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Tag ‘EU migrants’

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

Thursday, 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.

More seriously misleading reporting on EU migrants and benefits

Sunday, October 20th, 2013

The Sunday Telegraph on 20 October runs a follow up to its coverage on 13 October of a detailed European Commission report, which concluded that there is no evidence of systematic or widespread benefit tourism by EU nationals migrating within the EU, including to the UK.

This coverage is highly critical of the Commission report and calls into doubt its conclusions. But in all its thousands of words, the Sunday Telegraph at no stage provides any concrete quantitative evidence to contradict those conclusions and those of other reports – including for example by the OECD and the the Centre for European Reform – which have concluded broadly the same.

Unfortunately, the newspaper bases much of its coverage on factually incorrect assertions and on the omission of salient facts. This merits further detailed analysis.

The newspaper’s earlier coverage falsely claimed there are over 600 000 unemployed EU migrants in the UK. Its reporting was described by a Commission spokesperson as “a gross and irresponsible misrepresentation” and a detailed rebuttal was issued here by the European Commission’s London Office.

Another factually inaccurate claim is central to this week’s coverage. The paper states that “all people seeking work in Britain are eligible for Jobseeker’s Allowance, of £56.80 a week”. They are not. As we have repeatedly explained, EU migrants must pass a tough Habitual Residence Test set down in EU law (more on this below) before they can claim. The media cliche that anyone from elsewhere in the EU can step off a plane or a ferry and sign on the dole is simply not true.

Among the real facts – based on UK government statistics – are the following.

As Mark Harper, the Immigration Minister, said repeatedly on the BBC’s Question Time on Thursday 17 October, according to the Office for National Statistics, less than a third of net migration to the UK in recent years has been from the European Union.

And far from placing disproportionate burdens on the benefit system, UK government figures show beyond dispute that EU nationals are far less likely to claim working age benefits than UK nationals.

As this Department for Work and Pensions report from 29 August 2013 in turn reveals (P11-12), less than third of the non-UK nationals claiming all working age benefits in February 2013 – including Disability Allowance – in the UK were from the EU. EU nationals represented 2.1% of all working age benefit claimants (while representing nearly 5% of the working age population). Indeed, other figures from the DWP report (P10) show that 16.4% of working age UK nationals were claiming a DWP working age benefit compared to under 6% of working age EU nationals.

The stereotype that EU migrants in the UK are predominantly from Eastern and Central Europe is also incorrect. Only about half are. One of the biggest groups of all is from France – estimated by the French Consulate at between 300 000 and 400 000 in London alone.

As the DWP report above also shows, the number of EU migrants claiming Jobseekers Allowance – the main UK unemployment benefit – in February 2013 was estimated at 60 100, a tenth of the number the Sunday Telegraph described last week as “unemployed”.

So the vast majority of the approximately 600 000 “non-active” EU migrants in the UK are not claiming unemployment benefits.

In this context, the answer to Frank Field MP’s question quoted in the Sunday Telegraph (“so how are they living?) is that, like the over 12 million non-active UK citizens in Britain and the hundreds of thousands or even millions of non-active UK nationals in other EU countries, they are mainly being provided for by spouses and partners, parents (school children over 15 and students are included in this figure) and pensions. The Commission’s report shows that 84% of non-active EU migrants in the UK are relatives of an economically active EU national.

For the avoidance of doubt, just as most of the hundreds of thousands of UK pensioners in Spain receive UK pensions, if EU nationals have spent their working lives in other EU countries, those are the ones – and not the UK – that pay for their pensions.

The Sunday Telegraph also implies that the Commission is taking the UK to the European Court of Justice to make sure all EU jobseekers can get out of work benefits. It is not clear whether this implication is deliberate but it is clearly the inference a casual reader would draw – and it is false. The story fails to mention the Habitual Residence Test described above.

The Commission has indeed referred the UK to the European Court of Justice. But this is not because it wants the UK to allow all EU migrants to claim benefits.

It is because the UK imposes, over and above the Habitual Residence Test, an additional test not used elsewhere, called the Right to Reside test. EU citizens who are habitually resident in the UK and have  a significant work record have been denied benefits under that test.

Even on an anecdotal level, the Sunday Telegraph cannot seem to find in Polish circles in London a single person who came to the UK with the intention of claiming benefits rather than working. It does find EU migrants who have previously worked and are now claiming benefits – but that is hardly a surprise. It also puts forward evidence of pressure on local services in Peterborough – but far from contradicting the Commission’s analysis of the situation, this is precisely in line with it, as can be seen from Commissioner Andor’s quote here.

The Sunday Telegraph also seeks to suggest that the European Commission report is in some way biased because the contractors who drafted the report were paid by the Commission for their work.

This is not the case. Nearly all such reports, whether commissioned by EU institutions or by the UK and other national governments are performed by outside contractors – who obviously cannot work unpaid – after rigorous procurement processes. They serve no purpose if they cannot withstand tough neutral scrutiny.

The report pulls together published and undisputed figures – many of them from the UK’s own Department of Work and Pensions as described above.

Other media reports this week have suggested that the numbers in the Commission report somehow show that 41 000 EU nationals who have never worked in the UK are claiming Jobseekers Allowance (JSA).

This again is completely false and based on a simple mathematical error by those drawing this conclusion, who include Migration Watch in an erroneous report  here.

The Commission report refers, based on a Europe-wide Labour Force Survey (LFS), to 112 000 people seeking work in the UK being from other EU countries and says 37% of those – or about 41 500 – have never worked in the UK. This is where Migration Watch and the newspapers concerned – the Daily Telegraph and The Sun – seem to have obtained the 41 000 figure.

But most of those people are not eligible for and are not getting Jobseekers Allowance, as they would not pass the Habitual Residence Test referred to above.

A read across of the figures backs up this conclusion.

Based on the LFS figures, 63% of EU migrants seeking work (about 70 500 based on the the 112 000 figure) have worked previously in the UK. Most of those who have worked for a significant period would be eligible for Jobseekers Allowance – so this indicates that people with a previous work record make up the vast majority of the total of 60 100 EU nationals the Department of Work and Pensions says were claiming in February 2013.

Indeed – though there are risks in seeking to draw exact conclusions by cross-referencing figures from different sources as Migration Watch have done – the logical conclusion, far from being that there are 41 000 EU claimants who have not worked, is that  even many of those who have worked and are now unemployed are not claiming.

Meanwhile, at the time this blog was updated on 20 October, last week’s false statement about the “600 000 unemployed EU migrants” remained on the Telegraph’s website – with links to it from this week’s coverage – despite representations to the newspaper by the European Commission and others asking for an explicit correction to be published.

The Mail online and the Mirror have repeated and neither removed nor corrected this absurd claim.

It is a matter for serious concern that national newspapers – who quite rightly are quick to hold EU institutions to account – can fail when dealing with highly sensitive issues of this nature to properly scrutinise incorrect statitstics and calculations, run prominent stories misinforming their readers and fail to issue explicit corrections of those stories when requested- though we should in fairness point out that the Daily Telegraph has issued a correction, at least in part.

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.

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