) , e.g. in case of working on a platform, is everything within the 12-miles zone. Everything outside the 12-mile zone is therefore excluded and does not require a work permit. Exemptions are also possible when residing abroad and working on a registered vessel for international transport.
Question: Do you know anything about employing UK nationals that are still based in the UK and don't plan to move here?
Answer: Yes, from 1 January 2021 onwards UK nationals will require a work permit (or another form of work authorization) for work to be performed in the Netherlands (also see previous question). Should they already be commuting between the UK and the Netherlands or start to do so prior to 1 January 2021 and therefore be considered ‘cross-border workers’ they will need to apply for a ‘cross-border workers’-document under the Withdrawal Agreement with the IND. After 1 January 2021 they will in principle no longer be considered ‘cross-border workers’ and will therefore require a regular work permit for their activities.
For stays over 90 days in a 180 day time frame a residence permit may be required. However, this presumes relocation to the Netherlands.
Question: What is the expectation with regards to Dutch people being able to work offshore in the UK?
Answer: UK immigration legislation does not apply on offshore installations located in the EEZ of the UK. This means that the employer can send the workers to those installations without having to apply for a visa or a work permit as long as will not set foot on shore. At this point in time, we have no indications that this will change in the future.