Coronavirus (COVID-19): Global Mobility

18 May 2020 | Guy Abbiss

We are all in unprecedented times with changes to the way we live and work due to Coronavirus (COVID-19), that no-one could have imagined just a few months ago. With many countries in lockdowns and nearly all international travel paused apart from helping people return to their home country, the connected world of internationally mobile businesses and business travellers has changed beyond recognition. Some of these changes will create a ‘new normal’ and no doubt facilitate accelerated change in the way people work internationally.
For the time being, restrictions to business travel and the movement of assignees could result in unintended tax consequences that could eventually have an impact on withholdings, tax and social security liabilities and cash-flow for employers and their employees. Many of these consequences are happening as a direct result of the current restrictions due to Coronavirus (COVID-19) but will take time to identify and deal with.
Individual tax authorities and multi-national organisations such as the EU and OECD recognise these forthcoming challenges and have started to make announcements to ease the unexpected burdens that could arise. Some examples of measures that have been announced are:

  1. In the UK, HM Revenue and Customs (‘HMRC’)  has confirmed that days spent in the UK as a direct result of COVID-19 travel restrictions can be excluded as ‘exceptional circumstances’ for some aspects of assessing tax residence (more information available here).
  2. Some countries in the EU have already confirmed some relaxations to the interpretation of EU social security rules as a result of people spending unintended additional time working in member states due to Coronavirus (COVID-19).
  3. The OECD has published recommendations around interpretation of tax treaty residence for individual and companies as well as permanent establishments risk to avoid unintended, complicated and costly tax and administrative burdens
  4. Some countries, such and Belgium and the Netherlands, have agreed bilaterally how to deal with cross-border workers who unable to travel to their normal place of work

We hope to see more relaxations in due course as more and more people could be impacted over time.

This article focuses on some of the more pressing UK aspects to be considered for global mobility. These being:

  • Tax residence in the UK
  • Pay As You Earn (‘PAYE’) for commuters, assignees claiming overseas workdays and non-resident directors
  • Delayed assignments / UK employments

Tax residence in the UK

Tax residence in the UK is determined under statutory residence test. This was designed to provide a series of objective tests to assess tax residence. Most of the elements of the test use time spent in the UK as an objective factor.  The test also includes a provision for disregarding time spent in the UK for ‘exceptional circumstances’. However, such protection only excludes up to 60 days in each tax year.

The Coronavirus (COVID-19) travel restrictions for international workers are likely to impact the residence position in three ways:

  1. Returning to and working in the UK for the time being thus exceeding the di-minimis of 30 workdays in the UK allowed to remain non-resident for the tax years 2019/20 and or 2020/21
  2. Remaining overseas and taking a significant break of 31 days or more as a result of unpaid leave or furlough
  3. Ending their assignment overseas and returning to the UK

Employers should consider reviewing their assignment populations to determine the unexpected tax residence risk and its impact. Get in touch and we can support you with a review.

PAYE position for commuters, assignees claiming overseas workdays and non-resident directors

Internationally mobile employees can end up paying tax in more than one country as a result of their working arrangements. This means that tax withholding can apply in one or more countries. In practice, employers will set up the payroll such that there is no double withholding on the same income.  For example, by splitting the payroll withholding between the home country and country of employment.  As a result of travel restrictions, these withholdings will not be appropriate for the current situation. Employers may wish to consider identifying impacted individuals and pro-actively working with tax authorities to make adjustments as soon as possible.

Set out below are populations where withholding taxes may need to be reviewed.

Get in touch, as we can help you support your employees who may be impacted.


A commuter is someone who may typically be tax resident in their home country but spend a significant percentage of time working in another state. Usually commuters pay tax on their worldwide income and gains in their home country . This includes any earnings relating to due duties performed in the other country. They claim relief from double taxation in their home country so that they are not doubly taxed.

From a UK perspective, where someone is commuting to the UK and therefore subject to taxes in both the UK and their home country their employer will usually apply Pay As You Earn withholding (PAYE) to a percentage of their earnings related to UK duties. In such cases, HM Revenue and Customs (HMRC) will issue a ‘s690’ direction for a tax year based on a reasonable percentage of estimated UK workdays with the final position calculated in the a self-assessment return.

One of the consequences of the travel restrictions is that such commuters are currently working exclusively in their home country. Yet as lockdowns and travel restrictions continue there are likely to be increasing amounts of tax being paid to the wrong country.

ExamplePieter is a Dutch national, tax resident in the Netherlands where his family home is. Prior to Coronavirus (COVID-19), he worked 60% of his time in the UK and 40% of his time in the Netherlands. He earns £120,000 per year. His employer has received a ‘s690’ direction from HMRC and applies PAYE to £6,000 (60%) of his pay every month. He has not worked in the UK since 1 March 2020. If he is unable to resume his commuting arrangement until 1 July, he will have had PAYE apply to £24,000 of his earnings that are not actually subject to UK tax. The additional consequence is that no relief is available in the Netherlands on this amount as his services were provided in the Netherlands. He will need to claim the PAYE back to fund Dutch tax instead.


Individuals claiming Overseas Workdays relief

Certain individuals coming to the UK for temporary purposes may be considered non-domiciled in the UK. These  individuals coming to the UK for the first time to work are generally entitled to claim the remittance basis of taxation. Under the remittance basis earnings related to non-UK workdays and paid overseas are only taxed in the UK to the extent such earnings are remitted to the UK. Similar to commuters, employers may also apply for direction to operate PAYE on a percentage of earnings related to UK duties such that UK withholding may only be due on some of the earnings.

Such individuals are currently likely to be exclusively in the UK or in their home country. This means that, at the moment, 100% of their earnings are for duties performed in the UK or outside, distorting the regular PAYE position and resulting in a potential shortfall or overpayment of tax.

Where such employees have been furloughed, the position for such individuals may add complexity for their employer claiming the job retention scheme grant. Such furlough pay will likely be regarded as having been earned where the person would have normally worked.

Non-resident non-executive directors of UK companies

Under UK rules non-resident Directors are liable to UK tax on their income on a just and reasonable apportionment of fees for work performed in the UK. In practice the basis for taxation will be focused around the number of days attending board meetings in the UK. In the current situation, board meetings are taking place by audio or video conferencing facilities which means such directors are performing some of their duties outside the UK. If PAYE is applied to all of their Director fees, they can make a claim to reduce the amount chargeable to UK tax. Employers may wish to consider applying for a s690 in due course to ensure the PAYE is adjusted to reflect the current position or making sure a tax return is submitted to correct the UK tax liability taking in to consideration the actual days worked in the UK.

Delayed secondments and new employments

Employees  who were planning to move to start a new job or secondment but have been unable to travel to start their role in the new location. They may therefore be working on their new role from home in the country of their tax residence. This means their earnings are likely to be subject to tax in their home country and home country withholding may need to be applied.

This is quite straightforward for a delayed secondment where the home country payroll can continue to withhold local tax and would happen, for example, with delayed UK-outbound secondments for individuals already employed in the UK.

The situation for new hires coming to the UK is potentially more complex.

For a new UK employee commencing work in their home country, the UK employer will still have its requirements to deal with under the PAYE regulations. However, it can use a ‘No Tax-code’ for PAYE purposes if the facts of the employee meet the following conditions in HMRC’s guidance:

‘Where a business in the UK or the UK branch or office of an overseas business employs someone who’s non-resident, and the employee:

  • is working wholly outside the UK
  • has not been resident in the UK before
  • employee does not intend to and will not perform any duties in the UK

Once the individual does eventually arrive in the UK, PAYE and NICs will need to be applied.

Social security contributions

The general rule with regard to social security is that employees on temporary secondment will be able to remain in the home country social security regime. Assignees now forced to work from home in the home country will usually not be subject to a change in their social security treatment. Even if they return to their home country, they will usually be covered in their home country in the first place.

However, for cross border workers or commuters working from home, this could bring up unexpected consequences.

The EU commission has given some guidance addressing the key concerns for employers and employees, where employees can no longer continue their normal travel and work patterns as a result of the travel restrictions.

A number of EU countries including France, Belgium, Germany and the Netherlands have already reassured employers that their employees unexpectantly working in their home country will not be considered as working for social security purposes. Therefore, the social security affiliations currently in place will in most cases continue and not switch to a different country.

However, in some circumstances, an employee’s social security liability may switch due to for example working from home. In that scenario employers should consider making an application to the competent authorities and apply for continuation of social security under the special circumstances provision.

Employers should ensure that for secondments within the EU all their employees have valid A1 forms as well as a European Health Insurance Card (EHIC). The EHIC will allow employees to access health care system in any EU/EEA Member State regardless of where they are paying social security contributions.

For employees who are covered by a social security regime in a different country then when they and or their family are living, employers should obtain a S1 form.

Global Mobility Strategy and services for your Internationally Mobile Employees

With expertise in law and tax, as well as broader HR consulting and communications, and specialist payroll facilities, we offer a fully integrated consulting and advisory global mobility service for your internationally mobile employees. We can assist companies working out  the potential impact on tax and social security for their international assignee and business traveller populations. Particularly where tax is being withheld in the wrong country. Some of the impact will not become apparent until future tax returns are completed. Nevertheless, it would be sensible to review the global mobility strategy and risks and take steps to mitigate their impact.

Get in touch with us for more information or to talk to one of our experts.


Content is for general information purposes only. The information provided is not intended to be comprehensive and it does not constitute or contain legal or other advice. If you require assistance in relation to any issue please seek specific advice relevant to your particular circumstances. In particular, no responsibility shall be accepted by the authors or by Abbiss Cadres LLP for any losses occasioned by reliance on any content appearing on or accessible from this article. For further legal information click here.

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