Pharma and Life Science Tax Programme - Wednesday 27th January 2021 - Deloitte
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Pharma and Life Science Tax Programme Wednesday 27th January 2021
Welcome
Colin Forbes
Partner Tax & Legal
© 2021 Deloitte Ireland LLP. All rights reserved. 2
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
Share remuneration, corporate tax, transfer pricing, VAT & customs
Wed, 10 February
Wed, 24 February Intellectual property, R&D tax credits & government grants
© 2021 Deloitte Ireland LLP. All rights reserved. 3
Benefit-In-Kind – Local Concessions Update
Position from March 2020 to 31 December
Benefit-in-Kind Position in 2021
2020
Reimbursement of holiday/flight cancellation
Tax exempt
costs for employees returning to Ireland Taxable
Reimbursement of taxi fares for transporting
employees to/from work due to health and Tax exempt
Tax exempt (until further notice)
safety concerns
Costs of COVID-19 Testing at a
workplace/Employer provided COVID-19 test Tax exempt
Tax exempt (until further notice)
kits
Costs of Flu vaccination at
workplace/reimbursement to employee/direct
Tax exempt Tax exempt (until further notice)
payment to registered practitioner
Employer provided equipment
Tax exempt Tax exempt (until further notice)
Temporary Employer Provided Accommodation
to mitigate potential COVID-19 transmission
Tax exempt Tax exempt (until further notice)
risks
More than one voucher/other tangible item (e.g.
hamper) allowed in order to recognise Two vouchers /other tangible item (e.g. hamper)
Small Benefit Exemption exceptional efforts of frontline or other key staff allowed in order to recognise exceptional efforts
up to a total of €500 per annum (Note - Revenue of frontline or other key staff up to a total of
wording unclear - position being confirmed with €500 per annum
Revenue)
Employer Provided Vehicles Concessions apply (until further notice) – see
Concessions apply – see below for detail
© 2021 Deloitte Ireland LLP. All rights reserved. below for detail 4
Today’s speakers:
Colin Forbes Breda Mullaney
Partner, Tax & Legal Director, Tax & Legal
+353 1 417 2993 +353 1 417 3622
cforbes@deloitte.ie brmullaney@deloitte.ie
Roisin Fitzpatrick Karen Sheehy
Partner, Tax & Legal Manager, Tax & Legal
+353 1 417 3186 +353 1 417 2758
rfitzpatrick@deloitte.ie ksheehy@deloitte.ie
© 2021 Deloitte Ireland LLP. All rights reserved. 5
Welcome and Introductions
Agenda
Mobility Tax Matters
Immigration Issues
Thank you and Closing
© 2021 Deloitte Ireland LLP. All rights reserved. 6
Global Mobility
Breda Mullaney
Director, Tax & Legal
Karen Sheehy
Manager, Tax & Legal
© 2021 Deloitte Ireland LLP. All rights reserved. 7
Mobility Tax Issues – General © 2021 Deloitte Ireland LLP. All rights reserved. 8
Mobility Tax Issues - General
Assignments & Tax Equalisation Travel & Subsistence
• Employee stays on home country payroll and remains • Tax-free subsistence may be paid/reimbursed for first
in tax neutral position 12 months of a temporary assignment (less than 24
months)
• Can be very costly especially where host country taxes
are higher tax rates • Includes tax free housing & utilities for 12 months
• Company generally pick up home/host country taxes on • One home leave trip per year and journeys at the
any assignment related benefits/allowance e.g. commencement and end of the assignment can also be
housing, travel expenses. provided tax free
Special Assignee Relief Programme Removal & Relocation
A qualifying employee may make a claim for 30% of their You can repay your employee’s expenses for removal and
total compensation (including bonuses, BIKs and share relocation tax-free, if it costs your employee money to:
remuneration) to be excluded from PAYE
• move to a new employment location
−The exemption does not apply to USC or PRSI
• take up their employment
−Employers can also provide the following tax free:
Examples include removal of furniture and storage charges
◦ one return trip for the employee and family to their
Foreign Earnings Deduction (FED)
home country
Main outbound tax relief FED – it is available for working
◦ school fees of up to €5,000 per annum per child
abroad in specific countries (e.g. China, India, Brazil)
Relief is based on the volume of workdays overseas
© 2021 Deloitte Ireland LLP. All rights reserved. 9
Short Term Business Visitors © 2021 Deloitte Ireland LLP. All rights reserved. 10
Global Mobility – Inbounds to Ireland
Some good news!
Brings the position back broadly in Employees coming to Ireland from No longer need to consider multi-
New Revenue guidance issued on Employees from non-DTA countries
line with the original guidance from DTA countries with 60 workdays or year tests, or purpose of business
24 June – 30 workday threshold
2007 less in a year – no PAYE obligations visit to Ireland
Employees coming to Ireland from
DTA countries with more than 60 Simplified PAYE Dispensation
workdays but less than 183 total process however no change in
days in a year – apply for a application timeframe – must be
dispensation from requirement to submitted within 30 days of arrival
withhold PAYE in the State
Relevant DTA conditions must be
met
© 2021 Deloitte Ireland LLP. All rights reserved. 11Global Mobility – Inbound Rules regarding Shadow Payroll Obligations
Revised Guidance 2020 - Changes
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)”.
© 2021 Deloitte Ireland LLP. All rights reserved. 12Inbound Shadow Payroll Rules
Revised Guidance 2020
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 Review whether direct
PAYE obligation
in the tax year recharge of costs to an Irish subsidiary
More than 60 workdays but less than 183 days PAYE obligation arises in the absence of a
PAYE obligation
in the tax year/rolling 12 month period* PAYE Dispensation - review whether direct
recharge of costs to an Irish subsidiary
183 days or more in the tax year/rolling 12 PAYE obligation PAYE obligation
month period*
* Depends on the wording in the DTA in question
© 2021 Deloitte Ireland LLP. All rights reserved. 13Inbound Shadow Payroll Rules
Revised Guidance 2020
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
© 2021 Deloitte Ireland LLP. All rights reserved. 14Inbound Shadow Payroll Rules
Revised Guidance 2020
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
No PAYE obligation PAYE obligation
in the tax year
More than 60 workdays but less than 183 days PAYE obligation arises in the absence PAYE obligation
in the tax year/rolling 12 month period* of a PAYE Dispensation
183 days or more in the tax year/rolling 12 PAYE obligation PAYE obligation
month period*
* Depends on the wording in the DTA in question
© 2021 Deloitte Ireland LLP. All rights reserved. 15COVID-19 / Remote Working © 2021 Deloitte Ireland LLP. All rights reserved. 16
The landscape of remote work is changing rapidly
The pandemic has accelerated the future of work. For many businesses, there will be reduced importance as to
where work
Tax and is donework
remote and increased focus on how work is done, leveraging robotics, automation, digital
capabilities, connected platforms, tools and techniques.
Workforce sentiment Employer sentiment
3 in 5 workers who have been working Nearly 3 in 4 CFOs plan to shift at
remotely during the pandemic would prefer least 5% of previously on-site
to continue to work remotely post - employees to permanently remote
pandemic1 positions post-COVID 194
60% of workers say that Nearly 1 in 4
they are confident they can efficiently do CFOs plan to shift
their job remotely2 at least 20%5
50% of workers believe they are equally 38% of Organizations
or more productive working from home have increased remote work
than at the office3 opportunities to redesign
work around well-being6
Health & Safety Human Behaviour Regulatory Response
COVID-19 is continuing to disrupt all Unprecedented emotional & financial COVID-19 tax compliance relief for remote workers
economies and businesses - stress but for some, remote brings has been a patchwork and temporary in nature.
increased flexibility
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
© 2021 Deloitte Ireland LLP. All rights reserved. 17The 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
Shifting Tax Costs Increased Tax Risk Challenges of payroll Increased complexity in
reporting requirements compliance management
Tracking challenges; Tax risks Mid term – remainder of 2021 and
As a result of moving into Tax/social security being paid in the
through longer term or under the beyond. Longer term - requiring
higher/lower tax jurisdictions wrong location; new registrations
radar remote working. strategic planning
needed
HOW COULD ONE EMPLOYEE DISRUPT THE BUSINESS?
PERMANENT ESTABLISHMENT/TAX EMPLOYMENT LAW COMPLIANCE AND
RESIDENCE CONSIDERATIONS REGULATORY COMPLIANCE
TRANSFER PRICING IMMIGRATION CONSIDERATIONS/RIGHT TO
WORK-WORK AUTHORIZATION
INDIRECT TAX AND WITHHOLDING TAX
EXPOSURE PAYROLL REPORTING AND EMPLOYER
ANNUAL/MONTHLY FILINGS
INTELLECTUAL PROPERTY (LOCATION) AND
CORPORATE STRUCTURE ANNUAL INDIVIDUAL TAX RETURN FILING
One or two employees could create
significant international tax exposure
© 2021 Deloitte Ireland LLP. All rights reserved. 18Covid-19 - 2020 Reliefs and Concessions – Mobile Employees
SARP – extension of the filing Permanent Establishment
deadline by 60 days
PAYE Dispensations – Residence Rules – Force Majeure
extension of the 30 day
notification requirement
Covid-19 - 2020
Reliefs and
Trans- Border Relief – Concessions – PAYE Exclusion Orders –
concession but provided other Mobile Employees concession where 30 work days in ROI
conditions for relief are met exceeded
Shadow Payroll for Multi-State Workers – Irish
Inbounds – temporary payroll based on previous work
relocations during the covid-19 pattern
period
Click here to access our recent Deloitte Newsflash highlighting cessation of these concessions
© 2021 Deloitte Ireland LLP. All rights reserved. 19Expatriate tax concessions withdrawn from 1 January 2021
Requirement Position from March 2020 to 31 December Position in 2021
2020
No requirement to operate payroll taxes where
foreign company employee was working outside
Ireland prior to COVID-19 and temporarily
Operation of payroll taxes on foreign Payroll taxes must be operated unless PAYE
relocated to Ireland
employments exercised in Ireland dispensation available
Note – employee may be liable to Irish income
taxes via self-assessment on their employment
income depending on their residence position
Employer must file SARP1A form for Special
Assignee Relief Programme (SARP) for relevant 60 days extension to application period 90 days maximum application period for arrivals
employees within 90 days from the date of provided; 150 day maximum application period from 1 January 2021 (arrivals in late 2020 can
arrival in Ireland (see further commentary on avail of the 60 days extended period)
SARP below)
Employer must file PAYE dispensation
application within 30 days from date of arrival in
30 day maximum application period from date
Ireland for short-term business 30 day maximum application period not strictly
of arrival (exceptional cases may be notified to
travellers/assignees spending in excess of 60 enforced
Revenue)
workdays and less than 183 days in Ireland in a
tax year
Operation of payroll taxes on non-resident
foreign employees based on current working
Pre-Covid 19 working pattern allowed to be usedCurrent working pattern must be used
pattern in Ireland
Operation of payroll taxes where PAYE Exclusion No requirement to operate Irish payroll taxes
order in place but employee exceeds 30 Note – employee will be liable to Irish income
Payroll taxes must be operated
workdays in Ireland taxes on their employment income via self-
assessment
© 2021 Deloitte Ireland LLP. All rights reserved. 20Brexit / Social Security © 2021 Deloitte Ireland LLP. All rights reserved. 21
Social Security – Overview of EU Rules / Bilateral Social Security Agreements
Overriding principal General Rule
Persons shall be subject to Employees are generally
legislation of a single Member subject to social security in
State only which they work
Posted Workers Multi- State Workers
An employee who normally carries on activities A multi-state worker is an employee who performs
in the home State but who is sent by their activities in two or more States. If the employee
employer to another Member State to perform performs a substantial part of their activities in the
work there for that employer continues to be State in which they are habitually resident, they and
subject to social security in their home state their employer pay social security in that state.
provided that certain conditions are met.
Substantial Part – typically 25%
Similar arrangements apply for countries with
which Ireland has a bi-lateral social insurance Similar arrangements apply for countries with which
agreement including US, Canada, Australia, etc. Ireland has a bi-lateral social insurance agreement
An A1 / Certificate of Coverage is obtained from An A1 / Certificate of Coverage should be obtained.
“home” country.
© 2021 Deloitte Ireland LLP. All rights reserved. 22Brexit – Social Security – Protocol on Social Security Coordination
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.
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.
© 2021 Deloitte Ireland LLP. All rights reserved. 23Brexit – Social Security – New Protocol between Ireland and UK
New protocol on social Purpose is to ensure that social Applies to UK and Irish
security agreed between security rights and entitlements nationals.
Ireland and UK came into under Common Travel Area
effect on 31st December (CTA) are maintained. Question still over
2020. treatment of third country
nationals.Immigration Update
Roisin Fitzpatrick
Partner, Tax & Legal
© 2021 Deloitte Ireland LLP. All rights reserved. 25Ireland Immigration Updates for the Pharma and Life Science Industry
Contingency Plan Updates Brexit
• Ministerial automatic extension of status until 20 April 2021 • UK nationals no longer considered EEA nationals
• Dublin vs Regional Registration offices • UK nationals and family in Ireland
• Move to online applications versus in-person appointments
• WRC audits occurring again
Posted Worker Directive
• The Regulations provide that service providers who
post workers to Ireland are obliged to make a COVID-19 closures and travel restrictions
declaration to the Workplace Relations Commission • All passengers arriving into Ireland are required to have a negative / ‘not
• Must be prior to the date the posted worker detected’ result from a pre-departure COVID-19 PCR test taken within 72
commences providing services in Ireland. 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.
© 2021 Deloitte Ireland LLP. All rights reserved. 26Immigration consideration for Pharma and Life Science Industry
What roles are suitable for permits in Ireland (local What permit application are suitable for
hires) assignees or senior management (staying on
home country payroll)
• highly skilled roles
• Intra Company Transfer permit
• SOC Codes; 2111, 2112, 2113, (Natural and social
science professionals) 2127 (Production and • Salary threshold
process engineers) 2213 (Industrial pharmacists), • Time prior
2462 (Quality assurance and regulatory • 5 year max
professionals)
• * Business cases to expedite
.
Project work: Can family members come to Ireland?
•Posted Workers: Increased Importance of compliance of EU/EEA Employees
The Posted Worker Directive (PWD) was transposed into
Irish law by the European Union (Posting of Workers)
Regulations 2016. The new Directive was transposed into
Irish law on 1 October 2020 in the form of S.I. 374 of 2020
European Union (Posting of Workers) (Amendment)
Regulations 2020.
The Regulations provide that service providers who post
workers to Ireland are obliged to make a declaration to the
Workplace Relations Commission, prior to the date the
posted worker commences providing services in Ireland.
Where employees may be reluctant to permanently re-
locate to Ireland in the current pandemic, the temporary
posting of workers from one European country to
another is likely to become increasingly important.
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.
© 2021 Deloitte Ireland LLP. All rights reserved. 28Deloitte’s Solution for Pharma and Life Science clients
Right to Work checks & Immigration assessments
- GoVerify
- GoWork
GoWork Covid Map
Real time global map with updates on:
- Travel restrictions
- Quarantine requirements
- Transit visa specifics
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
Deloitte Global Network
- Aligned to address local country conditions to facilitate immigration
applications
© 2021 Deloitte Ireland LLP. All rights reserved. 29Close
Colin Forbes
Partner, Tax & Legal
© 2021 Deloitte Ireland LLP. All rights reserved. 30Pharma and Life Science Tax Programme
Other events as part of the series:
Event Date
Share remuneration, corporate tax, transfer pricing, VAT & customs
Wed, 10 February
Wed, 24 February Intellectual property, R&D tax credits & government grants
© 2021 Deloitte Ireland LLP. All rights reserved. 31Thank you for attending Webinar | Wednesday 27th January
At Deloitte, we make an impact that matters for our clients, our people, our profession, and in the wider society by delivering the solutions and insights they need to address their most complex business challenges. As the largest global professional services and consulting network, with over 312,000 professionals in more than 150 countries, we bring world- class capabilities and high-quality services to our clients. In Ireland, Deloitte has over 3,000 people providing audit, tax, consulting, and corporate finance services to public and private clients spanning multiple industries. Our people have the leadership capabilities, experience and insight to collaborate with clients so they can move forward with confidence. This publication has been written in general terms and we recommend that you obtain professional advice before acting or refraining from action on any of the contents of this publication. Deloitte Ireland LLP accepts no liability for any loss occasioned to any person acting or refraining from action as a result of any material in this publication. Deloitte Ireland LLP is a limited liability partnership registered in Northern Ireland with registered number NC1499 and its registered office at 19 Bedford Street, Belfast BT2 7EJ, Northern Ireland. Deloitte Ireland LLP is the Ireland affiliate of Deloitte NSE LLP, a member firm of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”). DTTL and each of its member firms are legally separate and independent entities. DTTL and Deloitte NSE LLP do not provide services to clients. Please see www.deloitte.com/about to learn more about our global network of member firms. © 2020 Deloitte Ireland LLP. All rights reserved.
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