Employers, agents and individuals should really consider reading the September 2019 Agent Update 'Brexit Edition'. Not only does this include important information, such as new ways of declaring small amounts of Merchandise in Baggage (MiB) when traveling after EU Exit, it contains the following:
Sending workers to the EU, the EEA or Switzerland – Changes!
The EU Social Security Coordination Regulations (883/2004) mean that, very simply, inpatriate and expatriate employees moving to and from the UK in the European Union, European Economic Area and / or Switzerland:
- Are covered by the social security system of one country and only pay contributions in one country
- Have the same rights and obligations as the nationals of the country where contributions are paid
- Previous periods of insurance, work or residence in other countries are taken into account and
- Benefits from one country are, generally, granted, even when living in another country
HMRC’s internal National Insurance Manual 33095 explains that someone who claims to be exempt from NICs in the UK (or social security in a Member State, EEA country or Switzerland) must produce a ‘Portable Document’ A1.
As part of leaving the EU, things were going to have to change at one time or another.
If there is a deal, the Update says at the bottom of the article that:
‘The UK Government is working to protect UK nationals by seeking reciprocal arrangements with the EU or Member States to maintain existing social security coordination for a transitional period until 31 December 2020. Individuals in scope of these arrangements will only pay social security contributions in one country at a time.’
Effectively, if there is a deal then there will be no change – for the time being.
The Government has already made legislation in the form of the Social Security Coordination (Regulation (EC) No 883/2004, EEA Agreement and Swiss Agreement) (Amendment) (EU Exit) Regulations 2019 which come into force on Exit Day in a no-deal situation. These are designed to ensure that ‘citizens’ rights are protected as far as possible in a ‘no deal’ scenario in relation to social security’.
The Agent Update expands on what this will mean in reality.
On day 1 (whenever that may be!), the coordination of social security with the EU 27, EEA countries (Liechtenstein, Iceland and Norway) and Switzerland will end. The result is that this may lead to employees working in the UK and the other counties having to pay social security in both – i.e. the UK and the other country. Notice the use of the word ‘may’ though, indicating that HMRC is not really sure what will happen.
In the event that the coordination of social security systems ends on the day after Exit Day, HMRC advises the following:
- If the employee is working in the EU, an EEA country of Switzerland and has a UK-issued A1, National Insurance will continue to be paid. Although,
- If the end date on the form goes beyond Exit Day ‘you will need to contact the relevant EU / EEA or Swiss authority to confirm whether or not your employee needs to start paying social security contributions in that country from that date’. The Update then gives a link to the European Commission’s Website that says will help employers find the relevant authority, however there is a document on the EU Website that gives the contact details of all of the institutions that issue the A1 forms is better!
- If the employee is working in Ireland, there will not be a need for any action due to the UK / Ireland Convention on Social Security which comes into force on Exit Day
After Exit Day, the A1 will be replaced for new applications, however, the same CA3822 form can be used to make applications.
As we approach Exit Day, the information from April, replicated in the Agent Update becomes more important.
Be aware of the obligation to contact the relevant EU / EEA or Swiss A1 issuing authority. The Agent Update gives a link to the EU Commission’s Website, however, this one is more direct. Note that this will not apply to UK or Irish nationals working in the UK or Ireland as a result of the Convention that will come into force.
Nothing is set in stone until we reach Exit Day. There are some discussion on-going that say that the social security cooperation arrangements that existed pre-Common Market days may resurrect themselves. After all, the Social Security Coordination Regulation applies to Member States and the UK will cease to be a Member State on Exit Day.
Do pre-Common Market coordination arrangements still exist and are they fit for purpose all these years later? Will individual Member States pass their own legislation to ensure the continued social security co-ordination?
The UK Government says that its page on Gov.UK will be updated when more information becomes available.
Deal or no deal, there is work ahead for employers.