Assignments to Europe WTS Assignments to Europe | Editorial WTS Assignments to Europe | Content

Editorial

In times of globalization, the importance of international employee de- Austria ...... 04 Russia ...... 53 ployment is growing. As a global company, you are therefore faced with the ever increasing complexity of managing your expatriates’ cross-bor- Belgium ...... 06 Serbia ...... 56 der taxation, social security, legal and immigration-related matters. The legal regulations in these fields are not only subject to constant change Bulgaria ...... 09 Slovenia...... 58 but they are also becoming more and more complex when applied in different jurisdictions at the same time. Incorrect decisions can be both diffi- Croatia ...... 11 Spain ...... 60 cult and costly to rectify. Czech Republic ...... 13 Sweden ...... 62 At WTS, we can help you to identify cross-border work related risks at an early stage and optimize tax and social security payments for you and your Denmark ...... 15 Switzerland ...... 64 employees while keeping the administrative burden to a minimum. Our expertise helps you to strategically plan and manage your intercompany Estonia ...... 17 United Kingdom ...... 66 assignment cost and compliance. Our Global Expatriate Services specialists guide you smoothly through the planning, structuring and implemen- Finland ...... 19 Ukraine ...... 69 tation of any cross-border work (e.g. assignments, remote work, foreign local hires). Jointly with our international network, WTS can assist you in France ...... 22 Appendix ...... 72 more than 100 locations worldwide. We provide local expertise from international professionals wherever you are. Germany ...... 24 Contacts ...... 76

This booklet offers you a brief overview of tax, social security and immi- Hungary ...... 26 Imprint ...... 78 gration related matters you might consider for your cross-border work to and within Europe. Iceland ...... 28

Editorial team Ireland ...... 30 WTS Global Mobility www.wts.com/expatriates Italy ...... 32

Latvia ...... 35

Luxembourg ...... 37

Netherlands ...... 40

Frank Dissen Norway ...... 43 Partner/Global Head of Expatriate Services Poland ...... 45 WTS Steuerberatungsgesellschaft mbH Taunusanlage 19, 60325 Frankfurt Portugal ...... 47

[email protected] +49 69 1338456-52 +49 162 2444916 Romania ...... 50

2 3 WTS Assignments to Europe | Austria WTS Assignments to Europe | Austria

Austria

Personal Income Tax and insolvency insurance (0.2%) up to a monthly → A payroll account must be kept for every employee. income ceiling of € 5,550 (for 2021, adjusted annu- → An annual wage tax certificate, the so called “Lohn- Comparisons → Individual’s taxes depend on their residential sta- ally). zettel” must be filed by the end of February of the Taxation of Fringe Benefits tus as well as on their total income earned. → Furthermore, the employer has to pay the follow- following year. → Austria has a progressive tax system which means ing duties: employee pension fund, employer con- Housing C that the rates range between 25% to 55% depend- tribution to the family equalisation fund, munici- Termination of employment Home Flights C ing on the total yearly income. pal taxes and employer contribution surcharge. → The work permit must be cancelled. Education for children C → Profits gained from capital invested are taxed at → The employee must be de-registered from the so- A Tax exempt | B Taxable | C Tax relief under certain conditions a rate of 27.5% and gains from real estate sales at Immigration cial security authority. 30%. → A final wage tax certificate must be filed. → The tax period is the calendar year. Visa Tax Rates → The annual income return must be filed electroni- → Generally, any foreign citizen who wants to work Single, no children 24,92% cally the year following the taxable period until 30 as an employee in Austria must apply for a visa. Employment Gross Income¹ € 100,000 p.a. June. The deadline can be extended to 31 March → This rule does not apply to citizens of the Europe- Married, 2 children 21,92% the second following year after the tax period with an Union, the European Economic Area (EEA) and Employment Gross Income¹ € 100,000 p.a. the assistance of a tax advisor. Switzerland. In these cases a visa is not mandatory. → Salaries in Austria are usually paid in 14 instalments, including the 13th salary as the holiday Work permit Maximum Effective Personal Income allowance and a 14th salary as a Christmas bonus. → Third country citizens (other than EU/EEA/Swit- Tax Rates for the past 3 years These two last named special salaries are taxed at zerland) must apply for a combined residence and 2019 2020 2021 a rate of 6% whereas the regular employment in- work permit, the so called ’’Red White Red Card’’. 55% 55% 55% come is subject to progressive rates.

Registration Social Security → All foreigners must register at their local registra- Social Security Rates Employment Gross Income1 € 100,000 p.a. tion office within a certain period. Social security contributions are mandatory and gen- Employee 18,12% erally all employees working in Austria have access Employer’s Obligations Employer 21,23% to the benefits of the social system. The contribution depends on the employee’s monthly income. The em- Start of employment Social Security Agreements (SSA) ployer is responsible for withholding and paying the → A correct residence and work permit for the em- contribution. ployee is mandatory in case of non-EU/EEA citizen- Australia ship. Canada Employee → The employee must be registered at the social se- Chile → Up to a monthly ceiling of € 5,550 (for 2021), which curity office before he/she starts working for an Montenegro is adapted annually, an employees contribution is Austrian company (if subject to the Austrian social deducted for health (3.87%), pension (10.25%) and security system). India unemployment insurance (3%) as well as Chamber Philippines of Labour levy (0.5%) and contribution to public During employment Serbia housing funds (0.5%). → Wage tax must be withheld on a monthly basis and Tunesia paid to the tax office by the 15th of the following Employer month. Turkey → Employers are responsible for paying contributions → Same goes for the social security contributions USA to health (3.78%), pensions (12.55%), unemploy- which must also be paid and declared by the 15th ment (3%) and work accidents (1.3%) insurance and of the following month to the competent social se- 1 Excluding fringe benefits such as housing. furthermore contributions to housing funds (0.5%) curity authority.

4 5 WTS Assignments to Europe | Belgium WTS Assignments to Europe | Belgium

Belgium

Personal Income Tax An exception may apply if the employee is seconded they are staying within 10 working days following Registration to Belgium, in which case the employee remains cov- the day of their arrival in Belgium. This obligation → All foreigners must register at the local municipal- → Individuals whose domicile or seat of wealth is ered by the social security system of his home country does not apply for employees who stay at a hotel ity of the place of residence (inscription in the reg- located in Belgium are considered tax residents upon application, provided that the secondment does or Airbnb. ister of foreign nationals). and are taxable on their worldwide income, while not exceed a certain duration (up to 5 years in certain → EEA nationals who stay for more than 3 months in non-residents are only liable to tax on their Bel- cases). Belgium must register their presence at the town Employer’s Obligations gian-sourced income. hall of the local district in which they are staying. → Executives on a temporary assignment to Belgium Under the Belgian social security scheme, both em- To be able to register their presence in Belgium, Start of employment may apply for the special tax regime for expatri- ployees and employers must pay contributions to the the individuals must demonstrate their employed → If applicable, obtain the necessary employment ates provided a number of conditions are met. National Social Security Office (“RSZ – ONSS”). activity in Belgium or be able to demonstrate that authorisation and ensure that the employee has → The general tax rates are progressive and range they have sufficient means of existence and medi- a proper visa, work permit and residence permit if from 25% to 50%. The income tax calculated ac- Employee cal insurance covering all risks during their stay in necessary. cording to these tax rates is increased by a munici- → The employee’s contributions are fixed at 13.07% Belgium. → Declare the entering into service and the depar- pal surcharge (which varies from 0% to 9% for Bel- and are deducted from their gross salary. These → Non-EEA nationals must, in principle, obtain a res- ture of its employees subject to Belgian social se- gian residents and is set at 7% for non-residents). contributions cover old-age and survivor’s pension idence permit prior to being posted to Belgium. If curity to the Belgian social security office (Dimona → The taxpayer may be entitled to a basic tax-free (7.5%), healthcare (3.55%), sickness and disability their posting does not exceed 90 days, they must declaration). amount of € 9,050 (income year 2021). This basic benefits (1.15%) and unemployment (0.87%). apply for a Schengen visa (short-stay type). Some → In case the employee remains subject to social se- tax-free amount is increased when the taxpayer exceptions exist depending on the nationality of curity in the home state, a certificate of coverage has children for whom they are responsible. Employer the posted employee and the passport type. or A1-certificate must be issued as proof. → The tax year runs from 1 January to 31 December. → From 1 January 2018, the basic rate of employer → Non-EEA nationals who are posted for more than → Moreover, in case the employee is not subject to → The filing deadline for the annual income tax re- social security contributions has been reduced to 90 days must be in possession of a single permit, Belgian social security, a “LIMOSA” declaration turn is the year following the income year: the approximately 25%. For certain sectors, different i.e. a permit that combines an authorisation to must be filed with the Belgian social security office deadline is determined each year. The following rates apply. On top of this basic rate, a number of work and a long-term residence permit into a sin- prior to the start of activities. generally applies: other specific contributions apply, such as, for in- gle application procedure. On average, a single → Residents: at the end of June on paper or mid-Ju- stance, a contribution to the fund for closure of permit application can take up to 4 months prior to During employment ly via tax-on-web; in October when the tax re- undertakings (up to 0.17% depending on the kind receiving all authorisations. → Salary withholding tax may have to be withheld turn is filed by an intermediary (tax advisor); of undertaking and the number of employees) and each month by the employer. → Non-residents: usually at the end of November. a specific contribution of 1.6% if the employer em- Work permit → Foreign entities are subject to the obligation to → Employment income is in principle subject to a ploys at least 10 employees. Moreover, extraor- → The obligation to obtain a work permit depends on withhold salary withholding tax if they have a Bel- withholding tax at source by the employer. This dinary social security contributions (linked to the the nationality of the employee. gian establishment. salary withholding tax is an advance payment joint committee to which the employer belongs) → EEA nationals are exempt from the requirement to → In addition, the Belgian group entity is also subject which is creditable against the final tax liability. may also be due. obtain a work permit. to the obligation to withhold salary withholding → Income may be exempt on the basis of double tax → The employer is obliged to take up an insurance for → Non-EEA nationals must, in principle, obtain a work tax in the event that (taxable) benefits or salary are treaties. Belgium uses the exemption with pro- occupational accidents with a private insurer. permit prior to being posted to Belgium. The em- granted by a foreign group company to employees gression method (for Belgian tax residents), which ployer of a non-EEA national whose posting does working in Belgium for the benefit of the Belgian means that tax-exempt income is taken into ac- Immigration not exceed 90 days must apply in advance for a so- group entity. count to determine the progressive tax rates appli- called ‘type B’ work permit that allows the posted → Also, employee social security contributions are to cable to the income that is taxable in Belgium. Visa employee to perform any professional activity in be withheld on the monthly salary payment. The → The visa requirements depend on the nationality Belgium. employer must pay the employer contributions Social Security of the employee and the duration of their stay. → The employer of a non-EEA national whose posting and the deducted employee contributions to the → Nationals of a member state of the European Eco- exceeds 90 days must apply in advance for a so- national social security office on a quarterly basis Unless provided otherwise by an international agree- nomic Area (“EEA nationals”) are allowed to stay called single permit, i.e. a permit that combines an (DmfA-declaration). ment or EU Regulation 883/2004, employees working in Belgium for a maximum of 3 months without a authorisation to work and a long-term residence → Allocate the employees remuneration in taxable in Belgium will generally be subject to the Belgian so- residence permit, provided they declare their pres- permit. and non-taxable portions. Some income or bene- cial security scheme for employees. ence at the town hall of the local district in which fits may indeed be tax-free.

6 7 WTS Assignments to Europe | Belgium WTS Assignments to Europe | Bulgaria

Bulgaria

→ Submit the annual Belgian tax slips reporting the Personal Income Tax 1959), unemployment (0.6%), “General sickness remuneration. Comparisons and maternity” fund (2.1%), health (4.8%). → Individuals are taxed on income depending on → Accident at work and occupational disease contri- Taxation of Fringe Benefits source/residency status. butions are borne by the employer (0.4%- 1.1%). Termination of employment Housing C → The tax rate is flat and is 10% (except for dividends The exact percentage is determined based on the → Prepare and submit a final tax slip for the year of Home Flights C and liquidation proceeds which is 5%, and interest business activities sector of the employer. termination. Education for children C income on bank deposits which is 8%). → The employer is liable for the social security contri- → Employees subject to Belgian social security, must → The tax year is the calendar year. butions on a monthly (i.e. payroll) basis. A Tax exempt | B Taxable | C Tax relief under certain conditions complete the Dimona-out declaration. → The annual personal income tax return is filed until 30 April of the year following the tax year. Immigration Tax Rates → The employment income is subject to tax in ad- Single, no children 40,02% vance, i.e. the personal income tax is withheld and Visa Employment Gross Income¹ € 100,000 p.a. paid on a monthly payroll basis by the employer/ → As a rule, any foreigner who wants to work as an economic employer. employee in Bulgaria and for that purpose has ob- Married, 2 children 34% Employment Gross Income¹ € 100,000 p.a. tained a work permit from the competent Bulgari- Social Security an authorities, must also on that basis obtain a visa type “D” to enter Bulgaria. Maximum Effective Personal Income As a rule, all persons who work under an employment → Exceptions apply to all EU and European Economic 2 Tax Rates for the past 3 years contract are subject to social security for all social se- Area (EEA) citizens and to Swiss (CH) nationals. 2019 2020 2021 curity risks. The social security contributions are de- 50% 50% 50% termined and paid on the basis of the accrued monthly Work permit gross employment income. The maximum social secu- → Third-country nationals (i.e. an individual who

rity income determined in the Social Security Budget is other that EU/EEA/CH national) are allowed to Social Security Rates Act for 2021 is BGN 3,000. work in Bulgaria if they apply for and obtain a work Employment Gross Income 3 € 100,000 p.a. permit from the Director of the Bulgarian employ- Employee 12,07% Employee ment agency. Employer 25% → Most social security contributions (with certain ex- → The work permit application together with all re- ceptions) are distributed between the employer quired documents is filed by the Bulgarian employ- and the employee in the ratio 60%/40%. er and is issued within 30 days as of submission of Social Security Agreements (SSA) → An employee is required to pay contributions to the the application form. A less burdensome and more Australia pensions fund (6.58% for individuals born after 31 expedient procedure is applicable under certain USA December 1959, and 8.78% for the individuals born conditions (i.e. EU Blue Card, postings, intra-corpo- Canada before 1 January 1960), supplementary compulso- rate transfers). ry pension contribution (2.2% for individuals born Brazil before 31 December 1959), unemployment (0.4%), Registration 1 Note that the given tax rates are excl. the communal surcharges (0% to DR Congo “General sickness and maternity” fund (1.4%), → Upon arrival in Bulgaria, the foreign individual is 9% for Belgian residents and 7% for non-residents). For non-residents, India health insurance (3.2%). obliged to register at the local office of the Migra- the given average tax rates are furthermore based on the assumption Japan tion Directorate at the Bulgarian Ministry of Interior. that the tax benefits such as the basic tax-free amount, children for Employer → Certain information about posted employees is Morocco whom they are responsible and the marital quotient are applicable. In → An employer is required to pay social security con- submitted by the Bulgarian company receiving the general, this is the case if the employee earns at least 75% of their pro- Turkey tributions to the pensions fund (8.22% for indi- posted personnel with the Bulgarian employment fessional income in Belgium. and more viduals born after 31 December 1959 and 11.02% agency. 2 Note that given tax rates are excl. the communal surcharges (0% to 9% for individuals born before 1 January 1960), sup- for Belgian residents and 7% for non-residents). plementary compulsory pension contribution 3 Excluding fringe benefits such as housing. (2.8% for individuals born after 31 December

8 9 WTS Assignments to Europe | Bulgaria WTS Assignments to Europe | Croatia

Croatia

Employer’s Obligations Personal Income Tax Area (EEA) citizens and to Swiss (CH) nationals. Start of employment Comparisons → Starting with 1 January 2021, Croatia introduced → Individuals are taxed on income, depending on visas for “digital nomads” i.e. citizens outside EU → Apply for and obtain a work permit for the particu- Taxation of Fringe Benefits lar employee based on which the foreign employ- source/residency status. who perform their work activities by using ICT for Housing ee could obtain a visa for entering the country, and B, A (in case of posting) → Tax rate is progressive, rates are 20% (for the tax employers (companies, including their own) with the respective residence permit in Bulgaria. Home Flights A (in case of posting) base up to HRK 30,000) and 30% (for the tax base a registered headquarters outside of Croatia. Visas → Register the individual with the local tax office by Education for children B over HRK 30,000), plus city tax if applicable (up to for digital nomads are granted for a period of one issuing of a tax identification number. 18% on the income tax). year. A Tax exempt | B Taxable | C Tax relief under certain conditions → Notify the local competent tax office about the → Personal allowance is HRK 4,000, and there are ad- concluded employment agreement. ditional allowances if the taxpayer supports quali- Work permit Tax Rates fying family members. → To be allowed to work in Croatia, third-country na- During employment Single, no children 10% → The tax year is the calendar year. tionals (means: other than EU/EEA/CH nationals) Employment Gross Income¹ € 100,000 p.a. → Withhold and pay personal income tax on the em- → Employment income is subject to a monthly with- must apply for a work and residence permit from holding tax. the Croatian consulate abroad or at the foreigner’s ployment income on a monthly (i.e. payroll) basis. Married, 2 children 10% → Withhold and pay monthly social security contribu- Employment Gross Income¹ € 100,000 p.a. registration office in Croatia. tions for the employee through the payroll. Social Security → Prepare and submit monthly reporting documents Registration Maximum Effective Personal Income (i.e. template returns) on the personal income tax Social security contributions generally apply to all em- → Upon arrival in Croatia, all foreigners must regis- Tax Rates for the past 3 years and social security withheld and paid for the employees working in Croatia. The base for contribution ter at their local registration office at the Ministry ployee. 2019 2020 2021 calculation is the monthly employment income. of Internal Affairs within a specific period of time. 10% 10% 10% Croatian tax number (OIB) will be issued upon reg- Employee istration. Termination of employment → Notify the Bulgarian employment agency upon Social security contributions with respect to employ- Social Security Rates ment income that are withheld from the gross salary Employer’s Obligations termination of the employment agreement. Employment Gross Income1 € 100,000 p.a. → Notify the local tax office of the termination of the (employee’s burden) are as follows: 2 employment agreement. Employee 13,78% → 15% state pension fund contributions; Start of employment → Prepare and provide the employee with a certifi- Employer 18,92 - 19,62% 3 → 5% individual capitalised pension fund contribu- → Obtain correct work permit type for the employee cate on the income tax and social security contri- tions. (if applicable). butions paid and withheld for the respective work → Register the employee for social security purposes Social Security Agreements (SSA) period within the calendar year. Employer with the competent social security authority. Azerbaijan Social security contributions paid by the employer as Canada an addition to the gross salary: During employment Israel → 16,5 % basic health insurance contribution. → Withhold wage tax each month (meaning any contractual or economic employer whose registered Moldova The employer is liable for all payments on a monthly headquarters is located in Croatia). 1 Excluding fringe benefits such as housing. Montenegro basis. The employer contributions are not subject to → Withhold social security contributions each month 2 Social security is deducted on income up to the maximum monthly Quebec taxation. for the employee if the employee is not subject to social security threshold of BGN 3,000 (€ 1500) for 2021. Any income ex- Republic of Korea social security in another country. ceeding the maximum monthly threshold is exempt from social security. Immigration → Allocate the employee’s remuneration in taxable Russian Federation 3 The exact percentage depends on the accident at work and occupa- and non-taxable portions. tional illness contributions which vary depending on the employer’s Serbia Visa business activity. Social security is deducted on income up to the maxi- Tunisia → As a rule, any foreigner who wants to work as an Termination of employment mum monthly social security threshold of BGN 3,000 (€ 1500) for 2021. employee in Croatia must first obtain a visa to en- → Cancel the work permit for the employee (if appli- Any income exceeding the maximum monthly threshold is exempt from ter Croatia. cable). social security. → Exceptions apply to all EU and European Economic

10 11 WTS Assignments to Europe | Croatia WTS Assignments to Europe | Czech Republic

Czech Republic

Personal Income Tax insurance (4.5%) and pension insurance (6.5%). Comparisons → Individuals are taxed on income, depending on Employer Taxation of Fringe Benefits source/residency status. An employer is required to pay contributions to health Housing C → The tax base is calculated separately for each type insurance (9%), pension insurance (21.5%), sickness in- Home Flights B of income. surance (2.1%) and unemployment insurance (1.2%). Education for children B → The income of individuals is subject to a flat tax rate of 15% up to the maximum annual assessment base Immigration A Tax exempt | B Taxable | C Tax relief under certain conditions for social security contributions which is defined as 48 times the monthly average wage (2021: CZK Visa Tax Rates 1,701,168). When the income exceeds this limit, a → Any foreigner who wants to work as an employ- Single, no children 23,28% flat tax rate of 23% is applied. ee in the Czech Republic must first obtain a long- Employment Gross Income¹ € 100,000 p.a. → The tax year is the calendar year. term visa (Employee Card or Blue Card) to enter the → Employment income is subject to a monthly in- Czech Republic. The application shall be submitted Married, 2 children 21,24% Employment Gross Income¹ € 100,000 p.a. come tax advance payments. at any consulate of the Czech Republic abroad. → Each taxpayer whose yearly income that is subject → Exceptions apply to all EU and European Economic to personal income tax has exceeded CZK 15,000 or Area (EEA) citizens and to Swiss (CH) nationals. Maximum Effective Personal Income who has made a loss from self-employment or has Tax Rates for the past 3 years more than one employer at the same time should Work permit 2019 2020 2021 submit a personal income tax return. → To be allowed to work in the Czech Republic, 36% 36% 30% → Filing deadline for the annual income tax return: third-country nationals (other than EU/EEA/CH 1 April (paper form) - 1 May (electronical form) - 1 nationals) must apply for an employment permit

July (tax advisor) of the year following the tax year. from the relevant regional office of the public em- Social Security Rates → Allowable deductions are deducted from the tax ployment service. Employment Gross Income1 € 100,000 p.a. base. Employee 20% → The credits may be deducted from the tax – basic, Registration Employer 16,5% spouse, child, disability tax credit etc. → Upon arrival in the Czech Republic, all foreigners → A joint tax return for married couples is not possi- must register at their local foreign police office ble. within a specific period of time. Social Security Agreements (SSA) → The Czech birth number (used also as tax ID) and Australia Social Security social security ID shall be applied for the employer. Canada Montenegro Social security contributions are compulsory and Employer’s Obligations generally apply to all employees and self-employed Serbia persons working or undertaking work in the Czech Start of employment Turkey Republic. The contributions are based on the monthly → Report a vacancy and its characteristics to the rel- Korea employment income. evant public employment office if the employer Bosnia and Herzegovina intends to employ a foreigner (at least 30 days be- The maximum annual assessment base for rent, un- fore the start of employment). employment and care insurance contributions in 2021 → Notify, in writing, the relevant regional office of is CZK 1,701,168. There is no cap on health insurance the public employment service of the foreigner’s contributions. starting work date, and do so no later than by the date on which that person starts work. 1 Excluding fringe benefits such as housing. Employee → Register the employee at the competent tax, social An employee is required to pay contributions to health and health security authority.

12 13 WTS Assignments to Europe | Czech Republic WTS Assignments to Europe | Denmark

Denmark

During employment Personal Income Tax → Work accident contributions are paid by the em- → Withhold wage tax each month (meaning any con- Comparisons ployer. tractual or economic employer whose registered → Individuals are taxed on income, depending on Taxation of Fringe Benefits headquarters is located in the Czech Republic). source/residency status. Immigration → Withhold social and health security contributions Housing C → The tax rate is progressive and ranges from approx- each month for the employee. Home Flights C imately 42% to 56% including 8% AM contribution. Visa → Allocate the employee’s remuneration in taxable Education for children C Investment income is taxed up to a maximum of → Any foreigner from a country with a visa require- and non-taxable portions. 42% and capital gains on shares and dividend dis- ment for entering Denmark who wants to perform A Tax exempt | B Taxable | C Tax relief under certain conditions → Prepare and submit an annual wage certificate tributions are taxed at a flat tax rate of 27% up to a certain work-related activities in Denmark, such as (“Potvrzení o zdanitelných příjmech”). threshold of DKK 56,500 (2021) and a rate of 42% on receiving or providing educational training or par- Tax Rates the excess amount. ticipating in negotiations for up to 90 days within a Termination of employment Single, no children 16,7% → The tax-free threshold up to DKK 46,700 (2021) and 180 days’ period, must obtain a visa prior to entry. → Notify, in writing, the relevant regional office of Employment Gross Income¹ € 100,000 p.a. a job-allowance of up to DKK 40,600 (2021) apply. → Any foreigner who has been granted certain types the public employment service of the fact that the → The tax year is the calendar year. of residence or re-entry permits in other countries Married, 2 children 14,4% employment was terminated. Employment Gross Income¹ € 100,000 p.a. → The filing deadline for the annual income tax return within Schengen does not need a visa to enter Den- → Inform the competent tax, social and health securi- is generally 1 May of the year following the tax year. mark. ty authority about the termination of employment. However, if foreign income or business income is → Prepare and submit a final wage certificate (“Pot- Maximum Effective Personal Income relevant, the filing deadline for the annual income Work permit vrzení o zdanitelných příjmech”) for the work peri- Tax Rates for the past 3 years tax return is 1 July of the year following the tax year. → EU citizens may reside and work in Denmark under od within the calendar year. 2019 2020 2021 → Employment income is subject to a monthly with- EU legislation with free movement. → Prepare and submit an employment record 22% 22% 23% holding tax. → Nordic citizens are free to reside and work in Den- (“Zápočtový list”) – details about the employee mark.

leaving work. Social Security → To be allowed to reside and work in Denmark, Social Security Rates third-country nationals (from outside the EU/EEA/ Employment Gross Income1 € 100,000 p.a. Social security contributions are compulsary and gen- CH and the Nordic countries) must apply for a work Employee 25,2% erally apply to all employees working in Denmark. and residence permit in Denmark. Employer 8,8% Rules on social security are regulated by EU Regula- → Different schemes are available, e.g. the Posi- tion no. 883/2004. tive List, The Pay Limit scheme and The Fast-track → The contributions are not based on the monthly em- scheme. Social Security Agreements (SSA) ployment income and are generally very low com- Slovakia pared to other EU countries. Registration Germany → Upon arrival in Denmark, all foreigners must regis- Austria Employee ter at their local registration office within a specific → An employee is required to pay ATP contributions period of time. Poland of DKK 1,136 per year. The costs are collected by the Hungary employer on a monthly basis. Employer’s Obligations Russia Spain Employer Start of employment → An employer is required to pay ATP contributions → Ensure that the employee does legally reside and Netherlands plus other various contributions. The annual costs work in Denmark – or else the employer may be- Luxembourg vary depending on the work performed by the em- come liable to a fine or imprisonment. USA ployee but are approximately DKK 10,000 – 12,000 → Request a tax identification number for the em- per year. The costs, including the employee contri- ployee and assist the employee in obtaining a pre- 1 Excluding fringe benefits such as housing. butions collected, are paid quarterly to the Danish liminary income assessment and a tax card. social security authority. → Register the employee for social security purposes

14 15 WTS Assignments to Europe | Denmark WTS Assignments to Europe | Estonia

Estonia

with the competent social security authority. Personal Income Tax nationals (other than EU, EEA, CH nationals) must Comparisons apply for a residence permit. The person to whom During employment → Individuals are taxed on income, depending on the residence permit has been granted, does not Taxation of Fringe Benefits → Ensure to apply for an extension of the residence source/residency status. need a separate work permit. and work permit before the expiry date. Housing B → The tax rate is 20%. → For specific purposes, it is possible to work in Esto- → Report income of the employee to the Danish tax Home Flights C → The tax year is the calendar year. nia for short-term employment without applying authorities and withhold taxes, including labour Education for children B → The filing deadline for the annual income tax re- for a residence permit. market contributions, social security contribu- turn is 31 March of the year following the tax year. A Tax exempt | B Taxable | C Tax relief under certain conditions tions (ATP contributions) and pay these withheld → Employment income is subject to a monthly with- Registration amounts to the Danish tax authorities. This is a re- holding tax. Personal income tax is withheld → As a general rule, upon arrival in Estonia, all for- quirement for any employer with permanent es- Tax Rates monthly by the employer at a rate of 20% of the eigners must register their address in Estonia in the tablishment in Denmark. Single, no children Up to 56% * gross salary of the employee. population register of Estonia within 1 month (in 3 Employment Gross Income¹ € 100,000 p.a. months for EU nationals). Termination of employment → Employees must be registered in the Tax and Cus- Married, 2 children Up to 56% * Social Security → For some employees, the right to reside in Den- Employment Gross Income¹ € 100,000 p.a. toms Board and generally also at the Police and Bor- mark is dependent on the employment contract. Social security contributions are compulsory and gender Guard Board before commencing work. By termination of employment, the employee may erally apply to all employees working in Estonia. The lose its right to residency. Maximum Effective Personal Income contributions are based on the monthly employment Employer’s Obligations Tax Rates for the past 3 years income. 2019 2020 2021 Start of employment 56% 56% 56% Employee → Register the employee as an employee in Estonia. → An employee is required to pay a contribution to → Non-resident companies should register as a

the unemployment insurance fund (1.6%, with- non-resident employer. Social Security Rates held by the employer). Employment Gross Income 1 € 100,000 p.a. During employment Employee DKK 1,136 / year (approx. € 152) Employer → Inform the Police and Border Guard Board and the Employer approx. DKK 10,000-12,000 / year → An employer is required to pay social tax at a rate Tax and Customs Board about the start of the em- (approx. € 1,330-1,600) of 33%, contributions to the unemployment insur- ployment of the foreigner. ance fund (0.8%) and contributions to mandatory → Withhold wage taxes on a monthly basis. Social Security Agreements (SSA) * funded pensions (2%). → Withhold social security contributions on a month- Australia → The employer is liable for all the payments on a ly basis. Canada monthly basis. → Prepare and submit tax returns for the income, so- Chile cial tax and contribution to unemployment insur- Immigration ance fund of the employee. India China Visa Termination of employment United States → As a general rule, any foreigner who wants to work → Inform the Police and Border Guard Board and the Turkey in Estonia should first obtain a visa to enter Estonia Tax and Customs Board about the termination of and work here. the employment of the foreigner. Pakistan → Exceptions apply to all EU and European Econom- Philippines ic Area (EEA) citizens and to Swiss (CH) nationals Israel (3-month period). 1 Excluding fringe benefits such as housing. * Some only deal with certain aspects of social security Work permit → To be permitted to work in Estonia, third-country

16 17 WTS Assignments to Europe | Estonia WTS Assignments to Europe | Finland

Finland

Personal Income Tax old-age pension (7.15% to 8.65%), unemployment Comparisons (1.4%) and health insurance, i.e. the contribution → Taxable income comprises earned income and cap- for daily allowance coverage (1.36%) and contribu- Taxation of Fringe Benefits ital income, depending on source/residency status. tion for medical care coverage (0.68%, included in Housing C → The tax rate for the state tax is progressive and rang- the tax percent) on their gross income. Home Flights C es from 6% to 31.25%. In addition, there are two flat → The contributions are usually collected in the Education for children C rates of tax applicable to earned income; municipal monthly payroll by the employer. tax ranging from 16.50% to 23.50% and, if applica- A Tax exempt | B Taxable | C Tax relief under certain conditions ble, church tax ranging from 1% to 2.20%. Employer → Tax-free threshold up to € 18,600 in state taxation. → An employer is required to pay contributions to Tax Rates For assessing the municipal income tax, deductions old-age pension (on average 16.95%), unemploy- Single, no children 20% up to certain income levels will be considered. ment (0.5% to 1.9%), accident (on average 0.7%) Employment Gross Income¹ € 100,000 p.a. → The final tax at source rate for non-residents staying and group life (on average 0.06%) insurance. in Finland max. 6 months is 35% and for foreign key → The contributions can be paid just once a year, Married, 2 children 20% Employment Gross Income¹ € 100,000 p.a. employees (a special act applies) 32%. As of 2014, quarterly or on a monthly basis. Pension insurance a non-resident can request taxation under the pro- contributions are usually paid monthly. gressive scale under certain conditions. → The employer contributions are generally tax-free. Maximum Effective Personal Income → The capital income tax rate is 30% for income up to € → If the foreign employer is considered to have a per- Tax Rates for the past 3 years 30,000 and 34% for the exceeding amount. manent establishment for income tax purposes in 2019 2020 2021 → Public broadcasting tax is 2.50% of the net earned Finland, it has to pay the employer´s health insur- 20% 20% 20% and net capital income exceeding € 14,000, max. ance contribution (1.53%) if the employee does not amount of tax is € 163. have an A1 certificate. The contribution is payable

→ The tax year is the calendar year. to the tax authority. Social Security Rates → Filing deadline for the annual income tax return is Employment Gross Income1 € 100,000 p.a. in May of the year following the tax year. The exact Immigration Employee 1,6% filing date is stated on the pre-completed tax return Employer 33,8% form. An extension may be granted upon applica- Visa tion. → A residence permit is an authorisation issued to a → Employment income is subject to a monthly with- foreign national allowing repeated entry into the Social Security Agreements (SSA) holding tax (in general). county and residence in the country for purposes Russia → Tax exempt income, e.g. income from foreign sourc- other than tourism. The type of residence permit Canada es may be considered for calculating the personal depends on the purpose of the stay. Ukraine tax rate (progression clause). → Basically, an application for a residence permit must be submitted abroad, before entering Fin- Australia Social Security land. Belarus → Working in Finland with a permit granted by an- Moldova Social security contributions are compulsory and gen- other country is usually not allowed, especially if erally apply to all employees working in Finland. The the duration of the job is longer than 90 days. contributions are generally based on the gross month- → In some cases, it is sufficient to have a residence ly employment income (some positions such as sever- permit or a visa granted by another Schengen ance pay may be exempt). There is no annual income country, or the employee might be allowed to re- ceiling when calculating the contributions. side in Finland without a visa. In these situations, the right to work is limited to certain jobs, and it 1 Excluding fringe benefits such as housing. Employee applies for max. 90 days, yet no longer than the → Employees are required to pay contributions to visa is valid.

18 19 WTS Assignments to Europe | Finland WTS Assignments to Europe | Finland

→ Exceptions apply to all EU and European Economic dence permit. The employer must also verify that → Obligation to withhold the tax on the monthly Area (EEA) citizens and to Swiss nationals. the foreign employee has the right to reside in Fin- salary calculated on the basis of the Finnish regu- Comparisons land. lations and to submit earnings payment reports to Taxation of Fringe Benefits Work permit the Incomes Register each month. → Any foreigner who intends to work in Finland, usu- Business with no permanent establishment → If no wages are paid during some months, the com- Housing C ally needs a residence permit based on employ- → No obligation to register as an employer paying pany must submit the “No wages payable” entry on Home Flights C ment, granted by the state of Finland (exceptions wages on a regular basis, however, voluntary reg- an employer’s separate report. Education for children C apply to EU, EEA and Swiss citizens). istration is possible. If the employer does not apply → A foreign employer is obligated to pay the employ- A Tax exempt | B Taxable | C Tax relief under certain conditions → A residence permit for an employed person is to be for the registration on a voluntary basis, it does not er’s health insurance contribution based on the requested if working is not permitted with anoth- withhold the tax on the monthly salary, instead wages if it obtains a permanent establishment for er residence permit or without one. the employees apply for the tax prepayments by income taxation in Finland. The employer must re- Tax Rates → For instance, foreign specialists, researchers, em- themselves in the event that Finland has a taxation port the employer’s health insurance contribution Single, no children 31,5% 2 ployees for religious or non-profit associations right on the salary. to the Incomes Register on an employer’s separate Employment Gross Income¹ € 100,000 p.a. do not need a residence permit for an employed report. Married, 2 children 31,5% 2 person, however, they need a residence permit to Business with permanent establishment Employment Gross Income¹ € 100,000 p.a. reside in Finland (please note the countries with → Obligation to register as an employer paying wag- Termination of employment exceptions). es on a regular basis with the tax authority. → Cancel the work permit for the employee if applicable. Maximum Effective Personal Income Registration During employment → Deregister from the employer´s register if regis- Tax Rates for the past 3 years → Usually, an application for a residence permit must Business with no permanent establishment tered as an employer paying wages on a regular 2019 2020 2021 be submitted abroad before entering Finland. When → Obligation to withhold social security contribu- basis and if there is no intention to employ any em- 55,95% 56,20% 56,95% 3 applying for the permit after entering Finland, the tions on a monthly basis for the employee payable ployees in the future.

Finnish Immigration Service is in charge of the han- to the home or host country insurance company. dling of all permits for foreign nationals. → Foreign employers must submit earnings payment ¹ Excluding fringe benefits such as housing. Social Security Rates Employment Gross Income1 € 100,000 p.a. → EU, EEA and Swiss citizens need to register their right reports to the Incomes Register in the following ² Health insurance contributions of 2.04% and public broadcasting 4 of residence with the Finnish Immigration Service if situations: tax included, municipality tax for Helsinki, no church tax. Employee 10,43% they stay in Finland for longer than 3 months. Income is paid to an income earner working in Fin- ³ Including state tax, church tax, municipality tax and broadcasting tax. Employer 20,66% 4 → An individual working in Finland usually requires a land, and one of the following criteria is met: ⁴ No ceiling for contributions. On average: contributions depend on Finnish personal ID. A Finnish personal ID is normal- → The income earner is insured in Finland. e.g. the employee´s age, accident risk of the employment. Social Security Agreements (SSA) ly requested from a local register office of the Finn- → The income earner resides in Finland for more than ⁵ Covers national pensions, urgent medical treatment included. 5 ish Digital Agency. If the personal ID is needed for a 6 months, even if he/she is not insured in Finland. ⁶ Covers old-age pensions and survivor pensions. Australia tax-related reason, the personal ID and the Finnish → The income earner works in Finland as a leased ⁷ Covers old-age pensions, survivor pensions and medical treat- Canada 6 tax number can be applied for at a tax office. employee for a service recipient in Finland. The ment (for pensioners). Chile 7 → If the estimated assignment period in Finland is data must be submitted when the tax treaty be- ⁸ Covers only pensions awarded under the statutory earnings-re- China 8 more than 12 months, the individual may obtain tween the employee’s country of residence and lated pension scheme and unemployment insurance contributions. 9 the right to be registered in a Finnish municipality Finland allows the taxation of a leased employ- ⁹ Covers only pensions awarded under the statutory earnings-relat- India of domicile by a local registry office of the Finnish ee’s wages in Finland, or when there is no tax ed pension scheme. Israel 10 Digital Agency. treaty. 10 Covers old-age pensions, survivor pensions, child benefits and Nordic Convention 11 An income earner working abroad is paid income, and maternity grants. With respect to posted workers, it also covers Province of Quebec 12 Employer’s Obligations the income earner is insured in Finland. health insurance and parental benefits. 13 11 Includes the countries Denmark, Finland, Iceland, Norway and Sweden. South-Korea Start of employment Business with permanent establishment 12 Covers medical treatment and health insurance. USA 14 → An employer must verify that a foreign employee → Obligation to withhold social security contribu- 13 Covers medical treatment and health insurance. has the required residence permit for an employed tions on a monthly basis for the employee payable 14 Covers national pensions and survivor pensions; for foreign dele- person or that the employee does not need a resi- to the home or host country insurance company. gates: health insurance, parental insurance and child benefits too.

20 21 WTS Assignments to Europe | France WTS Assignments to Europe | France

France

Personal Income Tax larly on the salary, employee status and activity. → Registration of the new employee with the official → Both contributions are effectively paid by the em- employees’ registry. Comparisons → The French personal and annual income tax rate is ployer to the French authorities. Taxation of Fringe Benefits progressive and ranges from 0% to 45%. During employment → Foreign tax residents are only subject to tax in Immigration → A withholding tax called “RAS” is levied on a quar- Housing C France on their French source income with a min- terly basis by the employer only if the employee is Home Flights C imum rate of taxation of 20% (30% for the share of Visa a non-French tax resident. The rate is progressive Education for children C the net taxable income exceeding € 25,710). This → As a rule, foreign individuals who want to work as and varies between 12% and 20%. A Tax exempt | B Taxable | C Tax relief under certain conditions minimum rate does not apply if the foreign tax- an employee in France must first obtain a visa or a → For French tax residents, a monthly withholding payers provide evidence that their French personal residence permit to enter France unless they are tax called “PAS” is levied by the employer. The rate income tax, resulting from the application of the exempt. is calculated on the last income released by the Tax Rates progressive tax scale, represents a total taxation → Exceptions apply to all European Union (EU) and taxpayer. Single, no children approx. 20% rate lower than 20%. In this event, the taxation un- European Economic Area (EEA) citizens and to Swiss Employment Gross Income¹ € 100,000 p.a. der the standard tax scale applies. (CH) nationals. Termination of employment Married, 2 children approx. 12% → A contribution on high income (€ 250,000 for a sin- → Specific formal requirement applies at the time of Employment Gross Income¹ € 100,000 p.a. gle person or € 500,000 for a married couple) may Work permit the termination of employment. also be due. → EU, EEA and CH nationals are not required to hold a → Specific tax and social security exemptions may ap- → Foreign tax residents must file an annual income work permit to work in France. ply on termination payments. Maximum Effective Personal Income tax return under the same conditions as a French → To be allowed to work in France, third-country na- Tax Rates for the past 3 years tax resident including their French source income. tionals (meaning other than EU/EEA/CH nationals) 2019 2020 2021 Filing deadline: no later than mid-May for the pa- must hold a work permit which can be 45% 45% 45% per return and end of May or beginning of June for → a long-stay visa or a residence permit that au-

the online return depending on the place of resi- tomatically allows the employee to work in dence of the taxpayer. France; Social Security Rates Employment Gross Income1 € 100,000 p.a. → The salaries earned in France by a non-French tax → a temporary visa or residence permit for profes- resident are subject to a withholding tax due quar- sional purposes; Employee approx. 22% terly by the employer. The withholding tax is lev- → a temporary work permit for a renewable peri- Employer approx. 45% ied on a progressive tax rate up to 20%. od up to 12 months; → Specific tax regimes are in place for impatriates → a certificate of application for a residence permit. Social Security Agreements (SSA) who become French tax residents, and for French tax residents posted abroad. Registration USA → Upon arrival in France, the employee must register Canada with the immigration services (OFII). Japan Social Security Employer’s Obligations India The contributions are shared between the employer China and employee. Start of employment Brazil → Apply for a work permit with the French local au- South Korea Employee thorities (“Préfecture”) if applicable. Philippines → The employee’s contributions represent around → File a pre-employment statement at the French so- 20% to 25% of the gross salary. cial security (“URSSAF”) no later than 8 days before Argentina the beginning of the employment. Morocco Employer → Pre-employment medical examination before the → The employer’s contributions represent around beginning of the employment or no later than the 1 Excluding fringe benefits such as housing. 35% to 45% of the gross salary, depending particu- end of the probation period.

22 23 WTS Assignments to Europe | Germany WTS Assignments to Europe | Germany

Germany

Personal Income Tax of € 64,350, a private health and nursing care in- a specific period of time (general within 2 weeks). surance is possible. → After registration, a German tax ID will be issued Comparisons → Individuals are taxed on income, depending on automatically. Taxation of Fringe Benefits source/residency status Employer → The tax rate is progressive and ranges from 14% to → An employer is required to pay contributions to old-age Employer’s Obligations Housing C 45% (except for investment income with a general pension (9.3%), unemployment (1.2%), health (7.3%) Home Flights C flat tax rate of 25%) plus solidarity surcharge (5.5% and nursing care (1.525%) insurance up to an annu- Start of employment Education for children C of the income tax) and if applicable church tax (8% al income ceiling for pensions and unemployment (€ → Appropriate sharing of costs based on transfer pric- A Tax exempt | B Taxable | C Tax relief under certain conditions or 9% of the income tax). 85,200) and for health and nursing care (€ 58,050). ing aspects should be agreed between the home → Tax-free threshold up to € 9,744 (single filing)/€ → The employer is liable for all payments on a monthly ba- and host company and documented properly. 19,488 (joint filing). sis. The employer contributions are generally tax-free. → Obtain correct working visa type for an employee (if Tax Rates → The tax year is the calendar year. → Work accident contributions are borne by the employer. applicable). Single, no children 32% → Filing deadline for the annual income tax return: → Request the electronic wage tax characteristics (“EL- Employment Gross Income¹ € 100,000 p.a. 31 July of the year following the tax year. Exten- Social security income ceilings for pension and unem- StaM”) for payroll enrolment. Married, 2 children 20% sions are possible until February 28/29 of the year ployment insurance differ from those as mentioned → Register the employee at the competent social se- Employment Gross Income¹ € 100,000 p.a. that follows with the assistance of a tax advisor above in the new German states (Brandenburg, Meck- curity authority. (i.e. 28 February 2022 for the tax return 2020). lenburg Vorpommern, Saxony, Saxony-Anhalt and → Employment income is generally subject to a Thüringen). In these states, the income ceiling for During employment Maximum Effective Personal Income monthly withholding tax. pensions and unemployment insurance contributions → Home and host company should establish a report- Tax Rates for the past 3 years → Depending on the status of residency, tax-exempt amounts to € 80,400. ing system to exchange payroll data especially in 2019 2020 2021 income needs to be considered for calculating per- the case of split pay out scenarios. 47,48% 47,48% 47,48% sonal tax rates (progression clause). Immigration → Withholding wage tax on a monthly basis by the

German employer (meaning any contractual or Social Security Visa economic employer whose registered seat is locat- Social Security Rates Employment Gross Income1 € 100,000 p.a. → As a rule, any foreigner who wants to work as an employed in Germany). Employees working in Germany are generally subject ee in Germany must first obtain a visa to enter Germany. → Withholding social security contributions on a Employee 19,575% to German social security. Individuals on assignment → Exceptions apply to all EU and Europe Economic monthly basis for the employee. Employer 19,575% to Germany from other EU/EEC member states or Swit- Area (EEA) citizens and to Swiss (CH) nationals. → Allocate the employee’s remuneration in taxable zerland may be exempt from contributing to the Ger- → Citizens of Australia, Canada, Israel, Japan, New and non-taxable portions. Social Security Agreements (SSA) man social security scheme upon application based Zealand, the Republic of Korea; United Kingdom → File special wage tax applications (i.e. to exempt in- on the EEC regulation. Individuals coming from other and the USA may also be required to obtain resi- come from taxation based on double tax treaty, to Australia countries may be exempt based on totalisation agree- dence permits after entering Germany at the local apply special tax classes). China ments or under Germany’s domestic law. immigration authority, without applying for a visa → Prepare and submit an annual wage tax certificate India beforehand. (“Lohnsteuerbescheinigung”) as well as social secu- Japan Employee rity certificate (“Jahresentgeltbescheinigung”). → An employee is required to pay contributions to Work permit Russia old-age pension (9.3%), unemployment (1.3%), → In order to be allowed to work in Germany, Termination of employment USA health (7.3%) and nursing care (1.525%) insurance third-country nationals (other than EU/EEA/CH na- → Cancel the work permit for the employee (if applicable). and SSAs with 18 further countries up to an annual income ceiling for pension and un- tionals) must apply for a residence work permit at → Prepare and submit a final wage tax certificate employment (€ 85,200) and for health and nursing the German consulate abroad or at the foreigners (“Lohnsteuerbescheinigung”) as well as social se- care (€ 58,050). Additional nursing care insurance registration office in Germany. curity certificate (“Jahresentgeltbescheinigung”) contributions (0.25%) up to an annual income ceil- for the work period within the calendar year. ing (€ 58,050) will be due for individuals without Registration children and above the age of 23. → Upon arrival in Germany, foreigners residing in Germa- 1 Excluding fringe benefits such as housing. → If the employment exceeds the annual threshold ny must register at their local registration office within

24 25 WTS Assignments to Europe | Hungary WTS Assignments to Europe | Hungary

Hungary

Personal Income Tax Area (EEA) citizens and to Swiss (CH) nationals. and social security liability. → No visa is needed from individuals for (for exam- Comparisons → Individuals are taxed on income, depending on ple) Australia, Brazil, Canada, Mexico, United States During employment Taxation of Fringe Benefits source/residency status. in the case of a stay for 90 days. → If the employee has local (Hungarian) contract, the → A flat 15% personal income tax rate is levied on the employer withholds the income tax and the social se- Housing C taxable income, no tax-free threshold applies. Work permit curity contribution from the gross salary and transfers Home Flights B → The tax year is identical with the calendar year. → EU/EEA and Swiss citizens can be employed in Hun- these amounts to the tax authority on a monthly basis. Education for children B → The filing deadline for the annual personal income gary without a work permit. Only a reporting obli- → If the employee has an employment contract with A Tax exempt | B Taxable | C Tax relief under certain conditions tax return is 20th May of the following year. Exten- gation is required. a foreign company and works in Hungary (receives sion is possible only under limited circumstances, e.g. → Work permit must be requested for third country income taxable in Hungary), personal income tax official document on foreign income is not available employees who wish to work in Hungary. advance has to be paid by the employee on a quar- Tax Rates by the deadline. In such cases, a request for prolonga- terly basis. Should the employee be obliged to pay Single, no children 15% tion has to be filed with the tax authority. Registration Hungarian social security, the foreign employer has Employment Gross Income¹ € 100,000 p.a. → Family tax base allowance system applies for indi- → EU/EEA nationals are required to report their stay to register in Hungary and is obliged to report and Married, 2 children 13,67% viduals with children. Family tax base allowance and longer than 90 days within a 180-days period at pay social security contributions. If the employer Employment Gross Income¹ € 100,000 p.a. other tax credits could be utilized by non-residents the immigration office. fails to register, the employee becomes obliged to under certain circumstances. → Residence permit applications for third country fulfil the employer’s obligations. → In general, income tax is withheld from the employ- employees shall be requested at the consular of- → Tax allowance could be taken into account by the Maximum Effective Personal Income ment income on a monthly basis. ficer or other official location authorized to receive employer during the monthly payroll based on the Tax Rates for the past 3 years residence permit applications in the home country declaration of the employee. 2019 2020 2021 Social Security of the individual. → The employer is obliged to prepare an annual tax 15% 15% 15% → The request for Hungarian tax ID number and social and social security certificate (form M30).

Participation in the Hungarian social security system security number (if needed) has to be submitted by → The employer is not obliged to prepare a yearly consisting health, pension insurance and labour force the individual to the competent authority. personal income tax return for the employee. Nev- Social Security Rates Employment Gross Income1 € 100,000 p.a. market contribution is mandatory for individuals ertheless, the Hungarian tax authority prepares a working in Hungary. EU provisions on the coordination Employer’s Obligations draft of the yearly income tax return based on the Employee 18,5% of social security as well as the provisions of social se- information available in its database. Employer 15,5 + 1,5% curity agreements have also to be taken into account. Start of employment → Requesting work permit for the employee. Termination of employment Social Security Agreements (SSA) Employee → Reporting new employees from EU/EEA at the gov- → Reporting the end of activity of foreign employees → Employment income is subject to 18.5% social se- ernment office. leaving Hungary at the tax authority and the gov- Australia curity contribution. → Reporting new employees to the Hungarian tax au- ernment office. Bosnia Herzegovina → In general, social security contribution is withheld thority if Hungarian social security liability applies. → Cancel the work permit for the employee (if appli- Canada from the employment income on a monthly basis. → In the case of hiring third-country employees, a cable). India preliminary request should be filed with the la- → Prepare final wage tax certificate. Employer bour office who decides whether a third-country Japan → Employer’s social security tax is 15.5% of the employ- employee could be hired for the job in question. Republic of Korea ment income plus 1.5% training fund contribution. → Employees of a foreign employer sent to Hungary Russian Federation to perform activity (employment or assignment) Serbia Immigration should be reported online to the Hungarian Labour Inspectorate by the foreign employer. USA Visa → Foreign employers employing Hungarian private Turkey → In general, foreigners who are coming to work in persons who are subject to Hungarian social secu- Hungary are required to possess a visa. rity, have to be registered for payroll purposes at 1 Excluding fringe benefits such as housing. → Exceptions apply to all EU and European Economic the Hungarian tax authority and fulfil monthly tax

26 27 WTS Assignments to Europe | Iceland WTS Assignments to Europe | Iceland

Iceland

Personal Income Tax Immigration During employment → Ensure to apply for an extension of the residence Comparisons → Individuals are taxed on income depending on Visa and work permit before the expiry date. Taxation of Fringe Benefits source/residency status Iceland is a member of Schengen. Any foreigner who → Withhold taxes including labour market contribu- → The income tax rate is progressive ranging from has been granted certain types of residence or re-en- tions, social security contributions, and pay these Housing B 31.45% - 46.25% try permits in other countries within Schengen does withheld amounts to the relevant authorities. This Home Flights B → The tax-free threshold is up to ISK 609,509. not need a visa to enter Iceland. All foreigners requir- is a requirement for any employer with a perma- Education for children B → The tax year is the calendar year. ing visas and who do not hold a valid Schengen visa nent establishment in Iceland. A Tax exempt | B Taxable | C Tax relief under certain conditions → Financial income (interest/dividend) is taxed at in their travel document must apply for a visa at the 22% of the income tax rate. applicable embassy/consulate before travelling to Termination of employment → Employment income is subject to withholding tax Iceland. Visas may be granted for business trips, tour- → The employer must notify authorities if an employ- Tax Rates at source. ism, private reasons (family and friends), official visits, ment contract is terminated before a temporary Single, no children 36% → Experts with special skills are entitled to a 25% tax short-term studies and for political, scientific, cultural, work permit ends. Employment Gross Income¹ € 100,000 p.a. discount for a period of three years subject to cer- sports or religious events. Married, 2 children 36% tain conditions. Employment Gross Income¹ € 100,000 p.a. Work permit Social Security → EU and EEA citizens may reside and work in Iceland under EU and EEA legislation on free movement. Maximum Effective Personal Income In Iceland, the pension fund system is an important → Nordic citizens are free to reside and work in Iceland. Tax Rates for the past 3 years part of the social security system and therefore pen- → To be allowed to reside and work in Iceland, 2019 2020 2021 sion fund contributions are categorized as social secu- third-country nationals (from outside EU/EEA/ 46,25% 46,25% 46,25% rity contributions here below. EFTA/CH) must apply for a work and residence per-

mit in Iceland. Employee → Different schemes are available, e.g. the fast-track Social Security Rates Employment Gross Income1 € 100,000 p.a. → The employee pays 4% of their gross salary as a scheme. contribution to a pension fund. The contribution Employee 4% is deductible from income tax. (The employee can Registration Employer 17,6% choose to pay a further contribution (max. 4%) as → Third-country nationals, who plan to stay in Ice- an additional specific pension fund payment which land for more than three months, must apply for a Social Security Agreements (SSA) would also be tax deductible). residence permit at the Directorate of Immigration. → The employee pays no other social security contri- → To be able to work in Iceland, all individuals must Europe – EU bution. register in the National Registry and receive an EEA identification number. Nordic Countries Employer → The employer pays 6.10% of the gross salary as a Employer’s Obligations social security contribution. → If the employee holds an A1 certificate, the social Start of employment security contribution applicable is 0.425%. → Ensure that the employee does legally reside and → The employer generally pays 11.5% of the gross work in Iceland – otherwise the employer may be- salary as a contribution into the employee’s pen- come liable for a fine or imprisonment. sion fund. → Request a tax identification number for the em- → If the employee has chosen to pay a specific addi- ployee and assist the employee in obtaining a pre- tional pension, the employer pays an additional liminary income assessment and a tax card. 2% contribution to this specific additional pension. → Register the employee for social security purposes 1 Excluding fringe benefits such as housing. with the competent social security authority.

28 29 WTS Assignments to Europe | Ireland WTS Assignments to Europe | Ireland

Ireland

Personal Income Tax Immigration issued. → Application must also be made to the Irish Depart- Comparisons → Individuals are taxed on income, depending on Visa ment of Social Protection for a Personal Public Ser- Taxation of Fringe Benefits source, residency and domicile status. → Employees do not need a visa to enter Ireland if vice Number (PPSN). → Special rules apply to limit the income tax scope of they are a citizen of the EEA, the UK (because of the → Tax registration application is made upon com- Housing B non-doms. common travel area provisions) or one of the coun- mencing employment (see below). Home Flights B → Tax rate is progressive but only two tiers apply. tries listed in the Immigration Act 2004 (isas) Order Education for children B → Effective tax-free threshold of € 8,250 (single fil- 2014 (full list available on request). Employer’s Obligations A Tax exempt | B Taxable | C Tax relief under certain conditions ing)/€ 16,500 (joint filing). Increases apply depend- → They also do not need a visa to enter Ireland if they ing on personal/family circumstances and whether hold a valid travel document issued in accordance Start of employment the income arises from a local employment contract with Article 28 of the Geneva Convention, hold a → Obtain correct work/employment permit for an Tax Rates or under the home country contract. travel document issued under the New York Con- employee (if applicable) and ensure the employee Single, no children 29,64% → The tax year is the calendar year. vention of 1951, hold either a valid residence card is in possession of the correct entry visa (if appli- Employment Gross Income¹ € 100,000 p.a. → Filing deadline for the annual income tax return: 31 4 EU FAM or a valid permanent residence card 4 EU cable). Married, 2 children 26,39% October of the year following the tax year. Short ex- FAM issued under the European Communities (Free → Make the necessary report under EU Regulation No Employment Gross Income¹ € 100,000 p.a. tensions are possible for online filing. Movement of Persons) Regulations 2015 or if they 2014/67/EU (Temporary Postings) which is includ- → Employment income is subject to a monthly with- are a family member of an EU citizen and hold a ed in Irish Law under the European Union (Posting holding tax (in general). document called ”Residence card of a family mem- of Workers) (Amendment) Regulations 2020. Maximum Effective Personal Income ber of an union citizen”. Tax Rates for the past 3 years Social Security → They will need a visa if they are citizens of a country During employment 2019 2020 2021 not covered by the visa exemptions listed above. → Withhold wage tax, social security and universal 52% 52% 52% Social security contributions are compulsory and gen- Also, citizens of the following countries require a social charge contributions and remit on a monthly erally apply to all employees working in Ireland, un- transit visa if passing through Ireland on the way basis (obligation extends to non-Irish resident em- less coverage in the (EU) home country is obtained via to another country (Afghanistan, Albania, Boliv- ployers where employee is working in Ireland). Social Security Rates Employment Gross Income1 € 100,000 p.a. a certificate of coverage. The contributions are based ia, Brazil, Chile, Colombia, Cuba, DR of the Congo, on the monthly employment income. Ecuador, Eritrea, Ethiopia, Georgia, Ghana, Guy- Termination of employment Employee 8,85% ana, Iran, Lebanon, Moldova, Nigeria, Paraguay, → Cancel the work permit for the employee (if appli- Employer 11,05% Employee Peru, Somalia, South Africa, Sri Lanka, Suriname, cable). → An employee is required to pay contributions to the Ukraine, Uruguay, Zimbabwe). → Complete termination of employment submission Social Security Agreements (SSA) social security fund at the rate of 4% of all employ- with Irish Revenue. ment income. Work permit Canada → Contributions are also payable by the employee → In general, non-EEA nationals (excluding UK na- Quebec in respect of the universal social charge. The rates tionals) must have an employment permit to work Australia are progressive, ranging from a blended rate of in Ireland. USA 1.13% on the first € 20,687 of income to a top rate of 8% on income over € 70,044. Income between € → EEA nationals, UK nationals and Swiss nationals do New Zealand 20,687 and € 70,044 is liable at a rate of 4.5%. not need an employment permit. Austria Republic of Korea Employer Registration Japan → The employer contributes at the rate of 11.05% of → With the exception of EEA, UK and Swiss nationals, the employment income. all other nationals must register with the local im- UK (covering Channel Islands and Isle of Man) → The employer is liable for all payments on a month- migration office in the area where they intend to The Swiss Confederation ly basis but deducts the employee contribution live in Ireland. Registration is by appointment only, from gross pay. which must be booked online and upon comple- 1 Excluding fringe benefits such as housing. tion of the process, a registration certificate will be

30 31 WTS Assignments to Europe | Italy WTS Assignments to Europe | Italy

Italy

Personal Income Tax → The applicable rate depends on the employer’s sec- ployment relationship to employment services terminated employee the annual tax certificate tor of activity (i.e. industry, agriculture, credit, ser- within a day before the employment relationship (so-called “CU Statement”) that states the salary → Individuals are taxed on income, depending on vices etc.) and the employer‘s workforce dimension. is initiated; if not, the employment relationship paid due to the employment relationship up to the source/residency status. will be considered as undeclared work. termination. → The tax rate is progressive and ranges from 23% to Employee → Obtain a proper work permit and residence permit → Other specific rules could be applicable with ref- 43%. On top of this, municipal (up to 0.8%) and re- → Applicable rate: 9.19% (10.19% for the part of the for the relevant employee (if applicable). erence to the reason of the termination (e.g. vali- gional surcharges (in the range of 1.2% to 2.03%) salary higher than a ceiling fixed yearly by law → Obtain for all employees the identity card (or pass- dation of employee’s resignation, payment of the apply. Financial income is, in general, taxed on the which is € 47,379.00 for 2021). port) and the Italian tax ID so as to enrol the rele- additional contribution for unemployment). basis of a 26% substitute tax. vant employee in the employer’s payroll. → The tax year is the calendar year. Employer → Register the employee in the social security system. → The filing deadline for the annual income tax re- → Applicable rate: 30%. → Communicate to the immigration services the hir- turn is 30 November of the year following the tax ing of the third national employee and provide year. It is possible, upon the payment of a reduced Immigration the employment office with all the required doc- penalty of € 25, to file the annual income tax return uments (i.e. copy of residency agreement and resi- within the following ninety days. Visa dence permit) within 5 days (if applicable). → Employment income is subject to a monthly with- → As a rule, any non-EU national who wants to work holding tax (in general) applied by the employer as an employee in Italy must first obtain a visa to During employment directly. enter Italy. The visa to enter Italy for reasons of → Withhold employee’s SSC and employee’s taxes work is mainly subject to the previous obtaining of each month. Social Security a work permit (i.e. “nulla-osta”) by the immigra- → Communicate to employment services every mod- tion authority within the framework of the immi- ification related to each employment relationship → Social security contributions (SSC) are mandato- gration quotas periodically fixed by the law. The (e.g. transformation from fixed-term employment ry and generally applicable to all people who are work permit must be submitted by the employer. of open-ended employment; transformation from employed and actually work in Italy. → Exceptions apply to all EU and European Economic part-time to full-time and vice versa, transformation → SSC covers retirement, unemployment, illness, ma- Area (EEA) citizens and to Swiss (CH) nationals. from apprenticeship to open-ended employment). ternity/parental care (national authority “INPS”) as → Complete and send to the tax authority and to each well as work accident contributions (national au- Work permit employee the annual tax certificate (so-called “CU thority “INAIL”). → To be allowed to work in Italy, third-country na- Statement”) that states the salary paid in the previ- → SSC are paid by the employer and the employee ac- tionals (meaning: other than EU/EEA/CH nationals) ous year. cording to the rates below. must apply for a work permit submitted by the em- → Complete and send to the tax authority the formal → SSC due are paid by the employer monthly on the ployer within the framework of the immigration declaration regarding withholding tax and social salary due to the employee. quotas periodically fixed by law. contribution applied in the previous year with refer- → The employer is liable for all payments and must with- ence to each employee (so-called “770 Statement”). hold the relevant amount of the employee’s salary. Registration → Communicate to the immigration services and to → SSC are tax free for the employee and can be de- → Upon arrival in Italy, third-country nationals must the employment service every variation related to ducted by the employer from company income as a apply for the residence permit in Italy within 8 days. the employment relationship with a third-national part of employment. → All foreigners must apply for the Italian tax ID from employee (if applicable). → If the relevant employee has been enrolled in the the relevant authority. social security system before 1 January 1996, SSC Termination of employment are calculated on the full salary without any ceiling Employer’s Obligations → Communicate the termination of the employment applicable. relationship to employment services. → If the relevant employee has been enrolled in the Start of employment → Communicate the termination of the employment social security system after 1 January 1996, SSC are → Obtain an Italian tax ID in order to be enrolled in the relationship with the third nationals’ employee (if calculated within the limit of a ceiling fixed yearly social security system before hiring any employee. applicable). by law (i.e. € 103,055 for 2021). → Communicate the commencement of every em- → Complete and send to the tax authority and to the

32 33 WTS Assignments to Europe | Italy WTS Assignments to Europe | Latvia

Latvia

Personal Income Tax Area (EEA) citizens, Swiss nationals and nationals Comparisons of the United Kingdom, as well as countries men- → Individuals are taxed on income, depending on tioned in the 15 March 2001 European Council Reg- Taxation of Fringe Benefits source/residency status. ulation (EC) No 539/2001. Housing C → Personal income tax (PIT) rates are 20%/23%/31%. → Upon mutual agreement, incentives to receive Home Flights C → 20% PIT applies to dividends, interest and rental in- a visa also apply to Albania, Armenia, Bosnia and Education for children C come and to capital gains. Herzegovina, the former Yugoslav Republic of Mac- → The tax year is the calendar year. edonia, Georgia, Cape Verde Islands, Russia, Mon- A Tax exempt | B Taxable | C Tax relief under certain conditions → Annual income tax declarations for the preceding tenegro, Moldova, Serbia, and Ukraine. year shall be submitted in the time period from 1 → Additionally, there is a simplified procedure of is- Tax Rates March until 1 June of the following year. If annual in- suing short-term visas for the citizens of the Rus- Single, no children 36,17% come exceeds the ceiling of the social security con- sian Federation, Ukraine, Armenia, Moldova, Geor- Employment Gross Income¹ € 100,000 p.a. tributions (currently € 62,800), the annual tax return gia, Bosnia and Herzegovina, Montenegro, Serbia, should be submitted from 1 April until 1 July of the Albania, Azerbaijan, the former Yugoslav Republic Married, 2 children 35,95% Employment Gross Income¹ € 100,000 p.a. following year. of Macedonia and Cape Verde.

Social Security Work permit Maximum Effective Personal Income → Any foreigner who wants to work as an employee Tax Rates for the past 3 years Social security contributions (SSC) are compulsory for in Latvia must obtain a visa or temporary residence 2019 2020 2021 employees working in Latvia. The contributions are permit with rights to work in Latvia. A specific work 43% 43% 43% specified for both employee and employer. The total permit obtaining exceptions apply to all EU, EEA standard rate of the SSC is 34.09%. Annual salary ex- and Swiss citizens.

ceeding € 62,800 is not subject to SSC but is subject to → If the employment of a foreigner is for a regular Social Security Rates solidarity tax at the same rate as SSC. After submission stay in Latvia which exceeds 90 days within six Employment Gross Income1 € 100,000 p.a. of the annual tax return, the solidarity tax is calculated months, the foreigner must obtain a temporary Employee 9,19 + 1% at 25% on an annual basis, and the overpaid amount is residence permit with the right to work. Employer 30% refunded to the employer. Registration Employee → The visa must be obtained from the Latvian repre- Social Security Agreements (SSA) → Employee SSC rate is 10.5% of the gross salary. sentative office abroad within a specific period of Argentina time. However, the temporary residence permit Australia Employer can be obtained only personally in Latvia at the Of- Brazil → Employer rate is 23.59% on top of the gross salary. fice of Citizenship and Migration Affairs. → Foreign employers not registered in Latvia but who → In certain exceptional cases, visas may be issued at Canada have employees working in accordance with em- the Latvian Republic customs border. India ployment agreements in Latvia, who are subject to → The temporary residence permits are issued for up Israel social security in Latvia, must register as employers in to 3 – 5 years, however temporary residence per- Turkey Latvia for SSC purposes and pay SSC accordingly. mits should be registered at the Office of Citizen- ship and Migration Affairs every year. UK Immigration USA Employer’s Obligations Visa → Foreigners who want to enter Latvia must first ob- Start of employment 1 Excluding fringe benefits such as housing. tain a visa. → Obtain correct working visa/residence permit type → Exceptions apply to all EU and European Economic for the employee (if applicable).

34 35 WTS Assignments to Europe | Latvia WTS Assignments to Europe | Luxembourg

Luxembourg

→ Register the new employee on the employees reg- Personal Income Tax dependency insurance (1.4%), i.e. a total of 12.20% ister at the state revenue service. Comparisons to 12.45%. → Individuals are taxed on income, depending on Taxation of Fringe Benefits During employment the category of income/residency status/tax class Employer → Employer withholds, pays and reports PIT and SSC Housing B (which depends on the civil status of the taxpayer). → Employers’ contributions include: pension insur- on a monthly basis. Home Flights B → The tax rate is progressive and ranges from 0% (up ance (8%), health insurance (2.80%/3.05%), acci- → Prepare a summary report for the year for all em- Education for children C to € 11,265/€ 22,530 for taxpayers filing jointly) to dent insurance (0.75% subject to bonus-malus), ployees regarding annual salaries and taxes paid. 42% (above € 200,004/€ 400,008 for taxpayers fil- mutual insurance (0.53% to 2.88%) and health at A Tax exempt | B Taxable | C Tax relief under certain conditions ing jointly). work (0.11%), i.e. a total of 12.19% to 14.79%. Termination of employment → A contribution for the employment fund amount- → The employer is liable for all payments (employ- → Cancel employee status on the employees register Tax Rates ing to 7% for income up to € 50,000 (€ 300,000 for ee’s and employer’s contributions) each month. with the state revenue service. Single, no children 20/23/31% taxpayers filing jointly), and 9% above, is also due → Cancel the work permit for the employee (if appli- Employment Gross Income¹ € 100,000 p.a. and leads to a marginal tax rate of 44.94% for in- Immigration cable). come up to € 150,000 (€ 300,000 for taxpayers fil- Married, 2 children 20/23/31% Employment Gross Income¹ € 100,000 p.a. ing jointly) and 45.78% above. Visa → The tax year is the calendar year. → Nationals from certain third countries who wish → The filing deadline for the annual income tax re- to come to Luxembourg must, before departure, Maximum Effective Personal Income turn is 31 March of the year following the tax year have a valid travel document with a visa issued by a Tax Rates for the past 3 years (extension possible until 31 December). consular authority from one of the countries in the 2019 2020 2021 → Employment income is usually subject to a month- Schengen Area. The visa enables free movement in 31,4% 31,4% 31% ly withholding tax (creditable against personal in- the Schengen Area. come tax). → Third-country nationals subject to a visa obligation

→ Income which is exempt under DTT may be consid- who wish to stay in Luxembourg for more than 3 Social Security Rates ered for calculating the personal tax rate (progres- months must apply for a long-stay visa. Before ap- Employment Gross Income1 € 100,000 p.a. sion clause). plying for a long-stay visa, the applicant must first Employee 10,5% → As of 2021, a new special tax regime was imple- obtain a temporary residence authorisation by fil- Employer 23,59% mented and applies to highly qualified employees ing a request to the Immigration Directorate of the recruited abroad (expatriates), provided several Ministry of Foreign Affairs. conditions are met by the employer and the em- → Exceptions apply particularly to all European Union Social Security Agreements (SSA) ployee. Such a special tax regime may lead to sub- (EU) and European Economic Area (EEA) citizens as Belarus stantial tax savings. well as to Swiss nationals. Canada Russia Social Security Work permit → Third-country nationals who have been authorised Ukraine Social security contributions are compulsory and gen- to legally reside in another Member State of the EU USA erally apply to all employees working in Luxembourg. or in a EEA country or in Switzerland, and who wish Australia The contributions are calculated on the monthly em- to work in Luxembourg without residing there ployment income. Social security contributions are must apply for a work permit (a visa is necessary if limited to a ceiling of annual income amounting to € they also want to live in Luxembourg). 132,115,80 (except for the portion of contributions fi- → Third-country nationals subject to a visa obligation nancing the dependency insurance, see below). who wish to work in Luxembourg during a stay of less than 90 days must also apply for a long-stay Employee visa and must request beforehand a work permit 1 Excluding fringe benefits such as housing. → Employees’ contributions include: pension insur- from the Immigration Directorate of the Ministry of ance (8%), health insurance (2.80%/3.05%), and Foreign Affairs.

36 37 WTS Assignments to Europe | Luxembourg WTS Assignments to Europe | Luxembourg

→ Third-country nationals are subject to a labour During employment market test following which the employer de- → The employer must withhold wage tax each Comparisons clares the vacant position with the national em- month. Taxation of Fringe Benefits ployment agency (Agence pour le développement → The employer must withhold/pay social security de l’emploi - ADEM) which checks, before validat- contributions each month. Housing C ing the position, whether it can be filled by an in- → The employer must prepare and submit an annu- Home Flights C dividual available on the national or European la- al wage tax certificate as well as a social security Education for children C bour market. certificate. A Tax exempt | B Taxable | C Tax relief under certain conditions → Highly qualified employees are not subject to the labour market test, but the employer still needs to Termination of employment declare the vacant position. → The employer must prepare and submit a final Tax Rates wage tax certificate as well as a final social security Single, no children 30,61% Registration certificate for the work period within the calendar Employment Gross Income¹ € 100,000 p.a. → After entering Luxembourg, third-country nation- year. Married, 2 children 19,49% als must file a declaration of arrival to the munic- Employment Gross Income¹ € 100,000 p.a. ipality of residency within 3 days following their arrival in the country. → In the case of a stay longer than 3 months, Maximum Effective Personal Income third-country nationals must also request a resi- Tax Rates for the past 3 years dence permit from the Immigration Directorate of 2019 2020 2021 the Ministry of Foreign Affairs and undergo a med- 45,78% 45,78% 45,78% ical check.

→ Exceptions apply particularly to all EU and EEA citizens as well as to Swiss nationals. Social Security Rates Employment Gross Income1 € 100,000 p.a. Employer’s Obligations Employee 12,20% Employer 12,19 % Start of employment → Before the start of the employment of a third-country national, the employer must file a declaration Social Security Agreements (SSA) of vacant position to the Luxembourg employment Brazil administration, which will first check whether a China suitable candidate is available on the local market. Canada If the job position is not filled by the national em- Korea ployment agency within 3 weeks, then a certificate allowing the hiring to proceed will be submitted to USA the employer. India → For social security purposes, the employer must Japan register the employee with the competent social Norway security authority. → The employer must obtain the employee tax card Switzerland in order to withhold the correct amount of wage Turkey tax. 1 Excluding fringe benefits such as housing.

38 39 WTS Assignments to Europe | Netherlands WTS Assignments to Europe | Netherlands

Netherlands

Personal Income Tax 1 Employee Work permit → In 2021, specific facilities exist to reduce the im- → An employee is required to pay contributions of → According to the Dutch Foreign Employment Act, pact of Covid-19, such as (wage)subsidies, post- → Individuals are taxed on income, depending on 17.9% to the state old-age pension (“AOW”), 0.1% to an employer needs to be in possession of a work ponement of tax payments and the release of the source/residency status. The following 3 (so called) the survivor pension (“ANW”) and 9.65% to the long- permit for a non-EEA national (excluding Swiss blocked account (“G-rekening”). boxes apply. term nursing care insurance (“WLZ”) up to an annual nationals) who will perform work activities in the → Box 1 includes income from work and home owner- income ceiling of € 35,129. The premium amounts Netherlands. Termination of employment ship. This includes employment and entrepreneuri- to a maximum of € 9,713 (27.65% of € 35,129). → Cancel the work permit for the employee (if appli- al income as well as home ownership of a principal → In addition, a private health insurance is required Registration cable). residence. The tax rate is progressive ranging from of which the monthly premium amount to around → Upon arrival in the Netherlands, all foreigners must → Prepare and submit final a wage tax certificate 9.45% to 49.50%. Taking into account 27.65% social € 125 per month depending on the coverage of the register at the town hall of the municipality where (“Jaaropgaaf”) for the work period within the cal- security premiums on the first € 35,129, effectively insurance and the policy excess. they will live. They register as a resident or tempo- endar year. € 37, 10% is levied on the first € 68,507 and 49.50% rary resident. After registration, the foreigner will → Determine in advance the timing of the final wage/ on the income above € 68,507. Employer receive a Citizen Service Number (“Burgerservi- bonus/redundancy/option payment(s). → Box 2 includes income from a substantial interest, → An employer is required to pay contributions for un- cenummer”, BSN, i.e. also the Dutch tax number). taxed at a flat rate of 26.9%. employment, disability and health insurance. Some → Box 3 includes (deemed) income from savings and of the premiums partially depend on the size and in- Employer’s Obligations interest. The deemed income ranges from 0.03% to dustry of the employer. The premiums include: 5.69%, depending on the fair market value of the → WW: 2.7% for employees with a written labour Start of employment total assets as per 1 January of the tax year. The contract for an indefinite period of time, 7.7% in → Obtain the correct work permit (if applicable). deemed income is taxed at a flat rate of 31%, tak- other cases. → If the employer is in the European Economic Area ing into account a tax exempt base of € 50,000 per → WAO/WIA: 7.53%, including 0.5% child day care (EEA) or in Switzerland, as from 1 March 2020, the person. allowance; obligation exists to notify the Dutch authorities of → The tax year is the calendar year. → WHK: 1.36% on average, and; a temporary posting of an employee in the Nether- → The filing deadline for the annual personal income → ZVW: 5.75% – 7%. lands through the Dutch online notification portal. tax return: the return needs to be filed before 1 → Premiums are due on the employment income of → Identify the employee and administer the required May of the year following the tax year. Extensions an employee up to an annual income ceiling of € personal details of the employee, including a copy of a couple of months are possible up to one year 58,311. For large employers (more than € 3,460,000 of passport and a copy of the certificate of cover- when filed by a tax advisor. premium wage) in the Netherlands different pre- age (A1/E101 declaration) when relevant. → As from 1 March after the tax year, resident tax miums (WHK) may apply. There is a possibility to → Obtain a 30% ruling when possible, reducing the payers can download their tax return from the tax self-insure the WHK premiums, taking over the obli- wage tax/personal income tax. authorities, website, including the information al- gation to pay the disabled or ill employee. → Arrange for Dutch acceptance of foreign pension ready known by the Dutch tax authorities. → The employer is liable for the payments on a month- scheme (if applicable). → In general, employment income is subject to a ly basis. The employer contributions are generally monthly withholding tax (i.e. wage tax). tax-free. During employment → Foreign tax-exempt income may be considered for → Work accident insurance contributions are borne by → The Dutch legal or economic employer must with- calculating the personal income tax rate (progres- the employer. hold Dutch wage tax monthly, including Dutch so- sion clause). cial security premiums when relevant. Immigration → Allocate the employee’s remuneration in taxable Social Security and non-taxable portions. Visa → Prepare an annual wage tax certificate (“Jaarop- Social security contributions are compulsory and gen- → Any foreigner who works as an employee in the gaaf”). erally apply to all employees working in the Nether- Netherlands must have a valid residence and work → Administer cost reimbursements and allowanc- lands. The contributions are based on the monthly permit. es (also in kind) to determine the (non-)taxation employment income. → Exceptions apply to all EU and European Economic monthly 1 All numbers are regarding the year 2021 Area (EEA) citizens and to Swiss (CH) nationals. → or annually (“Werkkostenregeling”).

40 41 WTS Assignments to Europe | Netherlands WTS Assignments to Europe | Norway

Norway

Personal Income Tax → EEA regulations can exempt the employee from Comparisons paying social security contribution in Norway, if → Individuals are taxed on income, depending on covered by the social security scheme in their home Taxation of Fringe Benefits source/residency status. country. Other rules may be applicable for employ- Housing C → The tax rate is progressive and ranges from 22.00 – ees outside the EEA. Home Flights C 38.20% for salaries. Investment income is taxed with Education for children C a general flat tax rate of 22.00% and dividend/gain at Employer shares at a flat rate of 31.68%. → The payroll taxes are generally 14.10%. A Tax exempt | B Taxable | C Tax relief under certain conditions → Annual tax-free threshold up to NOK 97,130 - (single → For employers that perform the business in north- filing). Joint filing is not applicable. ern Norway and certain provinces a lower rate be- Tax Rates → The tax year is the calendar year. tween 0.00% and 10.60% is applicable. Single, no children 40,63% → Filing deadline for the annual income tax return is 30 → Exemption is applicable for employees within EEA Employment Gross Income2 € 100,000 p.a. April of the year following the tax year. Extensions that are covered by the social security scheme in are possible until 3 May and up to 30 June for tax re- their home country. Other exemptions may be ap- Married, 2 children 40,63% Employment Gross Income2 € 100,000 p.a. turns with the assistance of a tax advisor. plicable for employees outside the EEA. → Employment income is subject to a monthly withholding tax (in general). Immigration Maximum Effective Personal Income → Tax-exempt income may be considered for calculat- Tax Rates for the past 3 years ing personal tax rate (progression clause). Visa 2019 2020 2021 → A PAYE scheme is applicable for an income not ex- → For citizens of some countries a visa is required to 51,75% 49,50% 49,50% ceeding NOK 651,250. The rate is 16.8% plus social enter Norway. When a visa is issued, a residence security contribution. Note that the gross income is permit including the right to work - prior to arrival in

usually higher under the PAYE scheme than under or- Norway - is automatically issued with an entry visa. Social Security Rates dinary taxation. Employment Gross Income2 € 100,000 p.a. Work permit Employee 27,65% Social Security → As a rule, any foreigner who wants to work as an Employer ±18,59% employee in Norway must first obtain a residence This is a general information/short teaser text social permit allowing them to work in Norway. security contributions are compulsory and generally → Exceptions apply to all citizens of the Nordic coun- Social Security Agreements (SSA) apply to all employees working in Norway. The con- tries. Citizens of these countries do not need a resi- Argentina tributions are based on the monthly employment in- dence permit of any kind. Citizens of EEA and Swiss Australia come (including fringe benefits). nationals do not need a residence permit but are Canada obliged to register with the police no later than Employee three months after arrival in Norway. China → An employee is required to pay contributions to pen- → Exemptions also apply to technical experts/employ- India sion insurance, unemployment, health and nursing ees of multinational enterprises who will work in Indonesia care insurance. The rate is 8.20% of gross salary. Norway for less than three months. A notice to the Japan → For self-employed, the rate is 11.40%. police before arrival in Norway is required. → For pension and life annuities the rate is 5.10%. South Africa → For individuals under 17 or over 69 the rate is 5.10%. Registration Turkey → Income below NOK 59,650 is exempt from contribu- → As a rule, any foreigner who wants to work as an USA employee in Norway must first obtain a residence 2 Excluding fringe benefits such as housing, tions. For income above NOK 59,650 the contribu- permit allowing them to work in Norway. for the year 2021. tion can not exceed 25% of the income in excess of → Exceptions apply to all citizens of the Nordic coun- this threshold. tries. Citizens of these countries do not require a res-

42 43 WTS Assignments to Europe | Norway WTS Assignments to Europe | Poland

Poland

idence permit of any kind. Citizens of the EU, Euro- Personal Income Tax up to an annual income ceiling (gross income of pean Economic Area (EEA) and Swiss (CH) nationals, Comparisons PLN 157,770 in 2021). do not need a residence permit but are obliged to → Individuals are taxed on income depending on → accident insurance (ranges from 0.4% to 3.33%, Taxation of Fringe Benefits register with the police no later than three months source and residency status. depending on sector of employer’s activity and after arrival in Norway. Housing C → The tax rate is progressive (annual taxable income number of employees), labour fund (2.45%) and → Exemptions also apply to technical experts/employ- Home Flights C up to PLN 85,528 is taxed at the rate of 17% and the employee benefits fund (0.1%) irrespective of ees of multinational enterprises who will work in Education for children C excess is taxed at the rate of 32%), except for capi- the employee’s income level. Norway for less than three months. A notice to the tal gains with a flat tax rate of 19% and specific in- → As a rule, the employer is liable for all the payments A Tax exempt | B Taxable | C Tax relief under certain conditions police before arrival in Norway is then required. come of non-residents with a flat tax rate of 20%. each month. The employer’s contributions may be → Tax-free threshold ranges from PLN 8,000 to PLN 0 considered as tax-deductible expenses, provided Employer’s Obligations Tax Rates depending on annual taxable income. that statutory requirements are met. Single, no children 33% → The tax year is the calendar year. Where one is not covered by social security on a man- Start of employment Employment Gross Income¹ € 100,000 p.a. → The deadline for the annual tax payment and filing datory basis, one may access the pension, disability → Contracts and subcontracts awarded to an enterprise the annual income tax return is between 15 Febru- and health insurance system on a voluntary basis. Married, 2 children 33% resident abroad must be reported to the Central Of- Employment Gross Income¹ € 100,000 p.a. ary and 30 April of the year following the tax year. fice of Foreign Tax Affair by filing of the form RF-1199. → Employment income is subject to a monthly with- Immigration Employees used to carry out the assignment have holding tax (in general). also to be reported to the Central Office of Foreign Maximum Effective Personal Income Visa Tax Affairs on the same form within 14 days after the Tax Rates for the past 3 years Social Security → As a rule, a foreigner who wants to work as an employ- work has started 2019 2020 2021 ee in Poland must first obtain a visa to enter Poland. → Obtain the tax withholding card either from the em- 38,2% 38,2% 38,2% Social security contributions are compulsory and gen- → Exceptions apply to a number of countries, includ- ployee or electronically from the tax authorities. If a erally apply to all employees working in Poland. The ing in particular all EU and European Economic Area

tax withholding card is not available (e.g. the em- contributions are based on the monthly employment (EEA) citizens and Swiss (CH) nationals. ployee has not made an application), the withhold- Social Security Rates income, except for health insurance contributions Employment Gross Income1 € 100,000 p.a. ing tax rate is 50%. based on the monthly employment income less: pen- Work permit Employee 8,20% sion and disability insurance contributions payable by → To be allowed to work in Poland, as a rule, During employment Employer 14,10% the employee and sickness insurance contributions. third-country nationals (meaning nationals other → Withhold wage tax on a monthly basis by the Nor- Furthermore, Poland introduced Employee Capital than EU/EEA/CH) must apply for a residence permit wegian employers (meaning any contractual or Plans (PPK), which is a voluntary system of long-term and/or work permit, depending on the specific case. Social Security Agreements (SSA) economic employer whose registered headquar- savings for retirement purposes. PPK is based on dif- → An exception is provided for citizens of Armenia, ters is located in Norway). Deduction for the social Australia ferent assumptions and was not included in the social Belarus, Georgia, Moldova, Russian Federation security contributions (if applicable) is included in Canada security burden presented here. and Ukraine. No work permit is required, provided the tax withholding card. Chile that the employer fulfils certain reporting obliga- → Allocate the employee’s remuneration in taxable Employee tions and work is performed up to 6 months in any India and non-taxable portions. → The employee is required to pay contributions to- 12-month period. → Issue Norwegian pay slips. Israel wards: → Monthly reporting to the Norwegian tax authorities. Turkey → pension (9.76%) and disability insurance (1.5%) Registration United Kingdom up to an annual income ceiling (gross income of → Registration at the place of temporary residence Termination of employment PLN 157,770 in 2021). (“zameldowanie na pobyt czasowy”): USA → Filing of form RF-1199 to the Central Office of For- → sickness (2.45%) and health (9%) insurance – ir- → EU/EEA/CH citizens staying in Poland for at least 3 eign Tax Affair for termination of the employment. EEA, Coordination of social security systems respective of the employee’s income level. months within 30 days from the date of arrival in Poland; 1 All fringe benefits such as housing etc. are subject to SSC/ Employer → third-country nationals (meaning nationals other PT while covered by the Norwegian Social Security Scheme. → The employer is required to pay contributions towards: than EU/EEA/CH) staying in Poland for at least 14 → pension (9.76%) and disability insurance (6.5%) days within 4 days from the date of arrival in Poland.

44 45 WTS Assignments to Europe | Poland WTS Assignments to Europe | Portugal

Portugal

→ Registration of stay (“rejestracja pobytu”): Personal Income Tax sion income is subject to tax at a flat rate of 10%. → EU/EEA/CH citizens staying in Poland for at least Comparisons → As a general rule, PIT tax rates are progressive, 3 months at the latest on the day following that → Resident individuals are subject to personal in- ranging from 14.5% to 48%. For taxable income Taxation of Fringe Benefits 3-month period. come tax (PIT) on a worldwide basis, which means between € 80,000 and € 250,000 an additional sur- Housing C that any income obtained by a resident individual charge of 2.5% applies whereas for taxable income Employer’s Obligations Home Flights B shall be subject to PIT, regardless of its source (Por- higher than € 250,000 an additional surcharge of Education for children B tuguese or foreign). Non-resident individuals are 5% is also applicable. However, a flat tax rate may Start of employment subject to PIT on all Portuguese-sourced in-come. apply to certain types of income (interest, divi- A Tax exempt | B Taxable | C Tax relief under certain conditions → Check (before start of work) the document author- → Generally speaking, an individual is considered to dends and rental income). ising the employee to stay in Poland. be resident in Portugal if he/she either: (i) remains → Income obtained by non-resident individuals is → Obtain work permit for the employee (if applicable). Tax Rates in the Portuguese territory for more than 183 usually subject to final withholding tax rates which → Register the employee for social security purposes Single *, no children 19,65% days, consecutively or not, in any 12-month peri- vary between 25% (employment income, business at the relevant social security authority. Employment Gross Income¹ € 100,000 p.a. od be-ginning or ending in the relevant calendar and professional income) or 28% (capital income → Submit a statement to the National Labour Inspec- year; (ii) though remaining for less than 183 days, such as dividends and interest). However, rental Married *, **, 2 children 16,32% torate (if the employer is domiciled outside Poland Employment Gross Income¹ € 100,000 p.a. in any 12-month period of the relevant year, has income and gains from the sale of real estate are and certain conditions are fulfilled). accommodation in circumstances that indicate an subject to a special tax rate of 28% and require intention to keep and occupy it as a habitual resi- non-resident individuals to file a tax return. During employment Maximum Effective Personal Income dence; (iii) on 31 December of any given year, is a → The PIT tax year coincides with the calendar year. → Withhold wage tax each month. Tax Rates for the past 3 years crew member of vessels or aircrafts operated by Taxpayers must submit PIT returns between 1 April → Withhold social security contributions each month 2019 2020 2021 entities with a residence, head office or place of and 30 June of the following year. After the tax for the employee. 32% 32% 32% effective management in Portuguese territory; (iv) authorities’ assessment, PIT must be paid (or reim- → Prepare and submit an annual wage tax certificate performs public duties for the state abroad. bursed) by 31 August of the same year.

(PIT-11) (Polish employers only). → PIT applies to specific items of income that are ex- → Any taxes withheld on Portuguese-sourced income → Keep employee’s records in the territory of Poland Social Security Rates pressly set forth under the PIT code: employment received by resident or non-resident taxpayers Employment Gross Income1 € 100,000 p.a. over the period of secondment and 2 years after- income, business and professional income, capital must be submitted to the Portuguese tax authori- wards for the purpose of an audit by the National Employee *** 14,81% income (dividends, interest, royalties), real estate ties within the first 20 days of the month following Labour Inspectorate (foreign employers only), if Employer **** 9,80% income, net worth increases (gains from the sale the payment date. additionally certain conditions are fulfilled. of real estate property or securities, proceeds from the liquidation of companies, non-compete com- Social Security Social Security Agreements (SSA) Termination of employment pensations) and pensions. → Report termination of employment to the authori- Australia → Non-resident individuals who transfer their tax As a general rule, employers, employees and directors ties that issued the work permit (if applicable). Canada residence to Portugal may be eligible for the of a company are liable to pay social security contri- → Deregister the employee from the social security Ukraine Non-Habitual Tax Resident Regime (NHR) provided butions. To determine the contributions from both system. they have not been considered to be a tax resident the employer and the employee for social security USA in Portugal in the preceding five years. This special purposes, the gross remuneration due from the per- South Korea regime allows for a tax exemption and tax reduc- formance of a professional activity or arising from an Mongolia tions on certain items of income. employment contract termination is considered to be Israel (as of 1 May 2021) → Under the NHR regime, passive income (dividends, the chargeable basis. For this purpose, remuneration * Effective tax rate = tax calculated based on the progressive tax interest and rental income) derived from outside is considered to be all the payments, in cash or in kind, Moldova scale (annual taxable income up to PLN 85,528: tax rate of 17%; the Portugal is fully exempt in Portugal, irrespective of granted to employees as a result of their work, accord- excess: tax rate of 32%). Republic of Macedonia the taxation applicable at source. Foreign-sourced ing to the employment contract, the labour legislation ** Assumption: spouse does not earn a taxable income. active income may also be fully exempt, and Por- or the traditional practice on this matter. *** Pension and disability insurance contributions – up to annual in- tuguese-sourced active income may also benefit come ceiling. 1 Excluding fringe benefits such as housing. from a flat rate of 20%, provided some specific con- Employee **** Assumption: accident insurance contribution at the rate of 1.67%. ditions are met. In addition, foreign-sourced pen- → Employees and directors are liable for social secu-

46 47 WTS Assignments to Europe | Portugal WTS Assignments to Europe | Portugal

rity contributions of 11% on the gross remuneration received. Comparisons → Under the applicable social security rules, the con- Taxation of Fringe Benefits tributions made by the employer and the employee cover sickness, professional sickness, parenthood, un- Housing B employment, disability, old age, widows and orphans. Home Flights B Education for children C Employer A Tax exempt | B Taxable | C Tax relief under certain conditions → The employer is liable for social security contributions at a rate of 23.75% applicable on the gross remuneration of the employee. Such contributions Tax Rates together with the amounts withheld from the em- Single, no children 34,54% ployee’s salary should be submitted to the social Employment Gross Income¹ € 100,000 p.a. security on a monthly basis. Married, 2 children 26,90% Employment Gross Income¹ € 100,000 p.a. Immigration

Visa Maximum Effective Personal Income → With the exception of nationals of the EU and Euro- Tax Rates for the past 3 years pean Economic Area citizens (EEA) (exempted from 2019 2020 2021 visa procedures, apart from a registration within 48% 2 48% 3 48% 4 the municipality of their area of residence), as a

general rule, third-country nationals are required to apply for a temporary visa in order to obtain a Social Security Rates Employment Gross Income5 € 100,000 p.a. residence permit if they wish to remain in Portugal for more than 180 days. Employee 11% Employer 23,75% Work permit → Work residence permits (such as the regular work Employer’s Obligations Social Security Agreements (SSA) permit, the tech visa, the residence permit for teaching activities, highly qualified activities or Start of employment Andorra cultural activities) are mandatory for third-country → Employment agreements should be communicat- Argentina nationals who wish to perform a professional ac- ed to the labour and social security authorities. Australia tivity in Portugal. Moreover, the holders of a resi- Brazil dence permit for investment activities (also known During employment as Golden Visa permit) are allowed to perform a → Withhold personal income tax and social security Canada professional activity in Portugal. contributions. 1 Progressive tax rates applicable to tax residents in Portugal (e.g. Chile → Professional training. employment income). Morocco Registration → Health and safety concerns. 2 Plus an additional solidarity tax of 2.5% (for income above €80,000) Mozambique → EU and EEA nationals and third-country nationals or 5% (for income above €250,000). should also register with the Portuguese tax au- Termination of employment 3 Plus an additional solidarity tax of 2.5% (for income above €80,000) USA thorities (to apply for a tax identification number), → Communication of the termination agreement to or 5% (for income above €250,000). Uruguay social security office (to obtain a social security the social security authorities. 4 Plus an additional solidarity tax of 2.5% (for income above €80,000) number) and the national health system (to be is- → Payment of the legal compensation, if applicable. or 5% (for income above €250,000). sued a user number). → Ensure access to unemployment benefits. 5 Excluding fringe benefits such as housing.

48 49 WTS Assignments to Europe | Romania WTS Assignments to Europe | Romania

Romania

Personal Income Tax tribution: labour insurance contributions (2.25%). regardless of whether or not they obtain revenue → In the case of secondment agreements, the Roma- → Any employer with more than 50 employees must in Romania. The immigration office will grant an nian resident employer must submit a statement → Residents and non-residents are taxed on income also pay a contribution for the non-employment identification number which will be used when at the tax authorities regarding the termination depending on their fiscal residency status and the of disabled persons calculated as 4% x number of submitting the tax returns. of the secondment no later than 15 days from the source of the income. employees x the minimum gross salary. Alterna- → In the case of secondment agreements, the indi- closing date of the contract. → Income is taxed at a flat rate of 10%. tively, the employer must pay a contribution of viduals must register also as taxpayers with the → The tax year is the calendar year. 4% x number of employees x 50% of the minimum relevant tax authorities. → Individuals hired based on an employment con- gross salary, plus to acquire products from entities → In 30 days after accomplishing 183 days of pres- tract by companies whose main activity is soft- employing disable persons for the difference until ence in Romania, the foreigner must complete and ware development can be exempted from tax on the first mentioned amount. submit to the tax authorities a questionnaire for income provided that the conditions set forth in determining the fiscal residence status. specific legislation in force are met. Immigration → The Romanian employer is obliged to calculate, Employer’s Obligations withhold, declare and pay to the state budget the Visa tax on income on a monthly basis, by the 25th of → EU/EEA/Swiss nationals do not need a visa to enter Start of employment the following month. In the case of foreigners Romanian territory. However, if the stay exceeds → Obtain a work permit and correct working visa seconded to Romania, the individuals are obliged 90 days within a 6-month period, the individual type for the individual (if applicable). to declare and pay each month the tax on income must obtain a registration certificate from the Gen- → In the case of local labour agreements, the Roma- to the state budget, by the 25th of the following eral Inspectorate for Immigration. nian resident employer must declare the labour month. → Nationals of the USA, Japan, Canada and of the contract to the labour authorities not later than states listed in Annex II of EC Regulation 539/2001 one day prior to the commencement date of the Social Security are visa-exempt for a short stay only. For stays over contract. 90 days, a long-stay visa must be obtained from → In the case of secondment agreements, the Ro- → Social security contributions are due, both by the Romanian consulates abroad. manian entity to where the employee is assigned the individual and the company. The employer is → No Romanian visa is required for: holders of valid must submit a statement to the tax authorities re- obliged, based on the gross salary of the employ- Schengen visas for short- or long-term stays, hold- garding the secondment no later than 15 days from ee, to calculate, declare and pay monthly contribu- ers of permanent residence permits issued by an the commencement date of the contract. tions, by the 25th of the following month. EU member state, nationals of states with which → In the case of secondment agreements, the → In the case of secondment agreements or pluriac- Romania has signed agreements in this respect, as non-resident employer must submit a statement tivity, the individuals can be exempted from pay- settled in these agreements. to the labour authorities within at least 5 days being social security contributions provided that they fore the starting date of the assignment and no lat- can submit an A1 form valid for the period of their Work permit er than the first day of the contract. assignment, certifying that respective individuals → EU/EEA/Swiss nationals do not need a work permit. are subject to the social security system in their → A work permit is compulsory for non-EU/EEA/CH During employment home country. If such a certificate cannot besub- nationals working in Romania. The work authori- → Calculate, withhold, declare and pay on a monthly mitted, social security contributions are due in Ro- sation is granted at the employer’s request by the basis the tax on income and social security contri- mania. Romanian immigration authorities and is required butions to the state budget, both for the employee when obtaining a long-term visa or residence per- and the employer. Employee mit for employment or assignment purposes. A for- → The withholdings from the salary are as follows: eigner who moves from one company to another Termination of employment health insurance contribution (10%) and social securi- must obtain a new work authorisation. → Cancel the work authorisation for the employee (if ty contribution (25% for normal working conditions). applicable). Registration → In the case of local labour agreements, declaring Employer → All foreigners exceeding 90 days of stay in Roma- the termination of the contract to the labour au- → An employer is required to pay the following con- nia must register at the local immigration office thorities in the first non-working day.

50 51 WTS Assignments to Europe | Romania WTS Assignments to Europe | Russia

Russia

Personal Income Tax Employer Comparisons For the purpose of this guideline, we consider an em- → Individuals are taxed on income, depending on ployer to be the following entities which pay payroll Taxation of Fringe Benefits source and residency status. to foreign citizens (employees) directly: (i) subsidiary Housing B → The tax rate for employment payments varies from of the foreign company or (ii) the branch representa- Home Flights B 13% to 30%, no tax-free threshold applies. The tive office of the foreign company duly registered in the Education for children B standard tax rate for tax residents is progressive Russian Federation, and (iii) the Russian legal entity. and varies from 13% to 15% (an incremental tax A Tax exempt | B Taxable | C Tax relief under certain conditions rate is applied to income that exceeds RUB 5 mil- → The social security contribution rates depend on (i) lion per year). Tax rate is 35% applying to non-em- the citizens and the status of the foreign employee Tax Rates ployment payments (e.g. lottery prize, etc.) (i.e. highly qualified (HQS), temporarily staying in Single, no children 10% → Personal income tax (PIT) deductions can be pro- the Russian Federation, temporarily or permanent- Employment Gross Income¹ € 100,000 p.a. vided to a foreign employee after they become a ly resident in the Russian Federation) and (ii) the tax resident of the Russian Federation. Up to this status of the employer (i.e. small or medium-sized Married, 2 children 10% Employment Gross Income¹ € 100,000 p.a. point, standard, property, and social deductions company, accredited IT company, non-profit or- are not applied. ganisation, etc.) or type of activity of the employer → The tax year is the calendar year and runs from 1 in the Russian Federation (for instance, employer Maximum Effective Personal Income January to 31 December. provides job for disabled persons, etc.) and region Tax Rates for the past 3 years → Employment income is subject to withholding by where the employer is located. 2019 2020 2021 the employer 1 no later than the next day after the → The legislation of the Russian Federation) does not 10% 10% 10% payment has been executed. provide grounds for exempting employers from → The PIT return for the employment payments and paying insurance premiums, including contribu-

tax withheld is submitted by the employer. The fil- tions for accident insurance, however employers Social Security Rates ing deadline is 1 March of the following year. can reduce the amount of insurance premiums due Employment Gross Income1 € 100,000 p.a. → However, if the employee has another income in to non-taxable payments (i.e. severance pay, wel- Employee 35% addition to the employment income, this should be fare payments, etc.). Some thresholds on the gross Employer 2,25% declared by the separate PIT return completed by employment payment are applied. The thresholds the individual before 30 April, and the associated are indexed by the government each year. PIT is to be paid by the individual directly before 15 → For the HQS the mandatory accident insurance is Social Security Agreements (SSA) July of the following year. applied only (0.2–8.5% depending on the level of Canada assessed risk of the employer activity). No thresh- Israel Social Security old is applied. Albania → In general, the standard social security rates for Rus- Russian social security is represented by two major sian citizens and foreigners with permanent or tem- Macedonia funds: the social insurance fund (including compulso- porary residency are the following: pension insur- Moldova ry short-term disability and maternity insurance, and ance – 22% on income up to RUB 1,465,000 then 10% Serbia mandatory accident insurance) and the pension fund is applied above the threshold; health insurance Turkey (including pension insurance and health insurance). contribution – 5.1% (no threshold is applied); for The social contributions are made monthly by the em- compulsory short-term disability insurance – 2.9% Quebec ployers based on the accrued gross salary only. (threshold is RUB 966,000); mandatory accident in- Korea surance – 0.2–8.5% (no threshold) depending on the Employee level of assessed risk of the employer activity. → Employees don’t pay social security contributions → The standard social security rates for foreign em- 1 Excluding fringe benefits such as housing. in Russia. ployees who are temporarily staying in the Russian Federation are the same excluding health insur-

52 53 WTS Assignments to Europe | Russia WTS Assignments to Europe | Russia

ance (it is not applied) and short-term disability of Russia. insurance – a reduced rate is applied (1.8%). → HQS and their family members are not required to Comparisons → Starting from January 2021, if the employer is in- submit notifications if their stay in the territory of Taxation of Fringe Benefits cluded in the special register of small and medi- the Russian Federation does not exceed 90 days. um-sized companies, the standard rates may re- Housing C duce to 15% in total. Employer’s Obligations Home Flights B Education for children C Immigration Start of employment A Tax exempt | B Taxable | C Tax relief under certain conditions → Employers who invite a foreigner to be an employ- Visa ee in the Russian Federation for the purposes of → As a rule, any foreigner who wants to work as an carrying out labour activity must have a permit in Tax Rates employee must first obtain a business visa to enter order to attract and employ foreign workers. Single, no children 13 (15) for tax res % Russia. If a foreign citizen enters the Russian Fed- → Employers should ensure that the foreigner has a Employment Gross Income2 € 100,000 p.a. eration for work, they must obtain a business visa. proper visa, work permit and registration in the re- Married, 2 children 13 (15) for tax res % Generally speaking, such a visa is issued for the du- gion of work. Employment Gross Income2 € 100,000 p.a. ration of an employment contract or a civil contract → Employer and host parties should send a notifi- for the performance of work/rendering services cation to the Ministry of Internal Affairs about the but for no more than one year. conclusion of the employment contract with the Maximum Effective Personal Income → Exemptions apply to all CIS citizens. They are able foreign citizen within 3 working days. Tax Rates for the past 3 years to enter Russia without a visa. 2019 2020 2021 During employment 30% 30% 30% Work permit → Take measures to ensure that the foreign citizen

→ Any foreigner who intends to work in Russia needs complies with the order of stay (residence) in the a licence (patent) which is issued by the Ministry of Russian Federation and their timely departure. Social Security Rates Employment Gross Income1 € 100,000 p.a. Internal Affairs. The exception is foreigners with → Withhold wage tax and pay to tax authorities no lat- a temporary residence permit or a residence per- er than the next day of the employment payment. Employee 0% mit, as well as citizens of Belarus, Kazakhstan, Kyr- Keep track of the period of stay in Russia so as to cal- Employer min 0,2 (ref 3) % 3,4 gyzstan and Armenia. culate the correct tax rate for residents and non-res- → The work permit is required for HQS or visa-free idents. For non-residents (period of stay in Russia Social Security Agreements (SSA) foreigners instead of a licence (patent). The dif- less than 183 days during a year) the tax rate is 30%. ferences between an HQS and an ordinary foreign → Pay social security each month for the employee by Bulgaria employee are the following: (1) skill level and (2) the 15th day of the following month. Czech Republic the average monthly payroll should amount to → Submit to the Ministry of Internal Affairs by the end Lithuania RUB 167,000 and above (i.e. RUB 2,004,000 p.a.). It of the month after the reporting quarter a special Spain is prohibited to pay HQS less than the above men- form for highly qualified employees, specifying tioned limit, otherwise the status of HQS will be the accrued salary. Belarus lost. At the moment, the government is consid- 1 For the purpose of this guideline, we consider the employer to be Ukraine ering raising this payroll limit to RUB 750,000 per Termination of employment the following entities which pay payroll to foreign citizens (employ- Republic of Moldova quarter (i.e. RUB 3,000,000 p.a.). → Grounds for dismissal can be the expiration date or ees) directly: (i) a subsidiary of the foreign company or (ii) a branch Kazakhstan annulment of the work permit or licence (patent), representative office of the foreign company duly registered in the Registration medical policy. Russian Federation, and (iii) the Russian legal entity. Azerbaijan → Upon arrival in Russia, all foreigners must register at → No later than 3 working days, the employer should 2 Excluding fringe benefits such as housing. their local registration office within a specific period send a notification to the Ministry of Internal Affairs 3 For HQS and low accident risks related to employer business activity. of time. The migration registration of foreign citi- about the termination of the employment contract 4 For temporary residents of the Russian Federation and high acci- zens is carried out by the Ministry of Internal Affairs with the foreign citizen. dent risks related to the employer business activity.

54 55 WTS Assignments to Europe | Serbia WTS Assignments to Europe | Serbia

Serbia

Personal Income Tax → A foreigner who wants to work as an employee in Serbia must first obtain a visa D to enter Serbia. Comparisons → Individuals who are resident in Serbia are taxed on → To be allowed to work in Serbia, the foreigner can Taxation of Fringe Benefits their worldwide income, non-residents are taxed apply for a visa D at the Serbian consulate abroad. on their Serbia-source income. Housing → The tax rate is 10%. Work permit Home Flights → Tax residents of Serbia have the right to a tax de- → To be allowed to work in Serbia, the foreigner can Education for children duction for tax paid abroad. apply for a work permit from the Serbian consulate A Tax exempt | B Taxable | C Tax relief under certain conditions → The tax year is the calendar year. abroad or at the offices of the National Employ- → The annual personal income tax return has to be ment Service in Serbia. filed by 15 May for the previous year. The annual Tax Rates personal income tax is progressive, the tax rate is Registration Single, no children 10% 10 or 15%. → Upon arrival in Serbia, all foreigners must be reg- Employment Gross Income¹ € 100,000 p.a. → Employment income is subject to a monthly with- istered at their local registration office of the Min- Married, 2 children 10% holding tax. istry of Internal Affairs within a specific period of Employment Gross Income¹ € 100,000 p.a. time. If foreigners want to obtain a temporary res- Social Security idence permit, they must submit the required documentation to the office of the Ministry of Internal Maximum Effective Personal Income → Social security contributions generally apply to all Affairs. Tax Rates for the past 3 years employees working in Serbia. 2019 2020 2021 → The basis for the contribution calculation is the Employer’s Obligations 15% 15% 15% monthly employment gross income if the gross

salary is below € 3,447. Start of employment → If the prescribed contribution base is above the → Obtain the correct work permit type for the em- Social Security Rates Employment Gross Income1 € 100,000 p.a. maximum monthly contribution base, the calcu- ployee if it is required. lation and payment of contributions shall be per- → Conclude an employment contract with the em- Employee 8% formed for the highest monthly contribution base. ployee. Employer 7% → Register the employee for social security at the rel- Employee evant social security register. Social Security Agreements (SSA) → Social security contributions with respect to employment income that are withheld from the gross During employment Germany salary (employee’s burden) are as follows: → Withhold wage tax each month. Russia → 14% state pension fund contributions, → Withhold social security contributions each month China → 5.15% healthcare contributions, for the employee, provided the employee is not Canada → 0.75% non-employment contributions. subject to social security in another country. → Allocate the employee’s remuneration in taxable Untied Kingdom Employer and non-taxable portions. Austria → Social security contributions paid by the employer Italy in addition to the gross salary: Termination of employment Croatia → 12.5% state pension fund contributions, → Cancel the work permit for the employee if it is → 5.15% healthcare contributions. needed. France → Deregister employee from the relevant social se- Turkey Immigration curity register. → Prepare documentation for the termination of em- 1 Excluding fringe benefits such as housing. Visa ployment.

56 57 WTS Assignments to Europe | Slovenia WTS Assignments to Europe | Slovenia

Slovenia

Personal Income Tax tions, but there is a discussion to introduce the so- part of the temporary address registration. If a for- cial security cap in 2022. eigner does not register their temporary address in Comparisons → Individuals are taxed on income received, depend- Slovenia and receives taxable income in Slovenia, Taxation of Fringe Benefits ing on the source and residency status. Employer they should obtain a Slovenia tax ID themselves. If → The tax rate is progressive and ranges from 16% → An employer is required to pay contributions to the the foreigner stays in Slovenia for a longer period of Housing B with the tax base of € 8,500 to 50% with the tax old-age pension scheme (8.85%), unemployment (up time, they should consider their tax residency status. Home Flights B base of € 72,000 p.a. (except for investment and to 0.06%), health (6.56%), nursing care (0.1%) and acci- Education for children B rental income with a general flat tax rate of 27.5%). dent at work (0.53%) insurance. In total up to 16.10%. Employer’s Obligations A Tax exempt | B Taxable | C Tax relief under certain conditions → Income not exceeding tax allowances is not tax- → The employer is liable for employees’ and employ- able (applicable only for resident taxpayers. ers’ payments each month. The employer contribu- Start of employment Non-resident taxpayers are entitled to tax allow- tions are generally tax-free. → Obtain a correct visa type/work permit for an em- Tax Rates ances only under certain conditions). → There is no cap on paying social security contribu- ployee (if applicable). Single, no children 31,83 / 32,64% → The tax year is the calendar year. tions. There is a political discussion to introduce the → Employer must register on an e-taxes application Employment Gross Income¹ € 100,000 p.a. → The filing deadline for the annual income tax re- social security cap in 2022 and AJPES (if not registered yet) in order to arrange Married, 2 children 31,16 / 32,64% turn: pre-filed annual tax returns are sent to resi- all necessary monthly reporting. Employment Gross Income¹ € 100,000 p.a. dent taxpayers on 31 March or 31 May for the previ- Immigration → Register the employee with the compulsory social ous tax year. If they do not appeal it within 15 days security system on the online platform E-vem. of receipt, the pre-filed return is considered to be Visa Maximum Effective Personal Income the final income tax return. If a resident taxpayer → Any foreigner who wants to work as an employee During employment Tax Rates for the past 3 years has not received the pre-filed annual tax return by in Slovenia must first obtain a visa to enter Slove- → Withhold income tax on a gross monthly basis by 2019 2020 2021 15 June of the following year, they must submit an nia. the Slovenian employers (meaning any formal em- 50% 50% 50% annual tax return. A non-resident taxpayer neither → Exceptions apply to all EU and European Economic ployer whose registered seat is located in Slovenia

receives a pre-filed annual tax return nor is obliged Area (EEA) citizens and to Swiss (CH) nationals. Ex- or a foreign employer having a PE in Slovenia for to submit an annual tax return unless they claim ceptions apply also to nationals of the countries of corporate tax purposes). Social Security Rates Employment Gross Income1 € 100,000 p.a. tax allowances (subject to certain conditions). The North America, most countries in South America, → Withhold social security contributions on a monthly final deadline for the annual tax return submission most Balkan states, Japan, Australia, New Zealand, basis for the employee (meaning any formal em- Employee 22,1% is 31 July of the following year. Israel and the UAE. ployer whose registered seat is located in Slovenia). Employer 16,1% → Employment income is subject to a monthly with- → Allocate the employee’s remuneration in taxable holding tax. Work permit and non-taxable portions. Social Security Agreements (SSA) → Tax-exempt income may be considered for calcu- → In general, foreigners who want to work in Slove- → Carry out the applicable annual reporting to the Fi- lating the personal tax rate (progression clause). nia (or stay more than 90 days) must obtain a tem- nancial Administration and Pension and Disability Australia porary residence permit or a unified residence and Insurance Institute, unless this process is automatic. Bosnia and Herzegovina Social Security work permit. At the same time, the temporary ad- → Prepare an annual report on income received for North Macedonia dress in Slovenia should be registered. Depending tax purposes and a notice of annual leave entitle- Montenegro Social security contributions are compulsory and gen- on the type of permit, it may be applied for at the ment. Both reports must be sent to the employees erally apply to all employees working in Slovenia. The Slovenian consulate abroad or at appropriate ad- via e-mail or via normal post. Serbia contributions are calculated as a percentage of the ministrative office in Slovenia. In some cases, the gross monthly employment income. employer of the foreigner may be eligible to apply Termination of employment for the permit in the name of the foreigner. → The work permit for the employee (if applicable). Employee → De-registration of the employee from the compul- → An employee is required to pay contributions to the Registration sory social security system online. old-age pension scheme (15.5%), unemployment → A foreigner who registers their temporary address → An annual report on income received and a notice (0.14%), health (6.36%) and nursing care (0.1%) in- in Slovenia obtains a Slovenia tax ID automatical- of annual leave entitlement shall be prepared. surance, in total 22.1%. ly. They should amend their file with the financial 1 Excluding fringe benefits such as housing. → There is no cap on paying social security contribu- administration with additional information - not

58 59 WTS Assignments to Europe | Spain WTS Assignments to Europe | Spain

Spain

Personal Income Tax Employee During employment → Employee’s contributions represent around 6.35% → A withholding tax is submitted on a quarterly or Comparisons → Spanish residents are subject to the Spanish per- of the social security contribution base. monthly basis by the employer, depending on its Taxation of Fringe Benefits sonal income tax based on their worldwide in- turnover. Non-residents at a rate of 19% or 24% come according to the progressive scale of rates. Employer (depending on if the taxpayer is EU-resident or not) Housing B The scale may differ depending on the region in → Employer’s contributions represent up to 31.4% of and Spanish residents at a tax rate up to 54%. Home Flights C which the taxpayer lives. The maximum marginal the employee’s social security contribution base. → The employer shall pay social security contribu- Education for children A tax rate is 47%. tions for its employees on a monthly basis. A Tax exempt | B Taxable | C Tax relief under certain conditions → Foreign tax residents are only subject to tax in Immigration → At the end of each tax year, employers shall file in- Spain on their Spanish source income, at a flat tax formative returns including details of the employ- rate of 24% for non-EU countries residents, or at a Visa ees’ gross salary and the amounts withheld Tax Rates flat rate of 19% for EU countries residents. → In general, all foreign individuals intending to Single, no children 31,08% → Employment income is subject to withholding tax work in Spain must first obtain a visa or a residence Termination of employment Employment Gross Income¹ € 100,000 p.a. in Spain if these earnings originate from work car- permit to enter Spain, unless they are exempted → The employer must prepare settlement documen- Married, 2 children 30,33% ried out in Spain. → Exceptions apply to all EU and EEA nationals as well tation to be signed by the former employee and Employment Gross Income¹ € 100,000 p.a. → The Spanish residents must file the personal in- as to Swiss citizens. deregister him/her at the social security authori- come tax return in April-June following the end of ties. the tax year. Work permit Maximum Effective Personal Income → Non-Spanish tax residents may be obliged to file → Generally speaking, EU citizens are able to work in Tax Rates for the past 3 years tax returns in Spain depending on the type of in- Spain without holding any work permit. 2019 2020 2021 come obtained in the Spanish territory. If only em- → To be allowed to work in Spain, non-EU nationals 48% 49,5% 54% ployment income is obtained in Spain, they are not (meaning other than EU/EEA/CH nationals) must

obliged to file a final income tax return, unless they hold one of the 7 different work permits issued by have been withheld in excess during the tax year. the Spanish immigration services. Social Security Rates Employment Gross Income1 € 100,000 p.a. In this case, they should file a final income tax return claiming the refund of the amounts withheld Registration Employee 6,35% in excess by the employer. → Upon arrival in Spain, non-EU residents must regis- Employer 31,4% → A special tax regime is applicable to workers posted ter with the Spanish immigration services. to Spain (“Beckham law”). Under this regime, the Social Security Agreements (SSA) new Spanish resident may be taxed as a non-Span- Employer’s Obligations ish resident. The choice applies in the year of arrival Australia in Spain and continues for the following five years. Start of employment Japan By electing to be a non-resident, the liability of the → Foreign tax resident employers are obliged to ap- LATAM Countries taxpayer is only limited to the Spanish income and ply for a Spanish ID number for tax purposes be- Russia assets. fore contracting employees under the Spanish law and to register with the social security authorities. USA Social Security → The employer is responsible for applying for the employee’s corresponding work permit before the Both the employee and employer must contribute to start date of the employment relationship. the social security system. Contributions are calculat- → The employer is responsible for registering its em- ed on the employees’ monthly salary of the previous ployees with the social security system before the month. Nevertheless, monthly salaries are capped starting date of the employment relationship. at € 1,050.00 downwards and at € 4,070.10 upwards when calculating social security contributions. 1 Excluding fringe benefits such as housing.

60 61 WTS Assignments to Europe | Sweden WTS Assignments to Europe | Sweden

Sweden

Personal Income Tax from income tax) social security charges at a rate until the permit has been granted. of 28.97% (2021) based on their gross taxable re- → EU/EEA/CH nationals are entitled to work in Swe- Comparisons → Tax residents in Sweden are subject to tax on their muneration. den without a work permit. Taxation of Fringe Benefits worldwide income. Income from employment in- → Reduced rates (10.21%) apply for individuals born cludes, inter alia, salary income, pensions, benefits from 1938 to 1956 on remunerations up to SEK Registration Housing C and allowances. 100,000. If the individual is born in 1937 or earlier, → If an EU/EEA/CH national intends to stay in Swe- Home Flights C → Non-tax residents are normally subject to Swed- no social security contributions are levied (2021). den for more than six months, the employee is re- Education for children B ish tax on remunerations received for work per- quired to register as a tax resident at the Swedish A Tax exempt | B Taxable | C Tax relief under certain conditions formed in Sweden as well as on certain pensions Employer tax agency. The requirement also applies if the and other income sourced from Sweden. → An employer is required to pay social security con- employee is taxable under SINK or if the employee → Under Swedish tax law, a natural person is deemed tributions on behalf of its employees, consisting of performs work for a Swedish entity for more than Tax Rates as Swedish tax resident if: charges for pension, health insurance and other so- 15 consecutive days or 45 days during a calendar Single, no children approx. 37% → he/she is domiciled in Sweden (i.e. has their cial benefits at a rate of 31.42% (2021). year. Upon registration, the employee will be as- Employment Gross Income¹ € 100,000 p.a. permanent home in Sweden); → Remuneration to employees born in 1937 or ear- signed a Swedish coordination number. Married, 2 children approx. 37% → he/she is a habitual abode in Sweden, or; lier is exempt from payroll tax and for employees Employment Gross Income¹ € 100,000 p.a. → he/she has “essential ties” to Sweden and pre- born in the years 1938 to 1956, the employer only Employer’s Obligations viously has been a Swedish tax resident. levy the retirement pension contributions which → Habitual abode (“stadigvarande vistelse”) in Swe- amount to 10.21% (2021). Start of employment Maximum Effective Personal Income den normally requires that the person stays contin- → Remuneration to employees born in 1998-2002 → Non-EU/EEA/CH nationals must apply for a work Tax Rates for the past 3 years uously for more than six months in Sweden. are reduced to 19.73%. permit. An application for a work permit must be 2019 2020 2021 → Local communal tax is levied on employment in- → The liability to pay social security contributions (for accompanied by an offer of employment form is- 57% 56% 56% come at rates ranging from 29% to 36%. employees belonging to the Swedish social secu- sued by the Swedish employer.

→ Annual employment income exceeding approx. rity system) applies to both Swedish and foreign → The employer may not hire a non-EU/EEA/CH national SEK 537,200 is subject to national tax at a flat rate companies (regardless of whether or not the em- to work in Sweden if they do not have a work permit. Social Security Rates Employment Gross Income2 € 100,000 p.a. of 20% (in addition to the local tax). ployer operates from a permanent establishment → Employment income is taxed on a cash basis when in Sweden). During employment Employee the income is available/paid out to the employee. → The economic employer is liable to report and pay → Monthly requirement to submit information to the Employer 31,42% → If an individual is deemed resident abroad, a special social security contributions monthly. Swedish Tax Agency regarding employees’ income. income tax (“SINK”) is payable on, inter alia, salary → Must withhold preliminary income tax (both na- Social Security Agreements (SSA) paid from a Swedish employer for the work con- Immigration tional and municipal income tax) on behalf of their ducted in Sweden. Tax is levied at a tax rate of 25%. employees. These amounts are preliminary until Canada → Capital (net) income is normally taxed at a rate of Visa the tax agency’s final decision the following year. Cape Verde 30%. → In most cases, non-European (EU) and European Chile → The income tax year is the calendar year. Economic Area (EEA) citizens or Swiss (CH) nationals Termination of employment India → The filing deadline for the personal annual income (CH) must obtain a visa to enter Sweden. → Employment contacts are valid until further notice tax return is 2 May following the income tax year (3 → Non-EU/EEA/CH nationals are also required to hold unless otherwise agreed. Luxembourg or 4 May if 2 May is on a Saturday/Sunday). a valid passport or identification document which Morocco states their citizenship. Quebec Social Security → Exceptions apply to all EU/EEA/CH nationals. Turkey → UK citizens may apply for a cross-border certificate Social security contributions are required and generally when sent to perform work in Sweden. Switzerland apply to all employees who perform work in Sweden. 1 Every child from the age of six has equal access to free education USA Work permit in Sweden. Some boarding schools may take a fee for housing which Self-employed → In most cases, non-EU/EEA/CH nationals will need is a taxable benefit for the employee. → Individuals that are self-employed sustain (apart to obtain a work permit and cannot enter Sweden 2 Excluding fringe benefits such as housing.

62 63 WTS Assignments to Europe | Switzerland WTS Assignments to Europe | Switzerland

Switzerland

Personal Income Tax old of CHF 21,510 (for 2021), additional charges for Employer’s Obligations a pension fund (2nd pillar) are due. These charges Comparisons → Individuals are taxed on income, depending on the depend on the employee’s compensation and age. Start of employment Taxation of Fringe Benefits source, residency status and domicile. → Obtain correct visa type/permit of residence for the → The tax rates are progressive and range from 9% to Employer employee. Housing C 45% depending on the amount and domicile. Addi- → An employer is required to pay contributions to → Request source tax rates for employment income Home Flights C tionally, social security charges are due on employ- old-age and survivors’ insurance schemes (AHV) of from the competent tax authority (if applicable). Education for children C ment income. 4.35%, disability insurance (IV) of 0.7% and income → Register the employee for social security purposes A Tax exempt | B Taxable | C Tax relief under certain conditions → The employment income of foreign residents is compensation/maternity allowance (EO-MSE) of with the competent social security authority. subject to source tax. 0.25%. Unemployment insurance (ALV) is charged → Reduced rates may be applicable for pension lump- at 1.1% for income up to CHF 148,200 and 1% from During employment Tax Rates sum payments. CHF 148,201 onwards. → Source tax on compensation, if employee is a for- Single, no children 10,5% 2 - 23,32% 3 → Capital gains on private property are generally → If the employee’s annual employment income ex- eign individual or non-resident of Switzerland. Employment Gross Income¹ € 100,000 p.a. tax-exempt with reservation for gains from real ceeds the threshold of CHF 21,510 (for 2021), ad- → Withhold employee’s share of the social security Married, 2 children 7,95% 2 - 15,43% 3 estate at the cantonal and communal tax level. ditional charges for a pension fund are due. These contributions from the employee’s compensation. Employment Gross Income¹ € 100,000 p.a. → Swiss residents will be taxed on their net wealth. charges depend on the employee’s compensation → Allocate the employee’s remuneration in taxable The rates range between 0.1% to 1% depending on and age. and non-taxable portions. the amount and domicile. → The employer is liable for all contribution pay- → Prepare and submit the annual salary certificate Maximum Effective Personal Income → Tax rates are calculated based on worldwide in- ments. (Lohnausweis). Tax Rates for the past 3 years come and wealth. However, foreign real estate 2019 2020 2021 and business activities are only taken into consid- Immigration Termination of employment 14,4% - 46% eration for determining the tax rate (exemption → Prepare and submit a final salary certificate

with progression). Visa (Lohnausweis) for the work period within the cal- → The tax year is the same as the calendar year. → In general, foreign citizens require a visa to enter endar year. Social Security Rates Employment Gross Income2 € 100,000 p.a. Switzerland. Social Security → Exceptions apply to EU, European Economic Area Employee 6,5% (EEA) citizens and countries for which Switzer-land Employer 6,5% Social security contributions (1st pillar) are compulsory has waived the visa requirement. and generally apply to all employees working in Swit- Social Security Agreements (SSA) zerland. The contributions are based on the monthly Work permit employment income. Half of the contributions is borne → EU and EEA citizens must apply for a residence per- Australia by the employee and the other half by the employer. As mit if they want to work more than 90 days within Canada for the pension fund (2nd pillar), a minimum of 50% of one year. Chile the payments must be paid by the employer (may pay → Non-EU and non-EEA citizens need a residence per- Japan more on a voluntary basis). mit in order to work in Switzerland. However, for such citizens, residence permits will only be grant- North Macedonia Employee ed to a limited extent and for highly qualified em- Philippines → An employee is required to pay contributions to ployees. United States old-age and survivors’ insurance schemes (AHV) of Uruguay 4.35%, disability insurance (IV) of 0.7% and income Registration compensation/maternity allowance (EO-MSE) of → Upon arrival in Switzerland, all foreigners must Brazil 0.25%. Unemployment insurance (ALV) is charged register at their local registration office prior to at 1.1% for income up to CHF 148,200 and 1% from taking up work in Switzerland. 1 Excluding fringe benefits such as housing. CHF 148,201 onwards. 2 Canton of Schwyz, excluding church tax. → If annual employment income exceeds the thresh- 3 Canton of Geneva, excluding church tax.

64 65 WTS Assignments to Europe | United Kingdom WTS Assignments to Europe | United Kingdom

United Kingdom

Personal Income Tax monthly, the rates are as follows: 0% on the first enables highly skilled scientists and researchers to plicable. GBP 797 per month, 12% on earnings from GBP 798 enter the UK without first securing employment. → Prepare and file “Leaver Declaration” and submit → The UK tax year runs from 6 April to 5 April of the to GBP 4,189 and 2% on earnings above GBP 4,189 online as part of local payroll submission (Full Pay- following year. per month. Registration ment Submission / FPS). → Income tax is imposed on individuals. The liability → Individuals arriving from certain countries must → The employee should complete and submit Form to income tax is based on the source of income and Employer register with the local police station and/or em- P85 to declare their departure from the UK and individual’s tax residence and domicile status. → An employer is required to pay class 1 NIC regard- bassy or consulate. For most, the only requirement claim non-resident tax status as appropriate (or → Income tax rates for England, Wales and Northern less of the age of the employee. For the majority is to register with the local authority for council tax file an Expat Deregistration Form if seconded to Ireland range from 20% on the first GBP 37,700 of of employees who are paid monthly, the rates are purposes. the UK). taxable income (known as the “basic rate”), to 40% as follows: 0% on the first GBP 737 per month and → Where an individual meets the criteria for filing on the next GBP 112,300 of taxable income (known 13.8% on earnings in excess of GBP 737 per month. income tax returns, registration is required by 31 as the “higher rate”) to 45% in excess of this amount → An employer must also pay class 1A NIC on bene- October following the tax year end. (known as the “additional rate”). Scot-land has dif- fits in kind and taxable termination payments and/ → An individual who is working as an employee in ferent bands to the rest of the UK, with tax rates or class 1B on items included within a PAYE Settle- the UK should also apply for and obtain a National varying from 19% to 46%. ment Agreement. The rate for class 1A and class 1B Insurance Number. → The personal tax free allowance provides an ex- contributions is 13.8%. emption from tax on the first GBP 12,570 of taxa- Employer’s Obligations ble income. This allowance is reduced by GBP 1 for Immigration every GBP 2 of adjusted net income that is over GBP Start of employment 100,000. This means that the personal tax-free al- Visa → Obtain a work permit where required. lowance is zero if income is above GBP 125,140. → If you are not a British or Irish citizen, you may need → Complete the employee “Starter Declaration” and → Depending on the level of income, further exemp- permission to enter the UK. Only British and Irish submit online as part of the local payroll submis- tions are available for interest on savings income nationals, members of the Overseas Countries and sion (Full Payment Submission (FPS)). up to GBP 1,000. Territories (OCT) and those who have successfully → Where an employee is exempt from UK tax under → Dividends are taxed at different rates, currently 0% applied to the EU Settlement Scheme (and have a tax treaty, apply for the Short-Term Business Visi- on the first GBP 2,000, then 7.5% for basic rate tax- valid “Settled or “Pre-Settled” status), are exempt. tor Agreement for advance approval not to operate payers, 32.5% for higher rate taxpayers and 38.1% → EU, EEA and Swiss citizens do not require a visa to Pay As You Earn (PAYE) withholding. for additional rate taxpayers. enter the UK when visiting for up to six months. → The first GBP 12,300 of capital gains are tax free. This includes attending most business meetings, During employment Gains in excess of this are charged at 10% for basic events and conferences. → Withhold tax according to the pay period (usually rate taxpayers (excluding property, which is taxed → Further agreements with 56 additional countries monthly) and report online to tax authorities un- at 18%) and 20% for higher or additional rate tax- provide for a “visa waiver” system allowing stays der Real Time Information procedures. payers (excluding property, which is taxed at 28%). of up to six months for visiting the UK. → Withhold NIC according to the pay period (usually monthly) and report online to tax authorities un- Social Security Work permit der Real Time Information procedures. → Non-UK citizens of any country other than Ireland → Prepare and issue Form P60 (annual certificate of Social security contributions, known as National Insur- or those with a valid “Settled” or “Pre-Settled” sta- pay and tax) to employee by 31 May following the ance Contributions (or “NIC”), apply to all employees tus under the EU Settlement Scheme, will require a tax year end and file with the tax authorities. working in the UK if they do not possess an exemption permit to work in the UK. → Prepare and issue Form P11D (annual report of ex- certificate from an overseas authority. → A work permit must be applied for by a prospective penses and benefits) to employee by 6 July fol-low- UK employer with a valid sponsor licence issued by ing tax year end and file with tax authorities. Make Employee the home office. payment of class 1A NIC by 22 July. → An employee is required to pay Class 1 NIC up to → A points-based system applies with specific cate- state pension age (this varies by gender and date of gories for skilled workers, health and care work- Termination of employment birth). For the majority of employees who are paid ers and graduates. The global talent scheme also → Cancel the work permit for an employee where ap-

66 67 WTS Assignments to Europe | United Kingdom WTS Assignments to Europe | Ukraine

Ukraine

Personal Income Tax al from an employer registered outside of Ukraine Comparisons (foreign company) for the execution of works in → The scope of income subject to taxation depends Ukraine shall be considered a Ukrainian-sourced Taxation of Fringe Benefits on the residency status of an individual and source income subject to taxation in Ukraine, if it is not en- Housing C of income, being Ukrainian-sourced income for visaged otherwise by the double tax treaty (if any). Home Flights C non-residents of Ukraine and worldwide income – In such a case, a non-resident individual is person- Education for children A for residents. ally required to file a tax return to the Ukrainian tax → Income may be exempt on the basis of double tax authorities and for the payment of taxes stated in A Tax exempt | B Taxable | C Tax relief under certain conditions treaties (if any). such a tax return on an annual basis. Upon results → The PIT standard rate is 18%. Yet, in cases directly of a declaration campaign, an individual may refer Tax Rates envisaged by the law the PIT rate may constitute to Ukrainian tax authority and receive a certificate Single, no children 25,4% 0%, 5% or 9% depending on the type of income. confirming the taxable income declared and the Employment Gross Income¹ € 100,000 p.a. Moreover, the taxable income is subject to taxation amount of taxes paid in Ukraine. with military tax at the rate of 1.5%. Married, 2 children 25,4% Employment Gross Income¹ € 100,000 p.a. → The individual is personally liable to file a tax re- Social Security turn and pay taxes in Ukraine on an annual basis in case of receipt of an income from sources other There is some uncertainty as to the accrual and pay- Maximum Effective Personal Income than tax agents (the person liable for withdrawing ment of social security contributions with regard to Tax Rates for the past 3 years taxes and reporting to the tax authorities on in- non-residents employed in Ukraine. Considering the 2019 2020 2021 come accrued and taxes withheld and paid accord- social security contribution is compulsory and gener- 45% 45% 45% ing to Ukrainian law). ally applied to all individuals employed by a Ukrainian → The tax year is the calendar year. employer, under a safe approach, in the case of em-

→ The deadline for filing a tax return personally or ploying a non-resident employee the employer also Social Security Rates electronically is before 1 May of the year follow- pays the social security contribution at the rate of 22%. Employment Gross Income1 € 100,000 p.a. ing the reporting year. If the tax return is filed via Employee 6,5% post, the deadline is offset 5 calendar days before Income payable by an employer is subject to taxa- Employer 12,4% the aforementioned deadline. In certain cases, the tion with social security contributions, however the deadline for tax return filing may be postponed un- monthly base for the social security contribution as- til 31 December based on the taxpayer’s request. sessment shall be within the range of the legislatively Social Security Agreements (SSA) → The deadline for paying taxes stated in the tax re- set minimal and maximal amount. Canada (Not Including Quebec) turn is before 1 August of the year following the EEA (EU, Iceland, Liechtenstein, Norway) reporting year. The minimal monthly assessment base for the social Israel → Employment income, if accrued and paid by a security contributions in 2021 is UAH 6,000 (approxi- Ukrainian employer, (a company or representative mately € 182), and the maximum monthly assessment Japan office of a foreign company) is subject to taxation base – UAH 90,000 (approximately € 2,730). That is, Philippines with PIT (18%), military tax (1.5%) at the expense the minimal amount of social security contributions to Republic of former Yugoslavia of an employee and with a safe approach - with be paid per month is UAH 1,320 (approximately € 40) South Korea social security contribution (22%) at expense of while the maximum amount is UAH 19,800 (approxi- the employer. The employer is liable for withhold- mately € 600). Switzerland ing and paying of taxes on behalf of an employee, Turkey as well as for reporting on the amount of income Employee USA accrued and taxes withheld and paid. Payment of → No special rules are set forth, however, if required, taxes is executed along (simultaneously) with the an employee is entitled to conclude a voluntary 1 Excluding fringe benefits such as housing. payment of salary (remuneration) to an individual. agreement on participation in the system of the → Remuneration received by a non-resident individu- state social insurance and pay social security con-

68 69 WTS Assignments to Europe | Ukraine WTS Assignments to Europe | Ukraine

tributions in the amount as agreed in such an ployee within 90 days from the moment of issu- agreement. ance of the work permit. Comparisons → Provide a copy of the employment contract of the Taxation of Fringe Benefits Employer employee to the regional employment centre → An employer is required to pay social security con- within 10 days from the moment of concluding the Housing B tributions at the rate of 22% of the monthly em- employment contract. Home Flights B ployee’s gross remuneration, however, within a → Notify tax authorities on the employment of the Education for children B range of minimal and maximal assessment base. foreigner before the commencement of employ- A Tax exempt | B Taxable | C Tax relief under certain conditions ment. Immigration During employment Tax Rates Visa → An employer withholds, pays personal income tax, Single, no children 18% → Foreigners who want to enter Ukraine must ob- military tax and social security contributions on Employment Gross Income¹ € 100,000 p.a. tain a visa first. This requirement does not apply to a monthly basis when remuneration is paid to an Married, 2 children 18% foreign nationals who are subject to the visa-free employee, and reports on the employee’s income Employment Gross Income¹ € 100,000 p.a. regime (e.g. citizens of the EU, USA, Canada, UK, accrued and taxes withheld and paid on a quarter- Australia etc.). ly basis. → Foreigners intending to stay in Ukraine for a peri- Maximum Effective Personal Income od longer than 90 days within any 180-days peri- Termination of employment Tax Rates for the past 3 years od should obtain residence permits requiring en- → Cancel the work permit for the employee at the re- 2019 2020 2021 tering Ukraine under D-type visa received at the gional employment centre (if applicable). 18% 18% 18% Ukrainian consulate abroad. → Notify the employee of due payments and execute

the full settlement on the last day of employment. Work permit Social Security Rates Employment Gross Income1 € 100,000 p.a. → In general, all foreigners (except those who have a permanent residence permit and those who fall Employee n/a under special categories provided by the law) must Employer 22% have a work permit to work in Ukraine. → Work permit for a foreigner shall be received by → maximal amount p.a. is €7,200, provided that the employer at the regional employment centre the income is paid in equal monthly instalments2 before the commencement of employment. Social Security Agreements (SSA) Registration Poland → Short-time visits to Ukraine do not require the registration of a place of residence. Latvia → In the case of a long-term visit, a foreigner should Lithuania register their place of residence within 30 calendar Span days of receiving a temporary residence permit. Slovakia Russia Employer’s Obligations 1 Excluding fringe benefits such as housing. 2 Due to legislatively set monthly minimal and maximal amounts Czech Republic Start of employment of assessment base for social security contributions, the minimal Hungray → Receive a work permit for the employee before the amount of social security contributions in 2021 is approximately € Portugal commencement of employment. 40 per month and maximal - approximately € 600 per month. → Conclude the employment contract with the em- 3 Deal with certain aspects of social security.

70 71 WTS Assignments to Europe | Appendix WTS Assignments to Europe | Appendix

Appendix

Taxation of Fringe Benefits Social Security Rates Country Housing Home Flights Education for Children Austria C C C Austria 18,12 % 21.23 %

Belgium C C C Belgium 13,07 % 25 %

Bulgaria B, A (in case of posting) A (in case of posting) B Bulgaria 13,78 % 18,92 %

Croatia C B B Croatia 20 % 16,5 %

Czech Republic C C C Czech Republic 25,2 % 8,8 %

Denmark B C B Denmark approx. 152 € p.a. / approx. 1,330-1,600 € p.a. Estonia C C C Estonia 1,6 % 33,8 % Finland C C C Finland 10,43 % 20,66 % France C C C France 22 % 45 % Germany C C C Germany 19,575 % 19,575 % Hungary C B B Hungary 18,5 % 15,5 % Iceland B B B Iceland 4 % 17,6 % Ireland B B B Ireland 8,85 % 11,05 % Italy C C C Italy 9,19 % 30 % Latvia B B C Latvia 10,5 % 10,5 % Luxembourg C C C Luxembourg 12,2 % 12,19 % Netherlands C C C Netherlands 27,65 % 27,65 % Norway C C C Norway 8,2 % 14,1 % Poland C B B Poland 14,81 % 9,8 % Portugal B B C Portugal 11 % 23,75 % Romania B B B Romania 35 % 2,25 % Russia C B C Russia 3 % Serbia B C B Serbia 8 % 7 % Slovenia B B B Slovenia 22,1 % 16,1 % Spain B C A Spain 6,35 % 31,4 % Sweden C C B Sweden 31,42 % Switzerland C C C Switzerland 6,5 % 6,5 % United Kingdom C C A United Kingdom 6,5 % 12,4% Ukraine B B B Ukraine 22 % 8,8 % 0 10 20 30 40 50 60 70

A Tax exempt | B Taxable | C Tax relief under certain conditions Employee | Employer

72 73 WTS Assignments to Europe | Appendix

Effective Income Tax Rates #workfromanywhere

Austria 24,92 % 21.92 % Your partner for the right 40,02 % Belgium 34 % 10 % Global Mobility Strategy Bulgaria 10 % 23,28 % Croatia 21,24 % 16,7 % Czech Republic 14,4 % 56 % Whether it‘s a traditional short- or long-term assign- Denmark 56 % 20 % ment, a project delegation abroad, a function in a Estonia 20 % 31,5 % matrix organization or a hybrid mobility approach Finland 31,5 % 20 % with a home-office agreement and occasional busi- France 12 % 32 % ness trips – we can develop together with you the Germany 20 % 15 % perfect mobility solution that suits your company’s Hungary 13,67 % 36 % requirements and culture. The Global Expatriate Iceland 36 % 29,64 % Services Team at WTS offers companies and individ- Ireland 26,39 % 36,17 % uals comprehensive advice from one source in all Italy 35,95 % 23 % relevant matters. This includes tax and social security Latvia 23 % 30,61 % law as well as labor and immigration law aspects of Luxembourg 19,49 % 40,63 % international workforce deployment. Our holistic and Netherlands 40,63 % 33 % interdisciplinary approach to legal and tax advice is Norway 33 % 19,65 % our particular strength. Poland 16,32 % 34,54 % Portugal 26,9 % 10 % Find out more: #workfromanywhere Romania 10 % 13 % Russia 13 % 10 % Serbia 10 % 32,64 % Slovenia 32,64 % 31,08 % Spain 30,33 % 37 % Sweden 37 % 23,32 % Switzerland 15,43 % Contact 25,4 % United Kingdom 25,4 % Frank Dissen | Global Head of Expatriate Services 18 % Ukraine 18 % +49 69 1338456-52 | [email protected] 0 10 20 30 40 50 60 70

Single, no children | Married, 2 children www.wts.com/expatriates

74 WTS Assignments to Europe | Contacts WTS Assignments to Europe | Contacts

Contacts

Austria France Netherlands Spain Karl Waser Christophe Denny Jan Boekel Andres Furniet [email protected] [email protected] [email protected] [email protected] +43 (0) 732/69412-74651 + 33 (0) 3 90 22 06 42 +31 (0) 10 217 9172 +34 (0) 971 31 80 30

Belgium Germany Norway Sweden Katrien Bollen Frank Dissen Arne Hjertholm Erik Nilsson [email protected] [email protected] [email protected] [email protected] +32 (0) 2 773 40 00 +49 (0) 69 133456 +47 (0) 22 81 46 46 + 46 (0) 73 52 51 551

Bulgaria Hungary Poland Switzerland Veselina Petkova Réka Kiss Ewelina Buczkowka Marc Gerber [email protected] [email protected] [email protected] [email protected] +359 (0) 2 933 09 81 +36 (0) 1 887 3739 +48 (0) 61 643 45 50 +41 (0) 58 958 58 58

Croatia Iceland Portugal UK Edo Tuk Bernhard Bogason João Riscado Rapoula Richard Watts-Joyce [email protected] [email protected] [email protected] [email protected] + 385 (0) 178 88 682 +35 (0) 482 060 33 +351 (0) 21 311 33 84 +44 (0) 207 100 2126

Czech Republic Ireland Romania Ukraine Alena Krizova Andrew Gelling Florin Ghergel Inna Taptunova [email protected] [email protected] [email protected] [email protected] + 420 (0) 221 111 777 +353 (0) 1 6760675 + 40 (0) 748 026 865 +38 (0) 044 490 71 97

Denmark Italy Russia Malene Overgaard Giovanni Rolle Olga Barbashova [email protected] [email protected] [email protected] + 45 (0) 3 525 25 36 +39 (0) 11 433 83 51 + 7 (499) 678 22 98

Estonia Latvia Serbia Tanel Molok Janis Taukacs Bojan Radojicic [email protected] [email protected] [email protected] + 372 (0) 64 00 926 +371 (0) 67 365 019 +381 (0) 11 396 27 44

Finland Luxembourg Slovenia Taina Lautala Michiel Boeren Mateja Babic [email protected] [email protected] [email protected] +358 (0) 9 2516-6379 +352 (0) 27 47 51 11 + 386 (0) 4 235 09 92

76 77 WTS Assignments to Europe | Imprint

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About WTS Global

With representation in over 100 countries, WTS Global has already grown to a leadership position as a global tax practice offering the full range of tax services and aspires to become the preeminent non-audit tax practice worldwide. Clients of WTS Global include multinational companies, international mid-size companies as well as private clients and family offices. The Private Clients Global Service Line consists of dedicated experts from 60 countries.

The member firms of WTS Global are carefully selected through stringent quality reviews. They are strong local players in their home market who are united by the ambition of building a truly global practice that develops the tax leaders of the future and anticipates the new digital tax world.

WTS Global effectively combines senior tax expertise from different cul- tures and backgrounds and offers world-class skills in advisory, in-house, regulatory and digital, coupled with the ability to think like experienced business people in a constantly changing world.

For more information please see: wts.com

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WTS Global P.O. Box 19201 | 3001 BE Rotterdam Netherlands T +31 (10) 217 91 71 | F +31 (10) 217 91 70 wts.com | [email protected]

The above information is intended to provide general guidance with respect to the subject matter. This general guidance should not be relied on as a basis for undertaking any transaction or business decision, but rather the advice of a qualified tax consultant should be obtained based on a taxpayer’s individual circumstances. Although our articles are carefully reviewed, we accept no responsibility in the event of any inaccuracy or omission. For further information please referto the authors.

78 79 WTS Global Assignments to Europe | 2021