Brexit – The People Mobility Impact in the Netherlands

New rules in 2021

After the UK left the European Union on 31 January 2020 a transition period took effect, which will end on 31 December 2020. The Withdrawal Agreement ensured there would be no immediate change to immigration, tax and social security rules. However from 1 January 2021 these rules will change. This means that employers should take action now in order to ensure they stay compliant when the transition period ends and new requirements take effect.

Review the impact for every group of employees

"Employers should ensure they are aware of the new rules that will apply to their workforce", says Hugo Vijge, senior manager Global Immigration Services in the People & Organisation practice at PwC. "This means making sure they have an overview of the type of travellers they have – such as expats and local hires but also commuters and business travellers – and assessing how the new rules will affect each group of employees. This will also mean that employers will need to ensure they have the processes and resources in place to accommodate questions from employees, work and residence permit applications and new administration requirements from 1 January 2021."

Dutch immigration rules

From 1 January 2021 the rights that apply to UK and EU nationals in the Netherlands and in the UK, respectively, on the basis of the Withdrawal Agreement will end unless the transition period is extended. As a result, new arrivals will require will require Dutch work authorisation in order to work in the Netherlands from day 1 of their activities. It is expected that UK nationals will be allowed to enter and stay in the Schengen area for up to 90 days in 180 days without having to apply for an entry clearance visa. "The United Kingdom will need to reciprocate for EU nationals", says Vijge. "In order to reside in the Netherlands for more than 90 days in 180 days UK nationals will require a residence permit. Applications for a work permit and/or a residence permit will be subject to the Dutch immigration rules that currently apply to other third country nationals. In practice this will mean that employers will generally need to obtain ‘recognised sponsorship’ status at the IND and ensure their UK employees meet a monthly salary threshold of either 3,381 or 4,612 euro gross per month, depending on their age (2020 thresholds)."

Social security

From 1 January 2021 the EU Regulation will no longer apply in social security matters relating to the UK. It is not yet clear which rules will apply from that date to employees from the UK that work in the EU or EU residents that work in the UK. "The UK authorities (HMRC) published a draft proposal before the summer", explains Vijge. "This document forms the basis for negotiations on new arrangements between the EU and the UK. Whether the two sides will come to an agreement and, if so, what the new arrangements will entail remains to be seen. If the UK and the EU do not come to an agreement, then from a Dutch perspective Dutch national law will determine where an individual is covered for social security after 1 January 2021. In this respect the Dutch authorities (SVB) already confirmed that the social security treaty between the Netherlands and the EU will not apply to situations that fall within the remit of EU Regulation 883/2004, even after the Regulation ceases to be applicable. This will have an impact on the social security position of international employees working in the EU and the UK, who can then be covered by social security in one country, both countries or none at all."

Tax

After the transition period, the Dutch tax treatment of UK employees who are subject to Dutch taxation may partly change. This is due to certain national tax regulations that will no longer be applicable to UK nationals or UK residents from 1 January 2021. "This mainly relates to regulations that are based on EU law", confirms Vijge. "From a Dutch perspective, UK residents will no longer be entitled to Dutch personal deductions when earning 90 percent or more of their income in the Netherlands as of 1 January 2021. These deductions will only be provided to residents of the EU/EEA. From an international tax perspective, the bilateral tax treaty between the Netherlands and the UK remains applicable after the transition period and as such, the allocation of an individual’s remuneration between both countries remains unchanged per 1 January 2021."