Webinar: International Assignments and Changing Working Patterns in the context of the Covid Crisis – 19 November 2020
November 24, 2020 Category Past events, Weekly
The Flanders-China Chamber of Commerce and Flanders Investment & Trade organized an information session on November 19 focused on managing international assignments in the context of the Covid crisis and profound changes of the working patterns due to the pandemic.
Ms Gwenn Sonck, Executive Director of the Flanders-China Chamber of Commerce and the EU-China Business Association welcomed the participants to the annual webinar with Deloitte, which is also a Structural Partner of the Chamber. Today, the biggest challenge for companies doing business with China is the fact that they can’t go to China as no visas are issued to Belgian travelers due to the high number of Covid-19 infections in our country. Of course, this is temporary. China has almost no new infections anymore. A few weeks ago there were six asymptomatic infections in Qingdao and immediately strict action was taken, with quarantine, efficient contact tracing and mass testing of nine million people in ten days. The speed and efficiency with which China is tackling Covid-19 is really impressive and innovative. Meanwhile, China is booming again and life is almost back to normal. Economists believe that China will be the only country that will have positive growth this year. According to the IMF, China’s growth will be 8.2% in 2021, which will be the highest in 10 years. Before giving the floor to the speakers, Ms Sonck briefly introduced the FCCC and the EUCBA.
Ms Rimma Abadjan, Assistant Manager, said that the webinar would start with an introduction on the Covid-19 situation on the Belgian and European side, followed by a look at the changing working patterns that Covid-19 has caused. The Covid-crisis was really unprecedented and unexpected and had consequences for the way we deal with migration and global mobility. The very core of all international employment – the movement of people – has been impacted by Covid-19. Governments had to react very quickly to the changes and we have seen abrupt changes at short notice. So there were a lot of challenges that had to be tackled in a quick and not always efficient way. A number of existing programs could not be managed in the same way and companies had to find new ways to deal with reality and to quickly adjust their own policies, which also increased the risks of non-compliance. Business travel was one of the areas that was largely impacted. A number of existing visa programs have been put on hold and Europe is still largely unavailable for business travel. There is a need for flexibility from the companies that translated in a number of new working patterns. Remote work is part of our life now. The impact of Covid goes beyond the immigration aspect.
Ms Abadjan asked participants to answer the following questions: Business have had to adapt internal mobility and immigration policies they use to run their program. Will your new/amended internal business immigration policy continue in a post Covid-19 world? Most companies expect the changes that they have implemented due to the crisis to remain to a certain degree in future due to the changing working patterns and the fact that we discovered that certain things do work despite our skepticism. The second question is: As we continue to navigate through the pandemic, what will be your main challenge in relation to the future of work from an immigration perspective? Most participants answered that managing short term business travel was the most challenging.
Covid-19 had a huge impact on our options of moving. Europe has tried to present a coherent approach at the external borders of the EU based on common criteria. There has been a list of safe countries to allow travel from outside the EU and exemptions to the travel ban for highly skilled workers. The EU has also tried to implement a coherent approach within its internal borders, based on common color codes. There is no reintroduction of border controls as we have seen in the first lockdown in March-April-May. Each member state is still allowed the necessary measures to secure public health within their territories. We have seen quite some variations in terms of quarantine and testing.
Belgium is following the European approach in the management of the external borders. Residents of Australia, Japan, New Zealand, Rwanda, Singapore, Thailand and South Korea can come to Belgium for business travel without testing and quarantine, unless they have symptoms. China is on the list of safe countries as well, but the EU is requiring a reciprocal approach and China has not allowed residents from safe European countries to travel to China. Within the EU, Belgium is allowing all travel but there is a potential quarantine requirement for 10 days, plus 4 days in case of symptoms. To be able to trace contacts, all passengers crossing the border are required to fill out a passenger locator form. In terms of travel there are now more possibilities than in the beginning of the crisis, but they are still limited and subject to certain rules. We have seen no interruption in the processing of work permit applications and there is even a decrease in processing times due to a lower work load. In terms of in-country processes we have seen a move to digitalization and on-line applications. But we have also seen potential delays due to the unavailability of appointments and overload of municipal administrations. In terms of social security, we didn’t see a huge impact because of the authorities’ flexibility towards the rules and the understanding that certain working patterns have changed.
Joke Braam, Senior Manager, mentioned that in June 2018 Deloitte published a study on Intra-Corporate Transfer (ICT) permits and an update of the study will be published soon. The European ICT permit allows foreign companies to employ their non-EU employees in different EU member states. In these uncertain times, it is very difficult for companies to navigate through the complex immigration rules and the ICT permit will allow some further flexibility for working across borders in the EU. In 2014 the European Council adopted the proposal of the Intra-Corporate Transfer Directive on the conditions of entry and residence of third-country nationals in the framework of intra-corporate transfers. The 25 participating member states had two years time – till November 2016 – to implement the directive in their national legislation. The UK, Ireland and Denmark opted out of this directive. All 25 countries have meanwhile included the directive into their legislation. In Belgium it will enter into force in January 2021. ICTs can be non-EU nationals assigned from an entity of a multinational company outside the EU to another entity within the same group within the EU. It covers executives, specialists and trainees. For example it would cover a Chinese manager working with Deloitte in China who would be assigned to Deloitte in Belgium. The main benefit of this directive would be for international companies to allow for intra-corporate transferees to be able to enter, stay and work also in other EU member states without the need to apply for additional work authorization in that country. This is allowed for a period of up to 90 days. Belgium has not introduced a quota on the number of ICTs that can be assigned. There are certain conditions that need to be fulfilled to be eligible for this service. In Belgium they differ according to the region where the employee will be working. A minimum wage requirement must be respected, the employee must hold a bachelor degree, and most countries have applied a certain level of seniority. In the Flanders and Walloon regions, prior employment of at least three months within the same group is required before you can apply for an ICT permit, while in the Brussels region the transferee needs six months of seniority. The ICT permit can be issued for a maximum validity of one year for trainees and three years for executives and specialists. The ICT period can be renewed but there is a cooling off period of three months, when the transferee is required to be outside EU member states.
What are the advantages of the ICT permit? It is a single permit for work and residence. It increases the mobility of staff of global companies across the EU. It offers the possibility of short term mobility of up to 90 days without the need to apply for another local permit. The ICT short-term mobility is more flexible than the current Schengen rule, which is limited to 90 days in any 180-day period in all EU member states, while for the ICT it is per member state. The ICT permit also offers some advantages to partners and spouses in view of access to the labor market. The ICT permit has also some disadvantages. The disadvantage in Belgium is that today it will not yet be issued. After the validity period, the permit is not immediately renewable, meaning that the employee will have to leave the territory of the member states for three months. In order to be eligible for an ICT permit, the employee will need an employment contract with the home country, so it is not applicable to local hires. The ICT permit entails only temporary migration, as the transferee will not build up any rights for permanent residence in the host member state. Transferees also should be employed within the same group for at least three months prior to their transfer.
Some other things need to be taken into account when deciding to use or not to use an ICT permit. For example, a Chinese employee assigned to Belgium may also work in other EU member states which may result in a “simultaneous employment” situation under EU socials security rules, entailing that local social security contributions become due. From a labor law point of view there is the risk of forbidden chain-secondment and forbidden “putting at disposal” of employees and the need for vigilance to comply with local labor law. Compliance is also required with the European Posted Workers Enforcement Directive (PWED). Last but not least, corporate tax rules may entail creation of taxable “permanent establishment” due to the presence in a third country. One should not be blinded by the advantages of the ICT permit but be advised on all aspects, such as social security, labor law and taxation. Deloitte has all the expertise to guide your company to the right set-up.
Dieter Kuipers, Senior Manager, explained that we are all facing remote work on a daily basis. The way in which we work has been evolving over many years. Over the past 20 to 30 years, long- and short-term assignments have evolved and been replaced by other types of mobility. Remote work is not originating from Covid, but has accelerated. We all have been working partly from home during lockdown periods. Technology supports individuals to work from home, virtual teams became a reality and businesses were able to continue working during the pandemic. Over 75% of the individuals who have been working from home due to the pandemic also want to continue to work remotely in the future. Around 47% of employees indicated that their employer provided the equipment needed to work from home. But there were also some challenges as 27% of workers felt isolated while working during the pandemic. From the employers’ point of view, 38% have increased remote work opportunities and 41% of workers are predicted to work remotely at least some of the time post-pandemic. We are at an important moment in time to think about this because, due to the lockdown, traditional working patterns changed overnight. Now that a vaccine is coming we are looking at how to go forward and how to embed working from home in the organization. How does working from home look like? The domestic remote worker is an existing employee wishing to work from another part of the same country. The number of international remote workers is also increasing. Those are individuals who have their family in one country and moved to another country and now want to work more from the country where their family is located. Also, new hires may want to work from another country. Being able to work remotely provides opportunities. The work force will become more diverse. As location becomes less relevant, companies can focus on hiring the right skillset, not a person in the right location. Physical presence is becoming less of a key component for remote work.
Steven Trippaers, Manager, talked about the challenges of remote work. From a tax point of view, many aspects are to be taken into account. From a corporate tax point of view, there is the risk of establishing permanent establishment from an employee working remotely. There are also the issues of transfer pricing, indirect tax and withholding tax exposure, and where intellectual property is located and employees creating this IP. There are also compliance issues regarding the employment and immigration laws, and filing of annual individual income tax returns. Remote work is a cross-functional effort, requiring attention from a lot of different functions to successfully enable remote work. It will be crucial to work out a long-term approach to remote working to ensure its success. It is important to embrace the change and fit it into your business strategy.
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