Pharma and Life Science Tax ProgrammeWednesday 27th January 2021
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Colin ForbesPartner Tax & Legal
Welcome
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Pharma and Life Science Tax Programme
Event Date Topics
Wed 13th January Employment tax issues including revenue audits, health-checks & reward
Today Global mobility matters including COVID-19 arrangements, Brexit & immigration
Wed, 10 FebruaryShare remuneration, corporate tax, transfer pricing, VAT & customs
Wed, 24 February Intellectual property, R&D tax credits & government grants
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Benefit-In-Kind – Local Concessions Update
Benefit-in-KindPosition from March 2020 to 31 December 2020
Position in 2021
Reimbursement of holiday/flight cancellation costs for employees returning to Ireland
Tax exemptTaxable
Reimbursement of taxi fares for transporting employees to/from work due to health and safety concerns
Tax exemptTax exempt (until further notice)
Costs of COVID-19 Testing at a workplace/Employer provided COVID-19 test kits
Tax exemptTax exempt (until further notice)
Costs of Flu vaccination at workplace/reimbursement to employee/direct payment to registered practitioner
Tax exempt Tax exempt (until further notice)
Employer provided equipmentTax exempt Tax exempt (until further notice)
Temporary Employer Provided Accommodation to mitigate potential COVID-19 transmission risks
Tax exempt Tax exempt (until further notice)
Small Benefit Exemption
More than one voucher/other tangible item (e.g. hamper) allowed in order to recognise exceptional efforts of frontline or other key staff up to a total of €500 per annum (Note - Revenue wording unclear - position being confirmed with Revenue)
Two vouchers /other tangible item (e.g. hamper) allowed in order to recognise exceptional efforts of frontline or other key staff up to a total of €500 per annum
Employer Provided VehiclesConcessions apply – see below for detail
Concessions apply (until further notice) – see below for detail
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Colin ForbesPartner, Tax & Legal
+353 1 417 2993
Today’s speakers:
Breda MullaneyDirector, Tax & Legal
+353 1 417 3622
Karen SheehyManager, Tax & Legal
+353 1 417 2758
Roisin FitzpatrickPartner, Tax & Legal
+353 1 417 3186
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AgendaWelcome and Introductions
Thank you and Closing
Mobility Tax Matters
Immigration Issues
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Breda Mullaney Director, Tax & Legal
Karen SheehyManager, Tax & Legal
Global Mobility
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Mobility Tax Issues – General
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Assignments & Tax Equalisation
• Employee stays on home country payroll and remains in tax neutral position
• Can be very costly especially where host country taxes are higher tax rates
• Company generally pick up home/host country taxes on any assignment related benefits/allowance e.g. housing, travel expenses.
Special Assignee Relief Programme
A qualifying employee may make a claim for 30% of their total compensation (including bonuses, BIKs and share remuneration) to be excluded from PAYE
−The exemption does not apply to USC or PRSI
−Employers can also provide the following tax free:
◦ one return trip for the employee and family to their home country
◦ school fees of up to €5,000 per annum per child
Travel & Subsistence
• Tax-free subsistence may be paid/reimbursed for first 12 months of a temporary assignment (less than 24 months)
• Includes tax free housing & utilities for 12 months
• One home leave trip per year and journeys at the commencement and end of the assignment can also be provided tax free
Removal & Relocation
You can repay your employee’s expenses for removal and relocation tax-free, if it costs your employee money to:
• move to a new employment location
• take up their employment
Examples include removal of furniture and storage charges
Foreign Earnings Deduction (FED)
Main outbound tax relief FED – it is available for working abroad in specific countries (e.g. China, India, Brazil)
Relief is based on the volume of workdays overseas
Mobility Tax Issues - General
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Short Term Business Visitors
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Global Mobility – Inbounds to IrelandSome good news!
New Revenue guidance issued on 24 June
Brings the position back broadly in line with the original guidance from 2007
Employees coming to Ireland from
DTA countries with more than 60
workdays but less than 183 total
days in a year – apply for a
dispensation from requirement to
withhold PAYE
Relevant DTA conditions must be met
Employees coming to Ireland from DTA countries with 60 workdays or less in a year – no PAYE obligations
No longer need to consider multi-year tests, or purpose of business visit to Ireland
Employees from non-DTA countries – 30 workday threshold
Simplified PAYE Dispensation
process however no change in
application timeframe – must be
submitted within 30 days of arrival
in the State
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Revenue have specified that the 60 workday threshold for DTA countries will only apply where the conditions outlined in Article 15(2) of the relevant DTA are satisfied
The guidance outlines that the conditions will not be met where –
◦ The foreign employer has a PE in Ireland, and the costs of the business trip or short-term assignment are borne by the PE, Article 15(2)(c) cannot be met.
−Revenue have clarified that a management charge (with mark-up) is not considered a recharge.
◦ “an Irish branch or subsidiary partially bears the costs of the short-term business visit or the short-term assignment (e.g. travel and subsistence expenses)”.
Revised Guidance 2020 - Changes
Global Mobility – Inbound Rules regarding Shadow Payroll Obligations
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No PE Payroll Position
DTA No DTA
Up to 30 workdays in the tax year No PAYE obligation No PAYE obligation
More than 30 workdays and up to 60 workdays in the tax year
Review whether directrecharge of costs to an Irish subsidiary
PAYE obligation
More than 60 workdays but less than 183 days in the tax year/rolling 12 month period*
PAYE obligation arises in the absence of a PAYE Dispensation - review whether direct
recharge of costs to an Irish subsidiary
PAYE obligation
183 days or more in the tax year/rolling 12 month period*
PAYE obligation PAYE obligation
* Depends on the wording in the DTA in question
Inbound Shadow Payroll RulesRevised Guidance 2020
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PE – Recharge of Costs Payroll Position
DTA No DTA
Up to 30 workdays in the tax year No PAYE obligation No PAYE obligation
More than 30 workdays in the tax year PAYE obligation PAYE obligation
Inbound Shadow Payroll Rules Revised Guidance 2020
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PE – No Recharge of Costs Payroll Position
DTA No DTA
Up to 30 workdays in the tax year No PAYE obligation No PAYE obligation
More than 30 workdays and up to 60 workdays in the tax year
No PAYE obligation PAYE obligation
More than 60 workdays but less than 183 days in the tax year/rolling 12 month period*
PAYE obligation arises in the absence of a PAYE Dispensation
PAYE obligation
183 days or more in the tax year/rolling 12 month period*
PAYE obligation PAYE obligation
* Depends on the wording in the DTA in question
Inbound Shadow Payroll Rules Revised Guidance 2020
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COVID-19 / Remote Working
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Tax and remote work
1Megan Brenan, “U.S> Workers Discovering Affinity for Remote Work” Gallup, April 3, 2020; 2,3 Roy Maurer, “Majority of Employees Embrace Remote Work,” SHRM, April 22, 2020; 4,5 Justin Lavelle, “Gartner CFO Survey Reveals 74% Intend to Shift Some Employees to Remote Work Permanently” Gartner, April 3 2020; 6 Deloitte HC Trends 2020 “https://www2.deloitte.com/us/en/insights/focus/human-capital-trends.html” Gartner, May 18, 2020
Health & SafetyCOVID-19 is continuing to disrupt all economies and businesses -
Human BehaviourUnprecedented emotional & financial stress but for some, remote brings increased flexibility
Regulatory ResponseCOVID-19 tax compliance relief for remote workers has been a patchwork and temporary in nature.
3 in 5 workers who have been working
remotely during the pandemic would prefer to continue to work remotely post -pandemic1
Workforce sentiment
Nearly 3 in 4 CFOs plan to shift at
least 5% of previously on-site employees to permanently remote
positions post-COVID 194
Employer sentiment
50% of workers believe they are equally
or more productive working from home than at the office3
60% of workers say that
they are confident they can efficiently do their job remotely2
Nearly 1 in 4 CFOs plan to shift
at least 20%5
38% of Organizations
have increased remote work opportunities to redesign work around well-being6
The pandemic has accelerated the future of work. For many businesses, there will be reduced importance as to where work is done and increased focus on how work is done, leveraging robotics, automation, digital capabilities, connected platforms, tools and techniques.
The landscape of remote work is changing rapidly
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PAYROLL REPORTING AND EMPLOYER
ANNUAL/MONTHLY FILINGS
ANNUAL INDIVIDUAL TAX RETURN FILING
PERMANENT ESTABLISHMENT/TAX
RESIDENCE CONSIDERATIONS
INTELLECTUAL PROPERTY (LOCATION) AND
CORPORATE STRUCTURE
EMPLOYMENT LAW COMPLIANCE AND
REGULATORY COMPLIANCE
IMMIGRATION CONSIDERATIONS/RIGHT TO
WORK-WORK AUTHORIZATION
HOW COULD ONE EMPLOYEE DISRUPT THE BUSINESS?
TRANSFER PRICING
INDIRECT TAX AND WITHHOLDING TAX
EXPOSURE
One or two employees could create
significant international tax exposure
The tax implications of remote work
Many organisations are considering making remote work permanent for all, or parts of their workforce. Tax teams (along with other stakeholders) will have a critical role to play in shaping remote work policy, but also significant remediation work and ongoing compliance.
1 2 3 4
Increased complexity in compliance management
As a result of moving into higher/lower tax jurisdictions
Challenges of payroll reporting requirements
Shifting Tax Costs Increased Tax Risk
Tracking challenges; Tax risks through longer term or under the
radar remote working.
Tax/social security being paid in the wrong location; new registrations
needed
Mid term – remainder of 2021 and beyond. Longer term - requiring
strategic planning
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Covid-19 - 2020 Reliefs and Concessions –Mobile Employees
Trans- Border Relief –concession but provided other conditions for relief are met
PAYE Dispensations –extension of the 30 day notification requirement
Shadow Payroll for Inbounds – temporary
relocations during the covid-19 period
Covid-19 - 2020 Reliefs and Concessions – Mobile Employees
Permanent Establishment SARP – extension of the filing
deadline by 60 days
Residence Rules – Force Majeure
PAYE Exclusion Orders –concession where 30 work days in ROI exceeded
Multi-State Workers – Irish
payroll based on previous work pattern
Click here to access our recent Deloitte Newsflash highlighting cessation of these concessions
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Expatriate tax concessions withdrawn from 1 January 2021
Requirement Position from March 2020 to 31 December 2020
Position in 2021
Operation of payroll taxes on foreign employments exercised in Ireland
No requirement to operate payroll taxes where foreign company employee was working outside Ireland prior to COVID-19 and temporarily relocated to IrelandNote – employee may be liable to Irish income taxes via self-assessment on their employment income depending on their residence position
Payroll taxes must be operated unless PAYE dispensation available
Employer must file SARP1A form for Special Assignee Relief Programme (SARP) for relevant employees within 90 days from the date of arrival in Ireland (see further commentary on SARP below)
60 days extension to application period provided; 150 day maximum application period
90 days maximum application period for arrivals from 1 January 2021 (arrivals in late 2020 can avail of the 60 days extended period)
Employer must file PAYE dispensation application within 30 days from date of arrival in Ireland for short-term business travellers/assignees spending in excess of 60 workdays and less than 183 days in Ireland in a tax year
30 day maximum application period not strictly enforced
30 day maximum application period from date of arrival (exceptional cases may be notified to Revenue)
Operation of payroll taxes on non-resident foreign employees based on current working pattern in Ireland
Pre-Covid 19 working pattern allowed to be usedCurrent working pattern must be used
Operation of payroll taxes where PAYE Exclusion order in place but employee exceeds 30 workdays in Ireland
No requirement to operate Irish payroll taxesNote – employee will be liable to Irish income taxes on their employment income via self-assessment
Payroll taxes must be operated
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Brexit / Social Security
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Social Security – Overview of EU Rules / Bilateral Social Security Agreements
General Rule
Employees are generally subject to social security in which they work
Overriding principal
Persons shall be subject to legislation of a single Member State only
Multi- State Workers
A multi-state worker is an employee who performs activities in two or more States. If the employee performs a substantial part of their activities in the State in which they are habitually resident, they and their employer pay social security in that state.
Substantial Part – typically 25%
Similar arrangements apply for countries with which Ireland has a bi-lateral social insurance agreement
An A1 / Certificate of Coverage should be obtained.
Posted Workers
An employee who normally carries on activities in the home State but who is sent by their employer to another Member State to perform work there for that employer continues to be subject to social security in their home state provided that certain conditions are met.
Similar arrangements apply for countries with which Ireland has a bi-lateral social insurance agreement including US, Canada, Australia, etc.
An A1 / Certificate of Coverage is obtained from “home” country.
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Withdrawal Agreement (cross border working arrangements as at 31 December 2020)
The terms of the Withdrawal Agreement apply full coverage under the existing EU social security regulations until 31 December 2020, but also allow for potential ongoing coverage beyond this.
Trade and Cooperation Agreement (cross border working arrangements starting after 31 December 2020)
The Trade and Cooperation Agreement includes a Protocol on Social Security Coordination that broadly replicates the existing rules on social security coordination, which is good for business because social security payments will only be due in one state at a time.
Important – Detached/Posted workers
EU member states have an opt-out, whereby they can choose to dis-apply this provision. This would result in UK assignees to those countries becoming liable to host country social security, and EU assignees coming to the UK becoming liable to National Insurance.
The UK and the EU have reached an agreement on their future economic partnership (Trade and Cooperation Agreement – TCA) which includes a Protocol on Social Security Coordination.
Brexit – Social Security – Protocol on Social Security Coordination
Brexit – Social Security – New Protocol between Ireland and UK
New protocol on socialsecurity agreed betweenIreland and UK came intoeffect on 31st December2020.
Purpose is to ensure that social security rights and entitlements under Common Travel Area (CTA) are maintained.
Applies to UK and Irish nationals.
Question still over treatment of third country nationals.
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Roisin FitzpatrickPartner, Tax & Legal
Immigration Update
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Ireland Immigration Updates for the Pharma and Life Science Industry
Brexit
• UK nationals no longer considered EEA nationals
• UK nationals and family in Ireland
Posted Worker Directive
• The Regulations provide that service providers who post workers to Ireland are obliged to make a declaration to the Workplace Relations Commission
• Must be prior to the date the posted workercommences providing services in Ireland.
Contingency Plan Updates
• Ministerial automatic extension of status until 20 April 2021
• Dublin vs Regional Registration offices
• Move to online applications versus in-person appointments
• WRC audits occurring again
COVID-19 closures and travel restrictions• All passengers arriving into Ireland are required to have a negative / ‘not
detected’ result from a pre-departure COVID-19 PCR test taken within 72 hours prior to arrival in Ireland.
• All passengers who have arrived from Great Britain, South Africa or any countries in South America are advised to self isolate (stay in room) for the full period of 14 days following their arrival into Ireland.
Immigration consideration for Pharma and Life Science Industry
What roles are suitable for permits in Ireland (local hires)
• highly skilled roles
• SOC Codes; 2111, 2112, 2113, (Natural and social science professionals) 2127 (Production and process engineers) 2213 (Industrial pharmacists), 2462 (Quality assurance and regulatory professionals)
• * Business cases to expedite
What permit application are suitable for assignees or senior management (staying on home country payroll)
• Intra Company Transfer permit
• Salary threshold
• Time prior
• 5 year max
Project work:
• <14 days: 14 day work permission *CVD
• <90 days: Atypical Working permission *CVD
• >90 days: employment permit
Can family members come to Ireland?
• Family members of local hires can join under certain criteria ( immediate with highly skilled roles and after 12 months on other roles)
• Not permitted to work where partner of an assignee or a GEP holder
.
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The Posted Worker Directive (PWD) was transposed intoIrish law by the European Union (Posting of Workers)Regulations 2016. The new Directive was transposed intoIrish law on 1 October 2020 in the form of S.I. 374 of 2020European Union (Posting of Workers) (Amendment)Regulations 2020.
The Regulations provide that service providers who postworkers to Ireland are obliged to make a declaration to theWorkplace Relations Commission, prior to the date theposted worker commences providing services in Ireland.
Where employees may be reluctant to permanently re-locate to Ireland in the current pandemic, the temporaryposting of workers from one European country toanother is likely to become increasingly important.
Posted Workers: Increased Importance of compliance of EU/EEA Employees
This is particularly relevant in the Pharma/Life science Industry, where tight timelines need to be met and temporary posting of workers is one way to achieve these deadlines.
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Deloitte’s Solution for Pharma and Life Science clients
Policy Updates - Ongoing discussion with the Irish government departments on work, entry and
residence processes for employees - On-going relationship with IDA and Irish government departments
GoWork Covid MapReal time global map with updates on:- Travel restrictions- Quarantine requirements- Transit visa specifics
Right to Work checks & Immigration assessments- GoVerify- GoWork
Deloitte Global Network- Aligned to address local country conditions to facilitate immigration
applications
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Colin Forbes Partner, Tax & Legal
Close
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Event Date
Wed, 10 FebruaryShare remuneration, corporate tax, transfer pricing, VAT & customs
Wed, 24 February Intellectual property, R&D tax credits & government grants
Pharma and Life Science Tax Programme
Other events as part of the series:
Thank you for attending
Webinar | Wednesday 27th January
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