Even with COVID19 overshadowing everything during 2020, Brexit did not exactly creep up on exporters on 1 January 2021. However, with the EU-UK Trade and Cooperation Agreement only being finalised on Christmas Eve, UK businesses had very little time to prepare for the reality of Brexit. It is little wonder, therefore, that we have had all of the headlines in the first few months of 2021 around delays at the ports, rotting food on lorries and empty shelves in stores. Even the UK’s beloved “Percy Pig” was threatened by EU “red tape”!
Following our previous blog on the personal tax impact of Brexit, it seems those who own property in France or Spain may be particularly affected by Brexit.
For any companies who previously relied on an EU directive in relation to Withholding Tax (“WHT”), there will be a need to consider the impact between the UK and other EU entities. The terms of the relevant Double Tax Treaty (“DTT”) should be reviewed to determine if there is any reduction, or possibly even elimination, of the withholding tax obligation. There may also be a requirement to make a new or amended claim to the relevant tax authority too.
Following the UK’s exit from the EU, both parties have reached an agreement regarding the details of the National Insurance rules to be applied between the EU states and the UK from 1 January 2021. This agreement largely replicates the current EU social security coordination regulations and aims to ensure workers who move between the UK and the EU are required to only pay into one country’s social security scheme at a time, usually the country where the work takes place. There are special provisions for multi-state and detached workers, with current rules continuing to apply to those protected by the Withdrawal Agreement.