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Newsletter: May 21, 2024

Welcome to the latest edition of our newsletter! Our goal is to ensure that you are well informed and equipped with the latest information.

Read on to stay ahead, stay compliant, and set the course for success.

Germany is Exploring Tax Breaks to Get its Citizens to Work Longer Hours

Working hours in Europe have been declining ever since the pandemic. Now, Germany has emerged as having the lowest average working hours of any developed economy. In response, the government is considering welfare reforms and tax breaks to encourage Germans to work longer hours. This comes close on the heels of the UK and Netherlands, which are already working on reversing the significant drop in working hours.

Lower working hours have aggravated the already worrying economic performance and competitiveness, along with the shrinking workforce and aging population across Europe. According to estimates released by the European Central Bank at the end of 2023, employees in the Eurozone had worked five hours less on average than they did pre-pandemic. This equates to a loss of 2 million full-time employees in a year.

The latest OECD data reveals that average annual work hours in Germany have declined 30% over the past 50 years, while the proclivity for more leisure time has grown. There is little incentive for lower-paid workers in Germany to work more, since they tend to lose a large part of the additional income to tax while access to benefits declines.

Plus, a large percentage of German women are employed part-time, with the German tax system proving a deterrent to longer working hours. With part-time employment, people can earn up to €538 a month tax-free, while “tax splitting” allows married couples to be jointly taxed.

Following months of debate, the coalition government in Germany is working on a “growth plan,” which is likely to be unveiled in June. The plan aims to make it more rewarding to work longer hours through various measures, such as tax cuts on overtime and changes to the unemployment benefits under the Bürgergeld.

The largest economy in Europe witnessed GDP growth of 0.2% in the first quarter of 2024, leading analysts to speculate that Germany could remain one of the weakest advanced economies in the world with annual GDP growth below 1% for 2024. This is another reason for the German government to focus on ways to “increase economic dynamism” in the country.

The EU’s New Multiple Visa Scheme is Making it Easier for Indians to Travel to Europe

On April 18, 2024, the European Commission approved a new visa scheme, meant specifically for Indian citizens residing in India applying for a Schengen visa. Known as the “cascade” scheme, this is a multiple-entry visa available to frequent Indian travellers with an extended validity of up to 5 years.

The new multiple-entry visa demonstrates the EU’s commitment to strengthening relations with India and encouraging business interactions and tourism between the two regions. This decision comes against the backdrop of the EU-India Common Agenda on Migration and Mobility, which seeks cooperation between the EU and India on migration policies, while easing “people-to-people contacts.”

To qualify for a two-year visa, Indian citizens will need to have obtained and lawfully used 2 visas within the last 3 years. After this, they can apply for a five-year visa, if their passport has sufficient validity. With these visas, holders will be granted travel rights equivalent to visa-free travellers, such as the ability to enter and exit Schengen countries multiple times without needing separate visas.

The 29 European countries (of which 25 are EU member states) are part of this visa scheme, including Austria, Belgium, Bulgaria, Croatia, Czech Republic, Denmark, Estonia, France, Finland, Greece, Germany, Hungary, Iceland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovenia, Slovakia, Spain, Sweden and Switzerland.

However, this cascade visa does not include the right to work. Indian citizens looking to work in the continent will need to get a separate work permit or Blue Card, if they qualify. This will allow them to live and work anywhere in the EU, except for Ireland and Denmark. Of course, individual EU nations have their own work permit schemes, which are focused on making it easier for skilled workers in specific domains to seek employment in the country.

Belgium: Changes to Immigration Policy for Foreign National Workers in the Flanders Region

From May 1, 2024, significant changes have been implemented in the immigration policy in the Flanders region associated with foreign workers. The revised policy gives priority to Belgian and European employees, while foreign nationals will be allowed to enter the Belgian workforce only after careful consideration of the national and regional labour markets.

One of the key aspects of the revised policy is that work permit exemptions have been broadened to allow entry into Belgium under a business visitor status for various business activities, including negotiation of business agreements, participation in conferences and training sessions, and tourism-related activities. These activities will not require a work permit. However, employers need to monitor the duration of their employees’ stay in Belgium, ensuring that it does not exceed 90 days within any 180-day period.

Employers who wish to hire foreign nationals for medium-skilled shortage occupations now need to provide documentation of the applicant’s qualifications, skills and experience, to be assessed by the Regional Employment Ministry (REM).

In addition, vacancy publication rules have been made more stringent. Employers now need to publish the vacancy for a minimum “uninterrupted period” of 9 weeks during the 4 months preceding the job application. The vacancy should also be published on the European Jobs Network (EURES) and the Flemish Employment Services (VDAB).

The Belgian government will not only accept labour market test applications for professions that are part of the VDAB list of shortage occupations. Renewal of employment will be allowed outside this list for the same job with the same employer.

Changes have also been made to the requirements for EU Blue Card applications, especially in the IT sector. Plus, Blue Card holders can change employers by informing the REM within 12 months of employment change and without the need for additional immigration formalities after 12 months of holding the Blue Card.

The revamped immigration policy aims to uphold the government’s concentric model of labour migration.

Digital Nomad Visas Offered by Italy, Japan

In April 2024, Italy and Japan launched their own digital nomad visas, joining a growing list of countries that make it possible for foreign nationals to live temporarily and work remotely. With the digital nomad visa, employees are spared the hassle of going through the tedious work permit and visa process.

Japan’s digital nomad visa came into force on April 1, allowing foreign nationals to live and work remotely from Japan for up to 6 months. However, this visa is not renewable. Citizens of 49 countries can apply for this visa, including the US, UK, Canada, EU, some non-EU European countries, Australia, Singapore and South Korea.

Eligibility criteria for this visa include:

  • Annual salary of ¥10 million (approx. $66,850/€61,550).
  • Citizenship of a country with a signed tax treaty with Japan (to avoid double taxation).
  • Citizenship of a country exempt from short-term visas to visit Japan.
  • Employed with or providing professional services to companies or individuals outside Japan via remote work.
  • Private health insurance that covers treatment and repatriation in case of death, injury, or illness in Japan.

If spouses or family members wish to join the digital nomad visa holder, they must be:

  • Nationals of Japan visa-exempt countries.
  • Fully dependent on the primary applicant
  • Have private health insurance similar to the digital nomad visa.

Italy’s digital nomad visa came into effect on April 4, 2024, and allows the visa holder to live and work remotely in the country for up to one year. There is also an option to renew the visa. The eligibility criteria include:

  • Annual income that is three times the minimum level required to be exempt from participation in healthcare costs. This equates to approximately €28,000 or about $30,400 annually.
  • Health insurance coverage for the duration of the stay, along with proof of accommodation and a track record of at least 6 months as a remote worker or digital nomad.
  • Employed in remote work that requires “high quality work activity through the use of technological tools.”
  • A minimum of a 3-year bachelor’s degree or higher education qualification with 6 months’ work experience.
  • In the absence of a degree, evidence of 5 years of work experience.
  • Spouses and family members require government approval to join the applicant.

Make sure you learn more about the tax and benefit implications and local employment laws, apart from learning about the culture of the nation before applying for the visa.

EU Platform Work Directive Approved

The EU’s platform work directive, first proposed on December 9, 2021, was finally passed on April 24, 2024. EU member states now have a deadline of two years to enforce the directive locally.

The EU defines platform work as “a form of employment in which organisations or individuals use an online platform to access other organisations or individuals to solve specific problems or to provide specific services in exchange for payment.” Gig workers such as app-based freelancers, rideshare drivers, and those who find work via digital platforms fall into this category of platform workers.

The Platform Work Directive addresses the employment status of such workers through the use of transparent algorithms for human resource management and automated monitoring systems. Platform workers and their representatives have the right to contest any of these automated decisions. The directive lays down guidelines for the working conditions of platform workers, as well as parametres to determine their employment status.

KPMG estimates that 28 million people work via digital labour platforms in the EU, with over 5 million workers in this “platform economy” being wrongly categorised as “self-employed.” With the new directive, an individual is presumed to be employed if they work through a digital platform. The burden of proof that the individual does not share an employment relationship falls on the concerned platform.

The directive also stipulates that a platform worker cannot be dismissed or terminated based on an automated decision-making system or algorithm. Digital labour platforms now need to ensure human oversight on all decisions that impact platform workers.

Finally, the new directive sets out rules to better protect platform workers’ data. Digital labour platforms are now prohibited from processing certain types of personal information, such as an individual’s psychological or emotional state, personal beliefs and biometric data.

This is a significant step forward by the EU to protect gig workers.