International Taxes

Now working overseas due to Covid-19?

If you are newly having to work from home overseas, do take a few minutes to check whether you are covered by social security in the country in which you are working.

This may determine whether you can access the local healthcare system.

The rules vary depending on the country: e.g. if you are now working in the EEA or Switzerland then you can continue to pay UK NIC and not pay social security in your host country but you will need an A1 to prove you are paying social security in an EEA country.

Any concerns, please contact the Tax Team or call the new HMRC ‘Coronavirus’ helpline number: 0800 024 1222 (open from 8am to 4pm Monday to Friday).

 

The Insurance Team have put together a list of FAQs on travel insurance and the Coronavirus pandemic

 

The Staff Immigration Team are regularly updating their site with the latest Visa and immigration guidance

Working overseas has implications for tax, social security, pensions, corporation tax, immigration, insurance and VAT.

The Tax Team is involved in a Global Mobility project to catalogue and document the international implications of the current work of the University and its subsidiaries. This page is to be viewed in the light of being a work in progress.

Social Securities Implications of Overseas Working

HMRC provide a summary at https://www.gov.uk/national-insurance-if-you-go-abroad. This includes details on how to apply for an A1.

There is also a telephone contact number for National Insurance and non-UK residents at https://www.gov.uk/government/organisations/hm-revenue-customs/contact/national-insurance-enquiries-for-non-uk-residents.

  1. Within the European Economic Area (EEA) and Switzerland

As an employee, if you temporarily work in a country within the EEA or Switzerland, you may be able to maintain your UK National Insurance contributions and avoid paying social security in the host location. You would need to apply for a ‘Portable Document A1’.
https://www.gov.uk/government/publications/national-insurance-employees-going-to-work-in-the-european-economic-area-ca3822

Note: It can take up to 4 months for the Portable Document A1 to be authorised by HMRC, the application should therefore be submitted as soon as possible to ensure compliance, although this does not restrict the individual from working overseas. Given the current climate 4 months is too slow, so the Tax team has written to HMRC to ask if this timeframe can be speeded up.

It should be noted that individuals who are not working temporarily in another member state, for example those who were living in the overseas location prior to their employment with the University, will not be covered by the posted worker regulations and it is highly likely that social security will be due in the overseas location.

EEA Countries:

Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, UK, Iceland, Liechtenstein and Norway

  1. Working in countries with bilateral Social Security agreements

If you are going to live in a country outside of the EEA and Switzerland but with which a Reciprocal Social Security Agreement (or ‘Totalisation’ agreement) is in place with the UK, you should be able to maintain contributions to UK National Insurance and avoid paying social security in the overseas locations. You must check this by completing form CA9107; if valid, a ‘Certificate of Coverage’ would then be issued by HMRC which evidences that the terms of the agreement apply to you.
https://www.gov.uk/government/publications/national-insurance-certificate-of-continuing-liability-working-abroad-ca9107

Countries with reciprocal social security agreements with the UK are as follows:

Barbados, Bermuda, Bosnia-Herzegovina, Canada, Chile, Croatia, Guernsey, Israel, Jamaica, Japan, Jersey, Mauritius, Montenegro, New Zealand, North Macedonia, Philippines, Republic of Korea, Serbia, Turkey, USA.

Please check the position in your host country if the Certificate of Coverage should take some time to come through.

  1. Rest of the world

If you are working temporarily in a country outside of the EEA and Switzerland and reciprocal agreement countries, typically you will be required to pay National Insurance for the first 52 weeks of the period spent working overseas, provided you meet the following conditions:

  • the employer has a place of business in the UK; and
  • the employee is ordinarily resident in the UK; and
  • the employee was living in the UK immediately before starting work abroad.

Once the initial 52 week period has elapsed, mandatory National Insurance contributions (class 1) should cease. It is possible for your National Insurance record to be maintained by making voluntary class 2 contributions. Please refer to the below guidance:
https://www.gov.uk/government/publications/social-security-abroad-ni38
 

You may also be liable for Social Security payments in the country of work/residence. The rules regarding Social Security liabilities are entirely separate from income/employment tax in most countries. Payment of overseas social security will be your responsibility and, as with income tax, the mechanism of your paying this should be agreed with the department with the support of the Tax team.

Please check the position in your host country especially during the lock down period due to Covid-19.

HR Support

HR are collating guidance for employees and managers on remote working during the Coronavirus (COVID-19) pandemic

FAQs for HR staff can be found on the Coronavirus contingency planning Sharepoint site

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Country by Country Status (WIP)

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The University is now registered for Belgian Social Security, please contact the Tax Team if you have any workers in Belgium.

See PwCs guidance on the tax implications of operating in Belgium.

See PwCs guidance on the tax implications of operating in China.

This information is designed to provide some high level guidance for individuals who are based in the UK and are intending to work for the University for a period of time in Germany. This is not intended to replace bespoke professional advice, but to give University employees an understanding of the possible impact that working in Germany may have. Individuals working in Germany who are based outside of the UK may have different issues to those discussed below and should take further advice.

What current presence does the University of Oxford have in Germany?

The University has formed a gGmbH, “Oxford in Berlin”, or “OiB” in Germany. This is a charitable entity which has been set up to apply for EU grants from a European base. This entity will operate from offices in Berlin and is a wholly owned subsidiary of the University. It has been granted charitable status and consequently careful management is needed in order to not jeopardise that status. As the University already has an entity in Germany, wherever possible we should look to use it to prevent creating further reporting requirements in Germany.

What is the University’s risk?

Individuals who are employed by the University and working in Germany create a number of possible issues for the University. These include (but are not limited to) creating a permanent establishment (a "PE") of the University in Germany, creating a withholding requirement for tax or social security, or creating additional employment rights for the individual. It is important that guidance is sought before any significant (in excess of 60 days) travel to Germany is undertaken, as it is possible to minimise and address all of these risks easily.

What constitutes a PE in Germany?

There are a number of ways an individual can create a PE; for example an individual signing contracts on behalf of the University in Germany, or an individual having a fixed place of work (including a home office) in Germany. Individuals who are in Germany solely undertaking research can be exempt from these rules, so it is possible to have individuals working in Germany without creating a PE.

EU posted workers’ directive

When individuals are posted to work outside of their home country temporarily within the EU, employers must determine whether there are any additional employment rights, registration obligations, or payments due to the individual (amongst other considerations). This is of relevance in Germany, and the University may need to take action before an individual starts performing duties in Germany.

What is my income tax position?

Individuals who work for the University and who visit Germany may become taxable in Germany, but only in certain circumstances. It is possible to plan your time in Germany to avoid creating a tax liability for you and the University in Germany.

There are two articles in the UK/Germany double tax treaty which allow individuals to work in Germany without creating an income tax liability in Germany. These are as follows:

  1. If the individual is in Germany for research or teaching
  2. If the individual is a “short term” traveller to Germany

The criteria for these are as follows:

  1. “Research or teaching”

Individuals who are in Germany for a period of up to 2 years for the “purposes of teaching or engaging in research at a university, college, school, museum or other cultural or educational institution” will be exempt from income tax in Germany. These individuals will remain subject to UK income tax in full, and a number of conditions have to be fulfilled.

  1. “Short term” travellers to Germany

Individuals who visit Germany temporarily are exempt from income tax in Germany. It is important that the individual keeps records of the number of days they spend in Germany (for example boarding passes for flights to Germany) in case the German authorities challenge the exemption.

To be eligible for this exemption, individuals must meet three criteria:

  • be in Germany for fewer than 183 days in a rolling twelve month period starting or ending in the fiscal year concerned
  • be paid by (or on behalf of) a non-German employer * (assuming you remain employed by the University of Oxford in the UK, you will meet this requirement)
  • be employed by a non-German resident employer

* It is important to note that it is possible to be deemed to be employed by a German employer, even if you remain legally employed by the University of Oxford.

If you meet either of the two exemptions, you may still be subject to other requirements in Germany, for example social security or income tax on non-University income.

If you do not fall into either of these two categories, you will become subject to German income tax and need to take further advice. It is likely that you will be seconded to the gGmbH, in order to avoid creating additional corporate filing requirements for the University in Germany. The ability to be seconded to OiB will depend on whether your reason for being in Germany is aligned with the purposes of OiB.

What if I am a director?

Directors of German entities are taxable on their income in Germany; they are not able to take advantage of the exemptions referenced above.

Will I still be paid in GBP?

If you meet either of the two above exemptions, you will remain on the UK payroll, subject to UK income tax and paid in GBP. Your PAYE withholding will not be impacted.

If you do not meet either of the above two exemptions, you will become taxable in Germany from day one of working in Germany. You may be seconded to OiB, but it is expected that you would to remain on the UK payroll, and paid in GBP.

What is my social security position?

This depends on your personal contribution history, but as a rule of thumb, individuals who are in the UK social security system and are in Germany temporarily, can remain in the UK system (paying national insurance contributions) for – in the first instance, up to two years, but ultimately for up to 6 years. You will need to apply to HMRC for an A1 in order to remain in the UK social security system. Please note that this advice is subject to change following Brexit.

Do I need a work permit or visa?

Having the right to work wherever you are working is crucial as failure to comply with a country’s rules can have serious personal consequences. Whether or not you need a visa or work permit to work in Germany will depend upon your nationality, what passports you hold, and what you will be doing when you are in Germany. It is recommended that additional advice is sought based on your personal circumstances.

Can I remain in USS?

If you are employed in the UK but working in Germany, then you are not eligible to be a member of USS, unless you are on secondment to OiB. If, this is the case, then you may be able to be a member of USS providing that contributions are maintained by the University.

If you work in both the UK and the EU then further advice is available here:

USS guidance on working overseas

USS guidance on taking a leave of absence

Am I covered by the University’s insurance?

The University will provide insurance cover if you are working overseas with the University in accordance with local laws and University policy. Please contact the Insurance team at insurance@admin.ox.ac.uk.

What help can I expect to receive from the University?

The University is committed to world class research, and not only understands that this involves overseas working, but actively encourages it where it benefits both the University and the individual.

Where can I go to for further advice?

The information provided here is intended to give a high level overview of the main considerations individuals should review, but detailed advice must be obtained via the proper processes before any work is undertaken overseas.

See PwCs guidance on the tax implications of operating in India.

See PwCs guidance on the tax implications of operating in Kenya.

See PwCs guidance on the tax implications of operating in the Netherlands.

If you are tendering for a training contract in Singapore then please contact the Tax Team as you may incur tax in Singapore.

Briefly, in principle training courses carried out in Singapore are subject to GST (Goods & Services Tax) at the standard rate (unlike the UK there is no exemption for education). However, at present, unless a business has either a fixed establishment or a business establishment in Singapore (note: a dependent agent might create a BE), an overseas business supplying services into Singapore is generally not liable to register for GST.

Please note that there are specific exceptions to this rule for services related to land and services related to advertising. 

It is worth noting that the rules will change on 1st January 2020. Again, briefly, Singapore is activating the reverse charge for B2B transactions where the recipient is not entitled to full input tax recovery. Furthermore, Singapore is introducing Overseas Vendor Registration for B2C supplies of services, also effective 1st January 2020. The GST registration rules relating to this regime differ from the normal GST registration rules.

If there is a withholding tax, it will be 17% for services performed in Singapore.  We will want to check if Oxford can avail itself of the relief from tax in Singapore under the Singapore UK DTA.  Further, we may be able to mitigate our withholding tax liability by including a grossed up clause in any agreements.

For further information, see PwCs guidance on the tax implications of operating in Singapore.

A subsidiary of the University is now registered for South African Social Security, please contact the Tax Team if you have any workers in SA.

See PwCs guidance on the tax implications of operating in South Africa.

The University is now registered for Spanish Social Security, please contact the Tax Team if you have any workers in Spain.

See PwCs guidance on the tax implications of operating in Spain.

See PwCs guidance on the tax implications of operating in Thailand.

The University has Federal Tax Exempt status in the US, supported by the annual filing of a US Form 990 to the IRS.

IRS US Tax Status letter  (DOC)

Where you are receiving income from the US, suppliers may ask for a form W8 to certify the University tax status. Sending these pre-completed forms should ensure you recieve the income without any WHT (withholding tax) applied.

Completed W8 form   (PDF)

Explanatory note to accompany W-8EXP certificate  (PDF)

Please contact the Tax Team in the first instance if you are thinking of operating overseas or sending an employee to work overseas.

We are currently in the process of registering for social security in Kenya, Norway, Sweden, and Switzerland.

Contact Us


 : Finance Division
       University of Oxford
       23-38 Hythe Bridge Street
       Oxford OX1 2JD

  : vatenquiries@admin.ox.ac.uk

  : 01865 (6) 16215

Reference


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