What Brexit’s bound to mean for your contracting in EU countries

Despite the March 29th Brexit date having come and gone, there is still no certainty about what the UK’s future relationship with the EU will look like and, specifically, what that will mean for British contractors working in the EU and vice versa, writes Nikolas Papageorgiou, country manager for Europe at global payroll and accounting specialists Access Financial.

That said, there are broadly six scenarios which are likely to be tabled in the coming days (183 of them until our new withdrawal date of October 31st), weeks and months. On our very own table (below) these scenarios, we have cited each one to pair them with outcomes.

First, the six big outcomes on Brexit -- they are:

1. No Brexit

In this case, things will likely stay as they are today. This assumes of course that the UK stays in the EU on the current terms. Although note that it has been suggested the EU might make a concession to the UK to secure the UK’s continuing membership, or even insist on the UK joining the euro as a condition of continuing membership.
 

2. No-deal Brexit

In this case, there is no social security cover for UK nationals in the EU and vice versa, plus the free movement of people is no longer valid. Work permits of some sort will be needed after October 31st 2019.
 

3. Brexit with a deal

In this case, there is now social security cover for UK nationals in the EU and vice versa but, based on the recent declarations, free movement of people is out of the question. Work permits of some sort will be needed after October 31st 2019, but will probably be less demanding or burdensome than those required in a no-deal scenario.
 

4. Customs union only between the UK and the EU

Again, there is no social security cover for UK nationals in the EU and vice versa, plus the free movement of people is no longer valid. Work permits of some sort will be needed. But only goods (as distinct from services) will be free to move within the union after October 31st 2019.
 

5. New referendum in the UK -- people vote Remain

In this case, things will likely stay as they are today, with the caveats mentioned in point 1 above.

6. New referendum in the UK -- people vote Leave

In this case, we are good for a new round of negotiations and possibly a new extension beyond October 31st 2019.

In all cases, taxes imposed on UK nationals working in the EU and vice versa, depend only on bilateral agreements that are not EU-wide. The table below summarises the possibilities and the likely impact of each on the tax, social security and right to work status of British contractors in the EU and vice versa.

*Tax is subject to bilateral agreements, so is not affected by the EU-UK future relationship

** This form (CA3821 & CA3822 for limited company directors) will enable HMRC to determine which member state’s social security legislation applies.

What’s most likely to happen?

Crystal ball-gazing is not something us accountants normally indulge in, preferring instead the clarity of hard numbers! Despite the continuing uncertainty, and a bit of a pause right now in Brexit’s timeline, the most likely outcome is the acceptance of the withdrawal agreement negotiated between the British government and the EU, either in its current form or amended.

This would mean that the Immigration (European Economic Area) Regulations 2016, which currently implement free movement in UK law, will be repealed. This will likely mean that British contractors will be treated the same as workers from all other countries when seeking the right to work in the EU, and vice versa.

This would be a disadvantage. But it should be remembered that, despite the advantage of freedom of movement, many more non-EU migrants come to the UK than EU migrants. So, although work permits are a burden, they are not an insurmountable one. The most advantageous outcome for British contractors working in the EU, and vice versa, would be the retention of freedom of movement, although this currently looks politically impossible.