2024-08-08-KPMG_Global-United_Kingdom_–_Social_Security_Treatment_for_Simultaneous_Employment_in_U.K._and_Self-Employment_in_EU_4页_283kb

HMRC Social Security Alert Summary

Core Topic

The GMS Flash Alert discusses HM Revenue and Customs (HMRC)'s clarification on social security treatment for individuals with simultaneous employment in the UK and self-employment in EU member states. Key points include HMRC's confirmation that overseas income is categorized according to UK law and subject to appropriate National Insurance contributions (NICs).

Key Points

HMRC's view emphasizes the principle of social security coordination under EU and UK regulations post-Brexit. Only one country is competent for social security contributions, based on where work is performed ("pay where you work"). For example, an individual employed in the UK with a director role in Belgium may have social security duties in the UK under HMRC's interpretation.

Importance and Risks

This clarification is crucial as it addresses challenges in determining correct social security treatment across the EU, European Economic Area, and UK, especially for board members where roles are classified differently. Overlooking multiple activities can lead to incorrect assessments, double taxation, and compliance risks.

Background and Context

The rules are governed by EU Regulation (EC) No 883/2004 and the UK-EU Protocol post-Brexit. Fundamental principles include: one country responsibility, and income treated as received where work is done. HMRC's stance aligns with KPMG's long-standing interpretation, supporting unified application in the competent country.

Recommendations

Companies should review their workforce, particularly board members, and maintain awareness of employees' activities across regions to prevent compliance issues. Employers must understand the rules and ensure proper registration and contribution obligations.