The coronavirus has brought our economy to a crawl. Internationally, governments are pulling out all the stops to support companies and citizens to reduce negative impact caused by this unprecedented crisis. This has serious repercussions for you as well as for your employees in terms of payroll and HR administration. These consequences have to do mainly with different tax and social law in the countries you operate.
Coronavirus measures differ from country to country. For example, in some countries workers must have a certificate to be allowed to travel across the territory, like in Germany or Italy. You should therefore inform yourself fully to avoid unpleasant situations for you and your employees. Additionally, rules governing temporary unemployment also differ across national borders. It’s important to keep these in mind as an employer to mitigate risks and impacts on your business activities.
People who work abroad are often also taxable in those countries. But now that their foreign assignments are temporarily on the back burner or even completely on hold, the tax regime to which your employees belong may also shift. For example, their net salaries may drop suddenly unless you guarantee them a minimum net salary. In those conditions, it is likely that the employer’s contribution to payroll costs will increase, as time worked abroad is reduced or interrupted.
Worth knowing: for a number of specific situations – such as the regimes applicable to cross-border work in France and Luxembourg – the tax authorities have declared the coronavirus crisis a case of force majeure. The impact on taxability will therefore be limited on those employees.
According to European regulations, if an employee spends at least 25% of their time working in their home country, the social security system of that country applies. In this case, too, the coronavirus crisis might throw a wrench in the works. Indeed, if the employee suddenly works more from home, a different regime may apply. It’s important to check if the countries you are active in aren’t applying temporary exemptions on this matter. If you’re not sure, turn to your payroll provider for help.
For example: a Dutch sales manager spends 80% of his time working in Belgium and 20% in his home country. He is therefore under Belgian social security. However, due to the protective measures against the coronavirus, he now temporarily works almost full-time from the Netherlands. In principle, he should switch to the Dutch social security regime, but this rule is not applied. He therefore remains within the Belgian social security system.
If you are wondering how the coronavirus pandemic will impact your workforce and how to tackle the specific formalities
check out our coronavirus info page
