Social Insurance, Taxation and Medical Treaties Between Countries (Part 3)
How EU Brexit Affects Expat Property Business & Pensions
PART THREE
In Part 3, ProACT Sam discusses in depth issues for Family and Business Living and Working Abroad with the looming EU Brexit for Expats early in 2019.
Social Insurance and Medical Treaties
Bilateral treaties between two countries have always existed before the EU and will do afterwards.
As we discussed previously the EU can influence and coordinate these between member states, but essentially tax, social and medical treaties are bilateral.
The UK can update and renew treaties immediately.
That social and medical treaties exist between Cyprus and UK then Expats living and working abroad in either country can enjoy coordinated healthcare and social insurance benefits. Remembering the benefits may differ in each country, the reciprocal agreements are for services and benefits, but not the level and quality of benefits.
ProACT Sam examines the Impact of Social Insurance Changes in Light of EU Brexit for Expats
Social Insurance Bilateral Agreements
All EU states have separate independent Social Insurance systems, but an harmonised and coordinated approach that allows Expats Living and Working Abroad or Retired overseas to access Social Insurance more effectively.
With EU Brexit Expats are concerned for their rights as worker to social welfare protection, health cover and pensions.
Will pensions still be paid?
Will healthcare be provided?
Are benefit transferable?
Social Insurance Agreements Can Be Independent
The UK has many Social insurance agreements around the world including .
The purpose of the agreements is that Expats Living and Working in another country have the same rights and benefits as the citizens of the country of residence.
That does not mean the Expat enjoys the same Social Welfare Benefits at home, it means that they enjoy the same as their country of residence.
For Example the Cyprus Health Cyprus has no Nursing or Long term care facilities, they will treat the medical condition, but not provide nursing care or accommodation for recovery, in hospital or the community.
The UK and Cyprus established a Social Security Agreement in 1957, long before the UK or Cyprus entered the EU.
Australia does not have a social security agreement with the UK, but does with Estonia and 32 other countries. UK Expats have to wait for 10 years residence to get access to benefits in Australia, whereas Estonias get reciprocal access straight away.
The UK has 14 reciprocal agreements plus the EU 27.
While the Cyprus UK agreement predates the EU common policy, it would be possible for the UK to maintain and update the 1957 agreement with Cyprus.
Even so Cyprus operates a Social Security System where Expats working must contribute for 3 years before claiming benefits, other than retired expats who get immediate access on tax registration.
Social & Medical Cover to Continue - Check the Benefit & Cost
Country by country variations exist and expats should consider what their entitlement is for pensions, welfare and medical treatments.
3 Changes to Social Insurance in 2018
Factors affecting social welfare with EU Brexit for Expats
Countries sign Bilateral Social Security Agreements for social insurance and benefits for Expats Living and Working Abroad. Countries like Cyprus and UK sign an agreements with the EU.
So each Social Insurance arrangement is different in each country, in terms of tax, cost and benefits.
By signing EU Regulations social insurance agreements between member states replace bilateral agreements by the coordinated single EU agreement connecting all EU28 member states.
UK had bilateral agreement before the EU with EU countries like Greece and Cyprus.
The UK Maintains bilateral agreements for social insurance with around 18 countries in addition to the EU28 member states. This includes USA, Canada, Philippines, Jersey, Israel, Japan and Korea.
Following EU Brexit Expats will wait to see is the UK sign a renewed bilateral agreement with the EU27 or individual bilateral agreements with countries like Cyprus again at the end of the transitional period.
Meanwhile EU Expats are covered under the EU Agreement through the end of the transitional period of EU Brexit in December 2020, so existing medical, benefits and pension arrangements will remain in place.
2. Social Dumping to End - Taxes to Rise.
The French President Macron has secured EU agreement to stop “Social Dumping”. Under this practice companies in a low social insurance cost countries within the EU, send workers to high social cost companies eg Poland to France, but only pay for the lower home country social insurance, and the employment is paid under the lower home country minimum wage structure
Now any Expat working in the EU for another country, will always pay social insurance costs in the country where work is done, not the low cost country of origin.
This affects EU expats working abroad in the EU - about 2m people.
Did you know Poland has the largest number of EU Expats working abroad in the EU, meanwhile Little Britain has the fewest Expats working abroad in the EU.
3. NI Contributions for Contractors - Expat Employee Charge
Expat job prospects in the UK are hit by a tax hike on employers who employ Tier 2 employees in the UK, these are people that are non EU skilled migrant workers.
These employers have been hit with a £1000 levy per person per year from 2017-18 and this should have been paid by companies.
Post Brexit this levy could be applied to EU skilled migrant workers seeking to live and work in the UK. This would discourage UK companies from employing overseas workers from the EU, as well as around the world, and could be EU Expats being let go.
Such action could not be applied until the end of the EU Brexit transition period in December 2020, meaning any extension of this levy on Expat jobs in the UK could only be introduced after 1st January 2021.
There are exemptions for this levy including people qualified to a higher level, an Expat migrant worker with a PhD. education will not incur for his UK employer the £1000 pa foreign workers levy post Brexit.
Expat Tax Saving Review:
3 Changes to Social Insurance in 2018
Factors affecting social welfare with EU Brexit for Expats
UK Employers to check liability to Expat Employee Levy
Social Dumping to Stop, Cross border business need to review and reorganise budgets and manpower and maybe location. Expat Employees may pay more tax on income.
EU Expats are covered by Bilateral Social Insurance Agreement with the EU28 till at least the end of the Transition period December 2020. Look for a revised UK Social and Medical Bilateral agreements after Brexit.
Contact Us for a Free Review Online for any EU Brexit for Expats.
