What are the post-Brexit issues for Brits contracting in Europe

By 27. July 2016News
What are the post-Brexit issues for Brits contracting in Europe

The result of the EU Referendum surprised many people on both sides of the debate and the future shape the UK’s relationship with the European Union will be subject to negotiation and political wrangling for months and years to come.

The new Prime Minister Theresa May has indicated that the earliest that the UK will ‘give notice’ to leave, by triggering Article 50, is the first quarter of 2017; after which there will be a two year negotiation period.  This means that there are unlikely to be any significant changes until 2019.

What does it all mean for the UK’s contractors who work in Europe? Until the British government has set out its negotiating position, we won’t know whether UK residents will be able to work in the EU without restriction. Since free movement of EU citizens to the UK was hotly debated during the campaign, contractors may potentially face some restrictions.

Contracting and Brexit

Although the single market for goods is well-established in the EU, there is no such single market for services – and there are complex rules relating to how services are taxed. If you supply services from the UK, you may be liable for VAT. If you travel to the EU, your customer has to account for any VAT-equivalent. But you may still have to pay foreign VAT to the relevant authority – and thresholds are often lower than the UK.

The process of Brexit negotiations is unlikely to make these rules any simpler. Britain’s economy is dominated by services so the government is likely to make negotiations about freedom of services a priority.

European contracting

Oil and Gas contractors are most likely to be affected by Brexit as they tend to have a more international focus to work, but IT contractors are also potentially affected due to the international nature of technology. Finance professionals and management consultants may also find their business is affected.

For contractors with clients in the EU, many will need to travel to meet their clients after Brexit is finalised. It’s important to remember that EU member states still set their own immigration rules so even if there is a “hard” Brexit with no freedom of movement, countries like France and Germany are unlikely to place significant barriers to entry for temporary working visits.

Exchange rate bonus

Clients often prefer to pay contractors in their home currency, so anyone with clients who pay them in Euros will have received a post-Brexit bonus of an increase of about 10 percent, thanks to the falling pound.

For regular updates on what Brexit means for contractors in the UK, don’t forget to come back to ContractingWISE. And for details of why only one in five contractors believe Brexit will harm their business, check out our free report: Why could Brexit be a cause for concern?


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