8th January 2021
The situation in each country, regarding travelling and contracting, is changing almost on a daily basis, mainly as a consequence of Covid, and the information contained in this blog may not be as accurate at the time of reading as it was at the time of writing. Please check with an expert before committing.
Last year was difficult for us all, but for international contractors, the on-going uncertainty, border closures and travel restrictions certainly presented a challenge that no one could have predicted. But, as we begin the New Year, the news of a vaccine is certainly boosting confidence that the coming months will at least be slightly more positive, despite the news of further lockdowns in some countries.
So, what is in store for international contractors in 2021?
Demand still growing
One trend that we saw in the last part of 2020 that we certainly expect to continue this year is the growing need for contractors in specific regions and sectors. As we mentioned back in November, there’s pockets of demand globally, with contract work in Germany particularly rife at the moment. And across the renewables and finance arenas, expert international talent has been increasingly sought after, an uptick that we’re predicting will remain for at least Q1 in 2021.
The simple fact is, for many international contractors, no matter what is happening in the global economy, the need for overseas expertise will remain relatively stable where in-country skills simply aren’t available. It is arguably for this reason that we’ve seen so many hirers take a more flexible approach to engaging contractors remotely during the pandemic. While borders may have been closed, niche expertise are still very much in high demand.
As such, no matter what lies ahead for international contractors in 2021, many can bank on demand for their specialist skills this year.
The impact of Brexit
Of course, we have to cover off Brexit if we’re looking at the future of contracting overseas. While this is certainly a UK-centric issue, the end of the transition period on 31st December was very much in the global eye – and while a deal has been agreed, it certainly came down to the wire.
While the deal is still yet to be fully ratified, it does provide some sense of clarity, though for contractors there are elements that remain uncertain. We do know that, in most cases, a UK national seeking an opportunity in Europe now will require a work permit. There will be country-specific nuances to obtaining these permits and these must be adhered to. It is important that contractors are aware of the timeframes in these circumstances – in some countries a permit can be obtained in a few days, while for others in can take months.
We do, unfortunately anticipate that in this early stage there will be a decline in EU-based recruitment agencies contracting UK workers due to what many may perceive as ‘burdensome’ permit requirements. However, it’s likely that those non-EU workers who already hold the required ‘right to remain’ or ‘right to work’ documents will see less disruption.
It is also important that we stress that a UK national operating under a UK-registered PSC in an EU country is likely to be working unlawfully. We also advise contractors to remember that the use of A1 certificates – which allow the holder to work in the host country but stay within their home country’s social security system – is not recommended anywhere in the EU, with many member states withdrawing the use of these.
Clearly there are still hurdles ahead in the Brexit saga, but contractors do need to be mindful that breaches of immigration rules are taken incredibly seriously – whether these have occurred deliberately or unintentionally. Anyone failing to abide by EU requirements will face potential fines, criminal charges or even deportation that could impact future work opportunities in that destination.
A stringent approach to compliance
For contractors seeking international assignments, it will also be impossible to ignore the fact that global authorities are taking a much tougher stance on tax fraud. We are increasingly hearing reports of tax reforms in various countries and greater collaboration across borders as governments worldwide seek to clampdown on fraud and recover much-needed funds as economies struggle.
In Brazil, for example, the country’s Economic Minister has focused a great deal of attention and efforts on reforming the tax system. While this will make it easier to navigate for businesses and nationals, the main purpose behind the reforms is to support the swift identification of non-compliance and fraud.
Authorities in Greece and Australia also revealed early last year that they would be collaborating to close loopholes that have been utilised to reduce tax payments across the two jurisdictions. Working together with the Organisation of Economic Co-operation and Development (OECD), the destinations have agreed to share international earnings of nationals operating in each location to ensure citizens are paying the correct taxes to the right authority.
These are just a handful of the examples we’ve seen in the last year, and we certainly predict that 2021 will see not only further stringent measures being implemented, but also greater collaboration across jurisdictions.
To add to the complexity of international tax compliance, the growth in contractors working remotely from their home country has arguably fast-tracked some tech developments as authorities attempt to monitor and police virtual work. As a case in point, we saw a rising interest in Digital Nomad visas throughout 2020. These are easy to obtain visas that grant the holder the ability to travel while they work. While Estonia was one of the first locations to open applications for this type of visa, others, including Croatia, have swiftly followed suit.
As we face on-going travel restrictions in light of the global pandemic, we certainly expect to see digital visas creep up the agenda for governments worldwide. However, digitalisation is impacting more than just the visa options for international contractors. We’re increasingly seeing authorities seeking means of taxing and policing virtual currencies in order to reclaim lost funds due to unreported income. The OECD has, for example, indicated that crypto assets will be a major focus for the authority in 2021, a move which will certainly further complicate international tax compliance for contractors.
A complex future
International contractors are certainly set for further upheaval and more complexity in regards to tax compliance in 2021. But opportunities have remained relatively buoyant despite the challenges of last year.
While we can’t say for certain what the future holds, we do know that tax compliance both at home and in your country of work should be a top priority. Contact our team of experts today to find out how they can help you.