Brexit questions: An executive in Amsterdam is due to begin a 3 year London secondment. Post-Brexit vote, should she stay in Amsterdam?

11 July 2016

Post-Brexit, if you go ahead with the secondment, there will be no material impact on the executive’s liability to income tax on her salary, benefits or share-based remuneration. Her liability to income tax will continue to be governed by UK domestic tax law (including the remittance basis of taxation for non-UK domiciliaries) and the UK’s network of double tax treaties.

For this particular executive, the main relief will be the so-called “overseas workdays relief” under which the remuneration of a UK resident but non-UK domiciled employee which arises in the first 3 years in the UK and is attributable to duties performed outside the UK is not liable to UK income tax unless remitted to the UK.

Brexit may affect the executive’s liability to social security contributions on her salary, benefits or share-based remuneration. At present, if she works both in the UK and elsewhere in the EU, double contributions liability is avoided by virtue of an EC Regulation. If that Regulation no longer applied to the UK, there could be a risk of double contributions liability. However, it is perhaps more likely that the UK will continue to adhere to the Regulation, as Switzerland does. Adherence to the Regulation does not seem to raise any issues relating to freedom of movement or require the UK to make a financial contribution (any more than a double tax treaty does). Alternatively, if the Regulation ceases to apply to the UK, we would expect there to be significant pressure to negotiate a double contributions convention with the EU, as a double contributions liability on migrant workers would not benefit the UK or EU member states.