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Pharma and Life Science Tax ProgrammeWednesday 27th January 2021

© 2021 Deloitte Ireland LLP. All rights reserved. 2

Colin ForbesPartner Tax & Legal

Welcome


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


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


Colin ForbesPartner, Tax & Legal

+353 1 417 2993

[email protected]

Today’s speakers:

Breda MullaneyDirector, Tax & Legal

+353 1 417 3622

[email protected]

Karen SheehyManager, Tax & Legal

+353 1 417 2758

[email protected]

Roisin FitzpatrickPartner, Tax & Legal

+353 1 417 3186

[email protected]

mailto:[email protected]





AgendaWelcome and Introductions

Thank you and Closing

Mobility Tax Matters

Immigration Issues


Breda Mullaney Director, Tax & Legal

Karen SheehyManager, Tax & Legal

Global Mobility


Mobility Tax Issues – General


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


Short Term Business Visitors


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


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


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


PE – Recharge of Costs Payroll Position

DTA No DTA


More than 30 workdays in the tax year PAYE obligation PAYE obligation

Inbound Shadow Payroll Rules Revised Guidance 2020


PE – No Recharge of Costs Payroll Position

DTA No DTA


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


COVID-19 / Remote Working


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

https://www.npr.org/sections/coronavirus-live-updates/2020/04/07/828778490/4-of-5-workers-are-affected-by-covid-19-worldwide-u-n-agency-says

https://www.npr.org/sections/coronavirus-live-updates/2020/04/07/828778490/4-of-5-workers-are-affected-by-covid-19-worldwide-u-n-agency-says

https://www.gartner.com/en/newsroom/press-releases/2020-04-03-gartner-cfo-surey-reveals-74-percent-of-organizations-to-shift-some-employees-to-remote-work-permanently2


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


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

https://elinkeu.clickdimensions.com/m/1/24389879/p1-b21018-1489475d6c854eaaa715876b8eab1982/2/883/9955400e-e762-4a7b-805b-3f30d6aa6a3d


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


Brexit / Social Security


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.


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.


Roisin FitzpatrickPartner, Tax & Legal

Immigration Update


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

.


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.


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


Colin Forbes Partner, Tax & Legal

Close


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:

https://deloitte.zoom.us/meeting/register/tJApcOqsrDIiH9dzhoyvAsgZ_qocckXozpex

https://deloitte.zoom.us/meeting/register/tJYpdu2qrjwuGte_KkCbFHGxH0aTHGTkEYzy

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Webinar | Wednesday 27th January

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