On January 1, 2021, the transition period for Brexit ended, and now contracting in the EU will be determined by several trade agreements between the UK and the EU. Unfortunately, many of the trade negotiations focused on selling goods to the EU rather than services, so it may be a while before more clarity is gained in real-time for UK contractors. This guide will discuss what we know so far, and what options a UK contractor might have.
How does Brexit affect UK contractors working in Europe?
Because Brexit made the UK an independent country, UK citizens will no longer enjoy the freedom of movement and trade as when the UK was an EU member nation. This will affect everything from meeting immigration requirements, type of business entity, and establishing professional qualifications.
How can UK contractors legally work in Europe after Brexit?
UK contractors no longer have any advantage over contractors from other non-EU countries and have to meet all of the same immigration and residency requirements. However, there is no indication that those requirements will be more difficult for UK contractors than for others.
For stays of longer than 90 days (within a 180-day period), you will need a work permit from a valid sponsor inside the country. One caveat is that if you were already working in an EU country prior to January 1, 2021, then you can retain the right to work visa-free. Even so, there may be changes to a country’s business registration rules, and the need to obtain a new residency card.
Here are your options for contracting in the EU post-Brexit:
UK freelancers just starting out in an EU country will now need to obtain a work visa from a legal sponsor in the EU. That could potentially be your EU client, but it may actually be easier to become an employee for visa-sponsorship purposes.
UK Limited Company
If you use your own UK limited company for contracting, and lease yourself out as an employee, then that will be a problem going forward. Your own UK company cannot sponsor a work permit for you as a foreign entity, so your other option is to seek a self-employment visa (if available in the destination country).
Use an umbrella company
Using an umbrella company can ease some of these challenges, as it is a legal entity in the EU country and can sponsor a work visa for you. The umbrella company can also assist with the contract, payment, and confirming performance with the client to avoid any conflicts.
Are there changes to taxes and social security?
One thing that has not changed is the need to pay taxes in EU countries where you contract, and the Brexit agreements did not change any double taxation treaties in effect between the UK and EU countries. Those will allow you to avoid double taxation of your earnings. There is also the possibility of remaining on your UK social security program and avoiding paying into an EU program.
How Contractor Taxation can help you with working in the EU post Brexit
We understand working in the EU post Brexit is more than an inconvenience for UK contractors that wish to work in the EU. After all, the EU has a large and nearby pool of potential clients that are now less accessible. There are solutions, however, and Contractor Taxation has a network of umbrella companies in most EU member countries, any of which can assist you with work visas, tax withholding, and social security rules.
Please contact us if you have questions about contracting in the EU, and would like to learn more about how an umbrella company can smooth the way for setting up new contracts.