Individual Taxpayers In The Spotlight
Kitty Miv, Editor
30 October, 2020
Having last week examined tax measures mainly affecting businesses, in this week's column, we will be turning our attention to those impacting individuals, especially in the current COVID climate, starting with Germany and Luxembourg. The two countries recently announced that they had reached a new agreement on the treatment of frontier workers who may be caught between their respective tax systems as a result of the changed working practices necessitated by the pandemic.
The authorities explained that they have signed a new agreement providing for concessionary tax treatment for frontier workers during the COVID-19 crisis which confirms that employees working from home due to the COVID-19 crisis may remain taxable in the state in which they exercised their professional activity before the health crisis.
This agreement applies to income from employment, including from public sector employment, and replaces the cross-border worker deal that had been agreed in April 2020. The new agreement applies from March 11, 2020, until December 31, 2020, and will be automatically extended on a monthly basis until it is cancelled by one of the two jurisdictions.
Meanwhile, in Egypt, the eyes of the authorities were on investors rather than employees, with the passage of Law 199 of 2020 making numerous tax changes to transfer taxes and taxes on dividends with effect from this month.
The law amended the rules to access the concessionary rate of withholding tax for dividend income. Previously, the rate was five percent if a dividend was paid to a foreign company that owned, directly or indirectly, at least 25 percent of the paying company's capital for at least 24 months. Otherwise the rate of tax was 10 percent. Under the new law, the five percent rate of tax applies if the company is listed on the Egyptian stock exchange. Otherwise the rate for unlisted companies is 10 percent.
The law also introduced a capital gains tax exemption for shares listed on the Egyptian stock exchange by a non-resident business, effective from May 17, 2020, and extended the temporary exemption for shares listed by domestic businesses until at least the end of 2021.
The new legislation additionally significantly reduced the rate of stamp duty on securities trading on the Egyptian bourse, to 0.125 percent for non-residents and to 0.05 percent for residents (applicable on both buyers and sellers). It is proposed that stamp duty will be lifted on resident taxpayers from 2022.
In Ireland, which is currently stepping back up the COVID restriction ladder, the Government announced changes to the Employment Wage Subsidy Scheme (EWSS) and the COVID Restrictions Support Scheme (CRSS).
EWSS has been in place since September 1, 2020. EWSS provides a flat-rate subsidy to qualifying employers based on the number of paid and eligible employees on the employer's payroll. The employer must have tax clearance to be eligible to join the EWSS and remain "tax clear" in order to receive the subsidy.
The Government said that, broadly, the EWSS rates will be aligned with the rates of payment available under the Pandemic Unemployment Payment, up to EUR350 per week, effective from the next payroll date after October 19. The maximum weekly subsidy rate per employee was previously EUR203.
In the Czech Republic, meanwhile, the focus was on self-employed workers, with the announcement that the lower house of Parliament had approved a bill to establish a new simplified tax regime for self-employed taxpayers.
The voluntary scheme would combine income tax and social contributions for non-VAT-registered self-employed taxpayers into a monthly lump sum payment of CZK5,469; initially the scheme was to be offered to taxpayers with annual business income of up to CZK800,000, but this proposal was amended by the Chamber of Deputies to cover yearly business income of up to CZK1m.
And finally for this week, the Swedish Government has submitted legislation to parliament to extend the special tax regime for foreign experts and researchers.
Under the scheme, 25 percent of a key foreign worker's pay is exempt from income tax and social security contributions for three years, subject to certain conditions. These include that they are suitably qualified and that they earn at least SEK94,601 per month. Their remaining pay is taxed at normal tax rates, but certain fringe benefits provided by employers to eligible key foreign workers are tax exempt, including moving expenses, holidays to the workers' home country, and school fees.
The Government is proposing that this scheme be extended to five years in duration, in line with other European countries with similar regimes for key foreign workers. If approved, this would apply from January 1, 2021.
Until next week!
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