Newsletter | July 25, 2023

Luxembourg introduces new online application process for EU citizens & 3rd country nationals

Overview:

On 10 July 2023, Luxembourg introduced online application processes for EU citizens and third-country nationals who seek to apply for resident permits, cards or certificates.

The changes:

The Luxembourg Ministry of Foreign and European Affairs recently announced that the following individuals (or immigration service providers on their behalf) are now eligible to file applications online on myguichet.lu:

• Eligible EU citizens who seek to apply for permanent residence certificates or replacement of their residence certificates if the original is lost or damaged.
• Eligible third-country nationals (i.e., nationals of countries outside the EU and EEA) who are family members of EU citizens and seek to apply for permanent residence cards, replacement of their residence certificates if the original is lost or damaged, or renewal of their existing residence cards.
• Other eligible third-country nationals who seek to apply for temporary or long-term residence permits, replacement of their residence permits if the original is lost or damaged, or renewal of their existing residence permits.

​​The online application process is currently available in French language, and the Ministry is expected to issue German and English versions in the coming weeks. Impacted individuals can continue to physically submit the applications above to the immigration authorities.

How does this impact Employers?:

The new online application processes will benefit employers by streamlining the immigration processes for their employees.

Source & credit: EY

Self-employment, is it Compliant and Viable?

In the UK, from 6 April 2014, the agency legislation in Chapter 7 of Pt 2 of ITEPA 2003 and the PAYE legislation in Chapter 3 of Pt 11 ITEPA 2003 has been amended to determine who should operate PAYE where more than one party is involved in the provision of a worker’s services.

For income tax purposes, where the conditions in s44(1) ITEPA 2003 apply, the worker is treated as holding employment with the agency. The remuneration they receive as a consequence of entering into the arrangements is treated for income tax purposes as earnings from that employment. In these circumstances, s688(1) and (1A) of ITEPA 2003 prescribe that the agency is the employer who must deduct income tax, operate PAYE, and remit the payment to HMRC via RTI.

All this effectively bars a recruitment agency from treating workers as sole traders, but this is not the case in other countries. Here is a summary of self-employment in four popular countries for contracting on the matter:

France

Self-employment is possible in France. There are a number of different ways to become self-employed in France, including:

• Registering as a micro-entrepreneur (auto-entrepreneur): This is the most common way to become self-employed in France. It is a simplified regime that offers several advantages, such as simplified tax and accounting requirements, a VAT exemption, and reduced social charges.
• Setting up a limited company is another way to become self-employed in France. It offers more flexibility than the micro-entrepreneur regime but also has more responsibilities.
• Working as a freelancer: This term often describes self-employed workers in the creative industries. Freelancers can work under the micro-entrepreneur regime or set up a limited company.

If you are considering self-employment in France, there are a number of things you need to do, including:

• Check your eligibility: You must meet specific criteria to be eligible to become self-employed in France. For example, you must be a resident of France, and you must have a valid work permit.
• Choose your business structure: You must decide how to structure your business. The most common options are the micro-entrepreneur regime and the limited company.
• Register your business: Register your business with the relevant authorities. This process can be different depending on the business structure you choose.
• Obtain a business permit: If you plan to operate a business from a physical location, you must obtain a business permit from the local authorities.
• Pay taxes and social charges: Self-employed workers in France are responsible for paying taxes and social charges. The amount you pay will depend on your income and your business structure.

The Netherlands

Self-employment is possible in the Netherlands. It is a popular option for many people, as it offers much flexibility and freedom. There are several different ways to become self-employed in the Netherlands, including:

• Registering as a sole proprietorship (eenmanszaak): This is the most common way to become self-employed in the Netherlands. It is a straightforward process, and it offers a lot of flexibility.
• Setting up a limited company (besloten vennootschap, BV): This is another way to become self-employed in the Netherlands. It offers more protection than a sole proprietorship but comes with more responsibilities.
• Working as a freelancer: This term describes self-employed workers in the creative industries. Freelancers can work under the sole proprietorship regime or set up a limited company.

If you are considering self-employment in the Netherlands, there are several things you need to do, including:

• Check your eligibility: You must meet specific criteria to be eligible to become self-employed in the Netherlands. For example, you must be a resident of the Netherlands, and you must have a valid work permit.
• Choose your business structure: You must decide how you want to structure your business. The most common options are the sole proprietorship and the limited company.
• Register your business: You must register with the Chamber of Commerce (Kamer van Koophandel). This process is relatively simple and can be done online.
• Obtain a business permit: If you plan to operate a business from a physical location, you will need to obtain a business permit from the local authorities.
• Pay taxes and social charges: Self-employed workers in the Netherlands are responsible for paying taxes and social charges. The amount you pay will depend on your income and your business structure.

Germany

Self-employment is possible in Germany. There are a number of different ways to become self-employed in Germany, including:

• Registering as a freelancer (Freiberufler): This is the most common way to become self-employed in Germany. It is a simplified regime that offers advantages, such as simplified tax and accounting requirements, a VAT exemption, and reduced social charges.
• Setting up a limited company (Gesellschaft mit beschränkter Haftung, GmbH): This is another way to become self-employed in Germany. It offers more flexibility than the freelancer regime but also has more responsibilities.
• Working as a contractor: This term is often used to describe self-employed workers in the construction industry. Contractors can work under the freelancer regime or set up a limited company.

If you are considering self-employment in Germany, there are some things you need to do, including:

• Check your eligibility: You must meet specific criteria to be eligible to become self-employed in Germany. For example, you must be a resident of Germany, and you must have a valid work permit.
• Choose your business structure: You must decide how you want to structure your business. The most common options are the freelancer regime and the limited company.
• Register your business: Register your business with the relevant authorities. This process can be different depending on the business structure you choose.
• Obtain a business permit: If you plan to operate a business from a physical location, you must obtain a business permit from the local authorities.
• Pay taxes and social charges: Self-employed workers in Germany are responsible for paying taxes and social charges. The amount you pay will depend on your income and your business structure.

Italy

Self-employment is possible in Italy. There are several different ways to become self-employed in Italy, including:

• Registering as a freelancer (libero professionista): This is the most common way to become self-employed in Italy. It is a simplified regime that offers several advantages, such as simplified tax and accounting requirements, a VAT exemption, and reduced social charges.
• Setting up a limited company (società a responsabilità limitata, SRL): This is another way to become self-employed in Italy. It offers more flexibility than the freelancer regime, but it also comes with more responsibilities.
• Working as a contractor (coordinatore o collaboratore coordinato e continuativo): This term is often used to describe self-employed workers in the construction industry. Contractors can work under the freelancer regime or set up a limited company.

If you are considering self-employment in Italy, there are some things you need to do, including:

• Check your eligibility: You must meet specific criteria to be eligible to become self-employed in Italy. For example, you must be a resident of Italy, and you must have a valid work permit.
• Choose your business structure: You must decide how you want to structure your business. The most common options are the freelancer regime and the limited company.
• Register your business: Register your business with the relevant authorities. This process can be different depending on the business structure you choose.
• Obtain a business permit: If you plan to operate a business from a physical location, you will need to obtain a business permit from the local authorities.
• Pay taxes and social charges: Self-employed workers in Italy are responsible for paying taxes and social charges. The amount you pay will depend on your income and your business structure.

Generally

Here are some of the benefits of self-employment in these countries:

• Flexibility: Self-employed workers have a lot of flexibility regarding their work hours and location. They can work from home or in a co-working space, and they can set their hours.
• Freedom: Self-employed workers are free to choose their projects and clients. They can work on projects they are passionate about and build their own business in their own way.
• Tax benefits: Self-employed workers in Italy can benefit from several tax breaks, including a reduced VAT rate.

However, there are also some challenges associated with self-employment in Italy, including:

• Risk: Self-employed workers are responsible for their income and expenses. If they do not generate enough revenue, they may be unable to make ends meet.
• Administration: Self-employed workers need to be organized and efficient in their administration. They need to keep track of their income and expenses and file their taxes correctly.
• Loneliness: Self-employed workers may feel lonely or isolated at times. They may not have the same level of social interaction as employees, and they may not have anyone to bounce ideas off of.

Summary

Overall, self-employment can be a rewarding experience in these countries. However, it is crucial to be aware of the challenges and to be prepared to work hard. If you are considering self-employment, it is essential to research and talk to experts in the field who can guide you competently.

Germany amendments to the Skilled Worker immigration regulations

Overview:

On 7 July 2023, the German Federal Council (“Bundesrat”) approved a draft law that was previously approved by the Federal Parliament (“Bundestag”) and amends the Skilled Worker immigration schemes, in an effort to address the shortage of skilled workers in Germany.

Some of the amendments will go into effect on 18 November 2023, with others between seven and ten months from the law’s official publication date.

The amendments focus on providing easier access to the German labour market to third-country nationals with relevant skills and/or qualifications and include reforms to the rules for Blue Cards.

EU Blue Card – what will change?:

The proposed regulations will implement the new EU Blue Card Directive 2021/1883 (“the EU Directive”) and introduce the following changes:

• A lower minimum salary threshold for standard occupations of 50% (down from 66.6% currently) related to the annual contribution assessment ceiling in the general pension insurance scheme.
• A lower minimum salary threshold for shortage occupations of 45.3% percent (down from 52% currently).
• The salary threshold for shortage occupations will also apply to young professionals in standard occupations for the first three years after they obtain their academic degree. Amendments to the Skilled Worker immigration regulations to go into effect starting in November 2023.
• The shortage occupation sectors will be expanded.
• Individuals will be eligible to apply for a Blue Card if they have an employment contract that is valid for at least six months (down from 12 months currently).
• IT specialists who do not have a university degree but do have at least three years of relevant professional experience in the preceding seven years will become eligible to apply for a Blue Card.
• Blue Cards will be restricted to employers or specific job roles only for twelve months (down from 24 months currently). After the Blue Card holder notifies the local foreigners’ office about a planned change of employer/job role, the authorities can put the planned change on hold for up to 30 calendar days. They may only reject the proposed change within this 30-day period. Otherwise, the Blue Card holder may start their new job.

The amendments passed by the German government do not include the provision included in the EU Directive, whereby individuals with at least five years of relevant professional experience would be eligible to obtain a Blue Card and work in any qualified occupation in Germany.

Further to the new amendments, individuals who hold a Blue Card issued by another EU Member State will be able to move to Germany more easily and obtain a German Blue Card:

• Long-term mobility: After holding a Blue Card issued by another EU Member State for at least twelve months (down from 18 months currently) or six months in a specific situation (i.e., if they previously held at least two Blue Cards issued by two EU Member States), qualifying individuals will be able to apply for a German Blue Card without filing a consular visa application in their country of residence.
• Degree recognition: Individuals who have held a Blue Card issued by another EU Member State for at least 24 months based on an acknowledged degree will have their degree automatically acknowledged, and they will not be subject to Germany’s specific rules regarding degree recognition.
• Adjudication time: Once the German Blue Card application is submitted with all required documents, the German authorities will be required to adjudicate the application within 30 calendar days (down from several months in some cases). Under exceptional circumstances (e.g., in complex cases), this period may be prolonged for another 30 days. In the event no decision is made within the first 30 days from the submission of the application, the applicant will be permitted to start working in Germany.

EU Blue Card – What won’t change?:

Several rules governing the issuance of Blue Cards will remain unchanged, including:

• ​​Blue Card applications will not be subject to labour market checks/tests or quotas.
• ​​​​​Blue Card holders will still be required to hold a position that is “adequate” in relation to their degree (as determined by the German authorities).
• In general, Blue Card holders will still be required to have a domestic employment relationship and make all social security payments in Germany (with only limited exceptions).

Additional guidance:

Professional Experience

Currently, residence permits with work authorisation based solely on work experience and without being a “specialist”, “Leading Executive” or similar designation are mainly limited to the IT sector. Pursuant to the new amendments:

• Residence permits with work authorisation based on relevant professional experience will be available to individuals in all professions (and not just IT).
• Applicants will require at least two years of relevant professional experience in the five years preceding the filing of their application (down from three years within the preceding seven for IT professionals, currently).
• Applicants in professions other than IT will be required to have completed at least two years of vocational education or obtained a university degree, and this must be acknowledged in the issuing country (in both situations).
• German language skills will no longer be required.
• A lower minimum salary threshold (of 45% of the contribution assessment ceiling in the general pension insurance scheme) will apply (down from 60% currently).

Opportunity Card (“Chancenkarte”)

The current visa scheme for job seekers who hold degrees issued outside of Germany (now called the Opportunity Card scheme) will be extended to a broader pool of applicants. It will now include individuals who have not completed vocational education or obtained university degrees acknowledged by the German authorities. These individuals will be able to apply under an alternative, points-based scheme. Individuals applying under the points-based alternative will be required to:

• Have completed at least two years of vocational education or obtained a university degree (the vocational education or university degree must be acknowledged in the issuing country), and
• Possess language skills of at least A2 (for German) or B2 (for English).

Points can be obtained based on the following criteria:

• Age
• Professional qualifications
• Language skills (i.e., German B1 or B2, or English C1)
• Work experience (i.e., at least five years in the preceding seven, or at least two years in the preceding five after acquiring the professional qualification).

Individuals who enter under the Opportunity Card scheme will be allowed to work for up to twenty hours per week (currently, job seekers without German degrees are not permitted to work in Germany). In addition, they will be able to work for trial periods of up to two weeks when offered jobs in relevant positions (up from 10 hours per week currently). These individuals will be allowed to remain under this scheme for up to one year (up from six months currently), without the possibility of extending their stay under this scheme (although it may be possible to remain in Germany by applying under another immigration category).

Other Categories

The new amendments also introduce the following changes:

• Blue Card holders with German A1 language skills will be eligible for a permanent permit after 27 months (down from 33 currently), provided they meet other applicable requirements.
• Individuals in Germany under other Skilled Worker schemes will be eligible to obtain a permanent permit after three years (down from four years currently).
• Spouses of Blue Card holders will be eligible to obtain a permanent permit after three years (down from five years currently) under certain circumstances.
• Students enrolled at German universities will be allowed to work in employed positions for up to 140 full days or 280 half days per calendar year (up from 120 full days or 240 half days currently).
• The immigration scheme for Balkan countries will become a permanent scheme (i.e., the end date of 31 December 2023 will be eliminated) and its annual quota will increase to 50,000 applicants (up from 25,000 currently).
• Parents of qualified employees and their spouses will now be eligible to obtain dependent permits (currently, this is only possible under extraordinary circumstances, including for medical reasons). Parents of spouses of qualified employees will be eligible to obtain dependent permits only if the spouse plans to stay permanently in Germany.
• Procedures will be simplified for applicants living outside Germany who have relevant prior long-term stays in Germany. The current requirement for an approval from the local foreigners’ office will be abolished for most scenarios.
• Immediate family members (i.e., spouse and minor children) of skilled workers and other qualified employees will no longer be required to submit proof of sufficient living space as part of their applications.

How does this impact Employers?:

Once the law goes into effect, employers are expected to benefit from a broader range of options for sponsoring third-country nationals to obtain German work authorisation.

The new rules governing Blue Cards and the permanent nature of the immigration scheme for Balkan countries will go into effect on 18 November 2023.

​​​​​​​Depending on the date of the law’s publication, other amendments will become effective seven months from the date of publication (e.g., new lead times for permanent permits) or 10 months afterwards (e.g., opportunity card; increase in the Balkan scheme annual quota).

Source & credit: EY

Cyprus Tax News: Amendments to Article 8(23A) of the Income Tax Law – 50% Exemption

Overview:

We would like to inform you that on 30th June 2023 an amending law was published in the Gazette with respect to the 50% exemption of the remuneration from employment, as provided in Article 8(23A) of the Income Tax Law.

What are the amendments?

• The non-tax residency requirement of the individual has been extended from 10 consecutive years to at least 15 consecutive years immediately before the commencement of the individual’s first employment in Cyprus.
• The provision now applies to remuneration from employment in Cyprus, whereas before it was limited only to the remuneration from first employment in Cyprus. This amendment broadens the scope of the provision and allows individuals to qualify for the exemption even if they change employer within the period of the 17 years. Thus, the provision would also apply to any subsequent employments within the period of the 17 years.
• The exemption applies for a period of 17 tax years or until the provisions of this Article are abolished, whichever is the earlier, starting from the tax year of commencement of the first employment of the individual in Cyprus.
• The amending law clarifies that the “second year” referred to in the below paragraph, is the year which follows the date of the first year of employment in Cyprus:
• The exemption is granted in any year in which the remuneration from employment in Cyprus exceeds €55,000, regardless of whether in any tax year the remuneration is reduced below €55,000, provided that in the first or second year of employment in Cyprus the remuneration exceeded €55,000 p.a. and the Commissioner is satisfied that the fluctuation in the annual remuneration is not an arrangement put in place with the purpose of obtaining the exemption.
• The exemption is granted in the tax year of commencement of first employment, provided that the remuneration from employment in Cyprus during the first 12 months exceeds €55,000​​​​​​​.
• ​​​The provision regarding the tax year of termination, as shown below in italics, is deleted.
• “The exemption is granted during the tax year of termination of employment in Cyprus or at the end of the 17 years period, provided that the remuneration from employment in Cyprus during the last 12 months of employment in Cyprus exceeds €55,000”.
• ​​​​​​​An individual is considered to have “Commencement of first employment in Cyprus” when the individual for the first time, after the period of 15 consecutive tax years during which he/she was not performing any salaried services in Cyprus, commences the exercise of employment in Cyprus with a Cyprus or a non-Cyprus employer.

It is noted that the previous reference to occasional full or part-time employment in Cyprus, in the above paragraph, was deleted.

• Individuals who were previously eligible for the 50% exemption of their remuneration from their first employment, based on the old provisions of Article 8(23A), will continue to benefit from the exemption provided that all the conditions, as they were in effect before the date of the publication of the Amending Law of 2023, are met. ​​​​​​​

Further, based on the amendments voted, regardless of the year of commencement of first employment in Cyprus, the provisions of Article 8(23A) of the ITL apply from the 1st of January 2022 and up to the completion of the period of 17 consecutive tax years, or until the abolishment of the current Article, whichever is the earlier, starting from the tax year of the commencement of first employment in Cyprus of an individual who has continuous employment in Cyprus from the year of commencement of his first employment up to and including the tax year 2021 and for a period of at least 15 consecutive years immediately before the commencement of his first employment in Cyprus was considered as a non-Cyprus tax resident and:

i. He/she was eligible for the 50% exemption based on Article 8(23) of the ITL; or

ii. Whose first employment commenced in Cyprus between the tax years 2016-2021, with emoluments exceeding €55,000 per annum; or

iii. Whose first employment in Cyprus between the tax years 2016-2021, with emoluments that did not exceed €55,000 per annum and within 6 months period from the date that the previous amendments were published in the Gazette, i.e. as from 26/07/2022, the individual’s remuneration exceeded €55,000 per annum.

THE AMENDING LAW HAS RETROSPECTIVE EFFECT AS FROM 1st JANUARY 2022

We expect that the Cyprus Tax Authorities will provide further guidance and clarifications on the practical application of the above exemption.

Source & credit: Deloitte Tax Alert

​​​​​​​Unlocking Global Opportunities: Sponsoring Work Permits

Access Financial has many group and associated companies for two main reasons: to sponsor work visas for our clients and offer them local billing, which can be a boon in mitigating withholding tax problems. Sponsorship is a defining difference between Access Financial and its direct competitors. Within Access Financial, we have an Immigration Department with dedicated staff that can help with employed and, in some cases, self-employed work visas in the following countries:

• Belgium
• China
• Cyprus
• Denmark
• Germany
• Hong Kong
• India
• Japan
• Luxembourg
• Malaysia
• Netherlands
• Norway
• Sweden
• United Arab Emirates
• Kenya
• Nigeria
• Ghana 

As our Immigration Department is not a separate profit centre but is there to support our usual business,  our costs are low and, if you are willing to wait while the wheels of government departments process our applications, you can expect a high rate of success, in the shortest possible time at the most reasonable of cost.

Japan announces Specified Skilled Worker route for foreign workers in 9 new industries

Overview:

​​​​In June 2023, the Japanese Immigration Services Agency announced that the Cabinet approved the expansion of the Specified Skilled Worker (ii) (SSW-2) route to foreign nationals working in nine additional industries.

Background – Specified Skilled Workers:

Japan introduced the SSW (1 and 2) status of residence in 2019 for foreign nationals who possess expertise and skill in 12 industry fields with a significant shortage of workers.

Holders of SSW-1 status can work in Japan for a total of up to five years and receive access to a dedicated support system that provides assistance with settling in Japan (e.g., finding accommodation, opening a bank account), but cannot bring in dependents.

Eligible individuals working in the construction or shipbuilding and ship machinery industries can apply for SSW-2 status. SSW-2 status holders can work in Japan for an indefinite period provided they continue to be employed in an eligible industry, and they can bring in qualifying dependents as well as apply for permanent residence.

Changes:

On 9 June 2023, the Japanese Cabinet decided to expand the SSW-2 status to nine additional industries:

• building cleaning management.
• industrial machinery, electric, electronics, and information.
• automobile repair and maintenance.
• aviation.
• accommodation.
• agriculture.
• fishery and aquaculture.
• food and beverage manufacturing; and
• food service.

NB – ​​​​​​​It is not yet known when SSW-2 applications will open for individuals working in these industries. The immigration authorities are expected to release further details in the upcoming months.

How does this impact Employers?:

Japanese employers that hire impacted individuals may benefit from enhanced access to skilled foreign talent and reduced administrative requirements.

Source & credit: EY