While nothing is certain at present, says Anne-Marie Welch of tax specialists RSM, there are a number of tax issues to consider for UK employers who are either sending employees on international assignments or hosting incoming secondees.

Income tax

On exit from the EU, the government may no longer be required to provide the UK personal allowance and certain other reliefs to other EU nationals while working here and these may therefore be restricted to UK nationals and residents.

This would mean that, for employers, assignments would be more expensive if an individual is tax equalised, simply because the tax costs will increase.

While this is not a huge issue for employers, individuals can claim gift aid relief when contributing to a UK or EU charity. This could be restricted to UK charitable contributions in the future, although contributions to other European Economic Area (EEA)-based charities (eg in Norway and Iceland) currently qualify, so it could be possible that the UK implements a similar position to Norway for the rest of the EU and gift aid would therefore remain unaffected.

Social security

For any rest-of-world countries, nothing will change. For any EU countries, nothing will change immediately and A1 and multistate A1 certificates will continue to be valid and continue to be available for new assignments until a complete exit happens.

The A1 certificate exempts both the employer and employee from any obligation to withhold and pay social security in the country that they are posted to (for a maximum period of five years) on the basis that they remain attached to the social security system in their home country.

Internationally mobile contractors regularly use a limited company based in their home country as their preferred contracting vehicle regardless of where the duties of the contract are based.

According to Crescenzi Consulting, if they are moving between countries within the EEA, there will always be a liability for social security for them in the country in which they are going to work. The only exception is if they can obtain a Certificate of Detachment in their home country (known in The EU as an A1 certificate).

Once a complete exit has been negotiated, it is unknown what agreements will replace the current agreements. It is possible that a ‘Norway style’ approach could be taken, whereby free movement of people has to be accepted by the UK as part of gaining access to the single market.

The other option would be a complete exit from the EEA system and this option would involve the UK renegotiating the social security agreements with each country individually. This may mean that, at the point of exit, existing A1 certificates may have to be reapplied for under any new agreement.

The impact of a complete exit from the EEA social security system would be likely to impact the ability of people to access benefits that they may have enjoyed previously. For example, currently contributions made in another EEA member state count towards the years’ worth of contributions required to qualify for a UK state pension, however this may change.

These changes may lead to employers having to consider the wording of current policies and assignment letters. At present, employees have the opportunity to remain in their home country social security system while on assignment and be exempt from local social security contributions, but this may not be the case in the future.