Navigation path

Left navigation

Additional tools

EU migrants avoiding tax ? Or Sunday Telegraph avoiding full story?

January 9th, 2014

EU migrants can avoid tax in UK“, according to a Sunday Telegraph headline on 5 January.

The piece goes on “Romanians and Bulgarians coming to work can avoid paying taxes in Britain because of a loophole.”

Large parts of the article are slanted, selective or simply incorrect, leading to a misleading impression overall.

The reality is as follows.

First, the vast majority of EU citizens working in the UK – well over  90% – are employed or self-employed in the UK, treated as resident and pay tax and social security in the UK.

Those referred to in the article are “posted workers”.  In other words people not resident in the UK long-term – so arguably not even migrants – but sent to the UK for limited periods by employers based elsewhere in the EU.

Given that posted workers in the UK come from many different EU Member States, it is difficult to see any good reason why the newspaper singles out Romanians and Bulgarians.

Second, there is no “loophole”, only reciprocal agreements made by the UK government. Where workers temporarily posted to the UK by employers in other countries pay tax is not governed by EU law – it depends on bilateral agreements between the UK and those countries.

As a general rule, however, those posted for less than six months continue to pay tax in their home country.

This, though the article neglects to mention it, obviously also usually applies to UK residents posted to work elsewhere in the EU – they generally continue to pay UK tax, rather than tax in the country where they are working.

So the headline could just as well be reversed to say: “UK migrants can avoid tax in other EU countries.”

The number of workers posted by UK employers to EU countries – about 35 000 a year – is roughly equivalent to the number of workers posted to the UK.  So the UK is unlikely to be down on the deal, especially as many workers posted from the UK are high earning professionals.

Social security contributions for temporarily posted workers are, unlike taxation, directly covered by EU law agreed by all Member States.  Posted workers –whether they are British residents working in say France or Germany, or for  example Spanish or Polish residents temporarily posted to the UK – do indeed pay their contributions in their home country rather than the country of work.

As is logical – though the Sunday Telegraph omits to mention this part – their home country is also reponsible for paying any social security benefits to which they might be entitled.

As a result, EU workers posted to the UK and paying social security contributions elsewhere are not eligible for UK social security benefits – whether in work or out of work benefits. They must claim any benefits from their own country.

The newspaper is therefore incorrect to say they can receive child benefit from the UK – to be eligible, they would need to be habitually resident, which, as a general rule, posted workers are not.

The same applies with respect to housing benefit.

Finally, the article is right that EU workers posted to the UK are entitled to free health care – but it fails to mention that the UK can claim reimbursement for this from their home country.

Tags: , , , ,

Leave a Reply

You must be logged in and you must ensure that your browser allows session cookies to post a comment.

EC in the UK

Check the EC Representation in the UK website

Please note that all statements in all entries were correct on the date of publication given. However, older archived posts are not systematically updated in the light of later developments, for example changes to EU law.

Share buttons

Twitter feeds


We welcome your comments. They will be moderated. Please keep to the topic and use respectful language.