The UK’s self-employed workforce has a vital stake in the outcome of the negotiations with the EU and the future trading relationship once the transition period ends on 31 December, writes Alasdair Hutchison, Policy Development Manager of IPSE.
Since the result of the 2016 referendum, IPSE (the Association of Independent Professionals & the Self-Employed) has been working hard to update our members on the implications of the talks and undertakes regular research on how freelancers view Brexit.
Data from the IPSE Confidence Index has highlighted how Brexit has caused uncertainty, put investment decisions on hold, and negatively affected freelancers’ confidence in their business for the last four years. More than a third of freelancers (39%) had at least one project or contract based in the EU prior to the pandemic, illustrating the importance of the negotiation outcomes.
Given the diversity of those in self-employment, there is no ‘one size fits all’ approach when it comes to preparing for Brexit. Ultimately freelancers working with EU clients will now have to comply not just with one EU-wide set of working rules but with each country’s particular guidelines.
Business travel to the EU after Brexit
Perhaps the most obvious change that will impact anyone traveling to the EU concerns the end of freedom of movement. From January 1st you can travel to most EU countries for up to 90 days in any 180-day period without a visa for purposes such as tourism. You will need your passport to both have at least 6 months left and be less than 10 years old (even if it has 6 months or more left).
For business travel – which could include activities such as travelling for meetings and conferences, providing services, and touring art or music – you will need to check if there are any extra entry requirements such as visas or work permits for the country you’re visiting. For instance, if you are working on a longer term contract, depending on who your client is, you may have to pay into social security abroad, instead of National Insurance, and inform HMRC using the form CA3837. You will also need a ‘Portable Document A1’ as proof.
Everyone, including business people, will then have to apply for a European Travel Information and Authorization System (ETIAS) visa waiver for €7 for travel to the continent from 2022.
Lastly, if contracting in the EU and countries such as Switzerland in the EEA, your EHIC health card will no longer be accepted, so you will have to put health insurance in place. This may be required of you by the jurisdiction, or the client depending on where you are contracted.
Selling services into the EU
Put simply, UK businesses and professionals selling services into the European Economic Area (EEA) will no longer be treated as if they were local businesses. You will have to comply with each country’s rules when selling. Again, there are some key areas to think about.
- First, if you have specific accredited UK qualifications and are looking to work and provide services in the EU, you will need to check these are recognised in that country.
- Second, there may be new rules on data transfers and protection if you or your business sends personal data to the EU from January 1. Unless the EU decides whether they accept that the UK’s data protection regime is still adequate, you may need to take actions such as getting Standard Contractual Clauses (SCCs) in place to keep data flowing lawfully.
- Third, there may be some loss of future IP protection if the UK and EU are unable to agree reciprocal arrangements. If your business owns Intellectual Property (IP) rights such as trademarks, patents, designs, or copyright IPSE suggest you review any agreements you have in case these need clarifying or updating post-transition. Finally, if you have used a .eu domain name to supply services in the EU, this will no longer be usable after December.
Tax and trading
Another area of concern to many freelancers who contract with clients in the EU concerns tax, particularly VAT. If you have been paying VAT on work in the EU through the Mini One Stop Shop (MOSS) system, you will have to reapply and register for MOSS in an EU member state from January 1st.
If your self-employed business trades goods, rather than services, into and out of the EU, the government recommends you consider how to deal with customs declarations and register for an Economic Operators Registration and Identification (EORI) number.
There are many other key points that will be worked out in the coming weeks (unfortunately giving freelancers little time to prepare) which may affect their work and contracts with EU clients.
So far, government has done precious little to support freelancers through this process. PSE has argued they should do much more to simplify the process for the self-employed, for example with a support hub and dedicated advice.
IPSE membership can also support freelancers and contractors in the coming months – not least because we offer a range of services and insurances including tax and legal helplines. Membership also helps boost our influential campaigning voice within government, which is more vital now than ever before given the self-employed face a trio of threats – Brexit, Coronavirus, and possible tax rises.
Alasdair Hutchison Policy Development Manager, IPSE .