Contractors’ Questions: How to work overseas via my limited company in the Brexit age?

Contractor’s Question: How can UK limited company contractors temporarily work abroad in the EU, or further afield now that the UK is longer an EU member?

Put another way, are any of ContractorUK’s tax, visa and general compliance recommendations for UK PSCs in the overseas contracting guides published on this page still applicable, whether I'm looking at working temporarily overseas as a UK Ltd in Austria, or Australia?

Or did the December 31st 2020 UK-EU Brexit deal mean that there is now one rule of thumb to work out tax compliance and tax efficiency if wanting to contract in an EU host country, and another rule of thumb to contract in a non-EU country, whether it's Dubai or Brazil?

Expert’s Answer: The main impact of Brexit on contracting between the UK and the EU is identical to how it was previously with any ‘third-country’ national.

Brexit, the ultimate leveller

So a UK national in the EU and an EU national in the UK have the same conditions as, say, a South African working in the EU, or the UK, would have. In short, the ‘free movement of persons’ has ended.

And this free movement has ended for all contracting modes of operation - self-employment, employment, and using your limited company/PSC.

Whichever way you want to contract overseas, you now need to have the legal right to work if you are an EU citizen wishing to work in the UK or a UK national wanting to work in the EU. Unless you were already living and working in the other state before Brexit on December 31st 2020, and have applied for residence before June 30th 2021, you will need to have the legal right to work, usually via a work permit.

Country-wide, not continent-wide

You should note that even though you may have the legal right to work in, say, France, a UK person does not have the right to live or work in any other EU state post-Brexit. Let me repeat -- the free movement of persons has ended.

Some contractor advisories  advising before the December 31st UK-EU deal cast doubt on the legitimacy of using a limited company to work abroad. Our view is that provided this is done compliantly in the work country, it is compliant and is not-non-compliant per se. To my mind, it is lazy thinking to avoid the complexities of registering and localising a foreign company in the work country. It isn't effortless, but it is possible.

However, a UK-registered PSC cannot typically sponsor a work permit and what this means is that those who plan to work abroad using their limited company must have a work or residence permit which an employer does not sponsor.

The new rules of thumb (there are three, broadly)

In other words, if you want to use your limited company to work abroad, in almost all cases your company will not be able to sponsor a work permit. So unless you have the right to work in that country, you will need to apply for a work permit without a sponsor which could be either a self-employed work visa or a Blue Card.

In summary, if there are any ‘rules of thumb’ they are probably the following three, which you should factor-in to any pre-Brexit overseas contracting advice, wherever you read it:

1. UK nationals can work without a work permit only within the UK, the Republic of Ireland, the Channel Islands, the Isle of Man, Gibraltar and, possibly, some other Crown Dependencies. The overseas contracting world is a much-shrunken place for Brits.
2. EU-nationals who do not have ‘settled status’ in the UK can work in the UK only if they have the right to work under the Skilled Worker scheme that replaced the Tier 2 visa or under one of the other UK's Home Office schemes.
3. UK nationals who want to work elsewhere than the above territories must have the correct visa just as before Brexit.

So other than these three new fundamentals of working temporarily overseas, nothing else has changed!

The expert was chartered accountant Kevin Austin, managing director of overseas work advisory Access Financial.