Brexit-deal: people mobility

21/01/21

Entry visas, immigration, services, and social security

The Trade and Cooperation Agreement (TCA) between the EU and the UK unexpectedly contains several provisions that impact people mobility. We explain a few key points on visas, immigration, services and social security.

The trade deal does not have a specific chapter relating to ‘mobility’. Yet, sections on social security, visas and services contain provisions that show the UK and EU reached agreement on certain issues regarding people mobility between the EU and the UK. This includes visa free stay for short-term visitors, common rules for determining the social security position of cross-border workers and the rights of individuals to work and stay in the EU or UK under free movement of services.

However especially in respect of social security and rights to work, the new rules are likely to lead to more complexity and administrative burdens for businesses operating in the EU and the UK. In any case it is clear that EU-UK cross-border travel and work will not be as easy and seamless as it was before Brexit.

Entry visas

Those who fall within the scope of the Withdrawal Agreement are subject to these rules. However new arrivals will be subject to new rules:

Short stays

In the agreement the EU and the UK agreed that nationals from either party would be permitted entry to their respective countries for short stays without requiring an entry visa. In practice this means UK nationals may stay in EU member states for a total of up to 90 days in a rolling 180 day period. However the UK’s system is more flexible and allows EU nationals to stay for up to 180 days in a rolling twelve month period.

For any stays exceeding these respective durations, a visa and/or residence permit will be required. Such permits will need to be applied for under the national immigration systems of the relevant country, in many cases prior to travel.

Covid-19 travel restrictions

Despite the provisions in the agreement, the EU and UK are still permitted to restrict travel for public health reasons. This has become especially relevant in light of Covid-19, with the UK now treated as a third-country that is not listed as a safe country of origin in respect of Covid-19. This has meant that travellers from the UK have been refused entry to several EU member states, as they could not prove they met the requirements for an exemption to the EU travel ban. In this respect EU border officials have begun enforcing new immigration rules since 1 January 2021.

It is expected that the travel ban will be gradually lifted in accordance with developments in limiting the spread of the Covid-19 virus, however in the meantime businesses should be aware of the new rules and how they can impact their cross-border workers. We advise to assess the options and limitations prior to travel.

Immigration

The EU-UK Withdrawal Agreement covered the rights of EU and UK nationals to work and reside in the UK or an EU member state, respectively, when they started their residence or work activities in that member state before 1 January 2021.

EU nationals coming to work or reside in the UK after 1 January 2021 are subject to the new UK points-based immigration system. Similarly, UK nationals are subject to the existing national immigration rules of the EU member state that they will work or reside in after 1 January 2021. This means that UK nationals are subject to 27 different immigration systems and will need to assess the requirements in the member state where they plan to work or reside.

This general rule is not changed by the new trade deal. Indeed generally a work permit will be required from day 1 for any work activities for UK nationals in the EU and vice versa. We therefore advise businesses to ensure they have completed an immigration compliance assessment and ensured all administrative paperwork is in place before an employee travels from the EU to the UK or vice versa. This is especially important for UK nationals who are subject to separate requirements in each EU member state.

In addition to these national rules, the trade deal contains provisions on continued cooperation between the UK and the EU specifically in respect of provision of services. Some of these provisions relate to the activities of individuals; specifically short-term business visitors, business visitors for establishment purposes, intra-corporate transferees, contractual service providers and independent professionals. Based on these provisions, some new rules will apply to cross-border workers between the EU and the UK in addition to national legislation. However it remains to be seen how this will work in practice, with member states being responsible for the implementation and enforcement of any new rules in their own jurisdictions.

Services

The trade deal contains provisions on work permit exemptions, application processes, recognition of qualifications and a ‘most favoured nation’ clause.

Work permit exemptions

The trade deal sets out which activities short-term business visitors, business visitors for establishment purposes and intra-corporate transferees should be allowed to perform in another member state without a work permit being required. The listed activities, which are to last no more than 90 days in a 6 month period, are:

Meetings and consultations
Research and design
Marketing research
Training seminars
Trade fairs and exhibitions
Sales, purchasing, after-sales or after-lease services
Commercial transactions
Tourism personnel
Translation and interpretation

However the UK and several EU member states have opted out from certain activities or added specific additional requirements or limitations. Each traveller will be subject to different requirements depending on the country they are travelling to and the activities they are performing.

Moreover, in practice these work permit exemptions will need to be implemented in the UK and EU member states, who each have their own existing work permit exemptions. The work permit exemptions under the trade dealwill supplement these exemptions for UK nationals or EU nationals, respectively, but will be enforced by the relevant member state. These discrepancies in implementation and enforcement mean it will likely be some time before businesses can rely on these exemptions in practice.

Application processes

Secondly, the agreement confirms that certain individuals will be able to apply for entry, residence and work authorisation under the trade deal if they meet certain requirements. There are specific provisions for business visitors (for establishment purposes) and intra-corporate transferees on the one hand, and contractual service providers and independent professionals on the other hand. Such applications will need to be made under national law in the relevant member state, however the trade deal confirms that such applications should not be subject to quotas or economic needs tests and the individuals should enjoy equal treatment to EU or UK nationals, respectively.

It remains to be seen how this will be implemented in practice in the UK and EU member states. Businesses generally already make use of existing national immigration procedures, of which the processing and requirements are already clear. It is therefore likely that in practice these provisions will not have a significant impact for employers. Indeed the trade deal leaves quite some discretion to member states in how such applications can be processed and which additional requirements can apply, with further opt-outs being applicable in certain sectors across many member states.

Recognition of qualifications

An important impact of Brexit is the end of automatic recognition of qualifications from 1 January 2021. The trade deal contains provisions onrecognition of qualifications in certain sectors, however many member states have opted out and additional requirements apply in certain sectors. For example, if a UK national needs to perform activities in a regulated sector (such as legal services or accounting) in the EU, an assessment will need to be made of the rules in that particular sector and member state, and for the specific activities to be performed. In practice this will lead to a significant administrative burden for businesses and possibly lead to new additional requirements.

The agreement between the UK and the EU does contain provisions allowing for future cooperation on recognition of qualifications. However this will be on a sector-by-sector basis and we do not expect that this will lead to harmonisation in future.

Most favoured nation

The Brexit trade deal contains a ‘most favoured nation’ clause. This allows the UK and EU to claim any more favourable treatment granted by the UK or the EU, respectively, in their future agreements on trade in services and investment with other third countries (except in the area of financial services). This can have an impact on immigration if the UK or EU agree more favourable terms to third countries in future, for example in entry and stay requirements or work permit exemptions.

Social security

The trade deal also contains coordination rules for determining the social security position of employees who work cross-border between the EU and the UK. These rules are laid down in the so-called Protocol and apply on new situations as of 1 January 2021. For situations that were already existing on 31 December 2020, the Withdrawal Agreement remains applicable.

The coordination rules from the Protocol are generally the same as the rules as laid down in the European Regulation on social security, however there are some important differences. First, the EEA-countries (Iceland, Norway and Liechtenstein) and Switzerland do not fall under the Protocol. Additionally, the Protocol contains a posting article for assignments for a maximum period of 24 months, in line with the current EU Regulation.

The Protocol offers the possibility to the EU-countries to opt out. In other words, to choose to not apply the posting article. All 27 Member States have announced to opt-in and apply the posting article.

Lastly, the scope of the Protocol differs from the EU Regulation. The Netherlands have for example decided to not include all parts of the Dutch social security scheme under the Protocol (family benefits, such as child benefits are excluded). The Protocol will therefore not in all cases result in the same benefits compared to when the EU Regulation for social security would apply.

There has been uncertainty in the past on whether the Long-term Care Act (Wet langdurige zorg or “Wlz”) was covered under the Protocol as well. The Dutch tax authorities recently confirmed that the Long-term Care Act (Wet Langdurige Zorg or Wlz) is included under the scope of the Protocol as of 1 January 2021.In practice this means that when the Protocol applies an employer either pays all Dutch social security contributions or is exempted in full. For a more detailed explanation on the social security coordination rules from the Protocol and the coverage for the Wlz, we refer to our Tax News Update.

Considering these important differences between the Protocol and the European Regulation for social security, we recommend to review the social security position of employees who started working cross-border per 1 January 2021 or per a later date on an individual basis. Additionally, it is of importance to update your internal processes to align them with the new coordination rules.

PwC Brexit Desk

The PwC Brexit specialists can help you determine the exact criteria that need to be met. They can also assist in setting up processes in order to ensure your business meets the new requirements for people mobility.