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Tag ‘Migration’

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.

Media claims that 600 000 unemployed EU migrants live in the UK are “a gross and irresponsible misrepresentation”

Monday, October 14th, 2013

The Sunday Telegraph reported on 13 October that a European Commission report published today would say that “600,000 unemployed European Union migrants are living in Britain at a cost of £1.5 billion to the NHS alone”.

This – as a Commission spokesperson has said to a press conference in Brussels – is “a gross and totally irresponsible misrepresentation of the facts”.

What the report really says, among other things, is the following.

The 600 000 figure refers to non-active migrants, a category which includes as well as job seekers, older schoolchildren, students, retired people, people taking time out of the labour market to bring up children and other direct family members.

As a comparison, 43 % of the UK population aged between 15 and 64 – so at a conservative estimate 12 million people – is classified as non-active. Clearly no –one would seriously claim that there were 12 million unemployed people in the UK.

The Sunday Telegraph’s claim that there are 600 000 unemployed EU migrants is equally absurd.

In fact, according to Department of Work and Pensions estimates, referred to on page 174 of the report, of 1.44 million people claiming Job Seekers Allowance in 2011, 8.5% of these were non-UK nationals, of which fewer than 38,000 claimants were from EU countries (approximately 2.6%).

Updated figures published in August 2013 – after the report was finished – show a higher figure of 60 100 claimants from EU countries. But this remains only 2.9 % of overall claimants.

Around twice as many non-EU nationals are claiming JSA in 2013 as non-British EU nationals. And the claimant rate for EU nationals of working age is around 3%, compared to about 4.5% for the native population.

The proportion of EU migrants in the non-active category is far lower – 30% – than the 43% in the general UK population (P19 of the report, see link above).

84% of non-active EU migrants in UK are relatives of an economically active EU citizen (figure 3.5, page 24). 64% of non-active EU migrants in UK have previously worked in the UK (p25-26)

The share of non-active EU migrants from the total population in the UK was 1.2% in 2011 and stayed the same in 2012.
The report estimates also that the proportion of the NHS budget spent on non-active EU migrants is between 0.7% and 1.1%.
It should be read against the background of other recent studies that consistently show that workers from other EU Member States taken as a whole make a major net contribution to the public finances of the UK.

In other words, migrant workers from other Member States – not only in UK but EU-wide – pay more in taxes and social security than they receive in benefits and services – including health services – because they tend to be younger and more economically-active than host countries’ own workforce.

These studies include: the OECD’s International Migration Outlook 2013, the Centre for Research and Analysis of Migration study on Assessing the Fiscal Costs and Benefits of A8 Migration to the UK and the recent study by the Centre for European Reform, which concluded that: “Contrary to popular opinion, EU immigrants are far less likely to take up benefits than the British population. ‘Benefit tourism’ is a canard: the great majority of EU immigrants come to Britain to work.”

Other media stopped short of the blatant misrepresentation seen in the Sunday Telegraph, but reports in for example the Daily Mail, the Sun and the Express – which saw fit to run the piece alongside pictures of a Jobcentre and of unidentified people apparently in a makeshift shelter under a bridge – were notable for the repetition of previous inaccuracies and as much for what they did not say as what they did.

For example, several reports included claims that it was necessary to clamp down on EU migrants benefit rights to stop “benefit tourism”.

But none mentioned that – under EU law and as explained in this previous blog – those coming to UK to look for a job already cannot claim benefits immediately. Only those “habitually resident” – which usually means having worked in the UK or being a direct family member of someone having so worked – can do so.

The Mail also confused two eligibility tests. The Habitual Residence Test is a test agreed by all EU Member States and applied by all. It aims precisely to prevent benefit tourism and all the evidence in the report is that it largely succeeds in doing so.

The second test applied in the UK is an additional UK test called the Right to Reside test, which refuses benefits to some who have worked a considerable time in UK. That is why the Commission has referred the UK to the European Court of Justice – over this specific and discriminatory test, not for having tough procedures to deter benefit tourism. Far from trying to prevent the UK from applying tough procedures, EU law is designed to make sure such procedures are applied.

Finally, it is worth noting that the UK government estimates that there at least 1.4 million UK citizens resident elsewhere in the EU. While there are no official figures as to how many of those are non-active, that number is highly likely to significantly exceed 600 000 given the high proportion of pensioners – and non-working partners – among such UK expats.

This entry was originally posted on 14th October 2013 and was last updated on 15th October 2013.

Absurd Daily Express story that EU could impose quotas of Roma MPs in UK

Monday, September 30th, 2013

The Daily Express reports today under the headline ‘Now EU “Crackpots” demand gypsy MPs’ that, if a resolution from the European Parliament becomes law “all the political parties in the UK will have to impose female gypsy candidates on the electorate and get them into Parliament.”

This story is ludicrous. First and foremost  – and leaving aside the questionable  terminology used by the Express – the EU only has the powers delegated to it by the Member States in unanimously agreed Treaties. Those powers do not include the power to intervene in how candidates for national elections are nominated. So it is quite simply impossible that the EU could pass such a law.

The story has been described by an MEP in a letter sent to the Express as “fabricated from beginning to end.”

The agreed European Framework for Roma inclusion looks into ways of helping integrate traveller communities into education, employment, healthcare and housing. It says nothing about political representation, let alone quotas.

What the MEPs concerned are trying to do is draw attention to the exclusion and discrimination faced by Roma communities all around Europe, around 90% of whom live below the poverty line.

Free movement and migration within the EU and rights to claim benefits – the myths and the facts

Monday, February 18th, 2013


There are three recurring myths about EU rules on migration and benefits.

First, it is a myth that EU law gives all EU citizens an unconditional right to reside freely in the UK or another Member State. In reality, this right is subject to important restrictions.

Second, it is a myth that EU law means that EU migrants are automatically entitled to claim benefits in the UK or another Member State. In fact, EU rules require migrants to meet stringent requirements before they can be eligible either for means tested “social assistance” benefits like housing benefit and income support or for social security benefits like child benefit, invalidity benefit or contribution-based Jobseekers’ Allowance.

The third, linked, myth is that EU rules somehow encourage so-called benefit tourism. In fact, the rules are designed to prevent “benefit tourism”.

Benefit tourism?

There is no evidence that the UK suffers significantly from benefit tourism. Neither do EU migrants represent a disproportionate number of benefit claimants – rather the reverse.

As an example, the Department for Work and Pensions’ figures show that of 1.44m people (or very roughly 2.4% of the UK population) claiming Jobseekers Allowance (JSA) in Feb 2011, under 38 000 were from other EU countries. This represents about 2.6% of total JSA claimants, which is broadly in line with the estimated percentage of the UK population – also around 2.6%, or about 1.6 million people – who are nationals of other EU countries.

However, given that a significantly greater proportion of the EU migrant population is of working age than is the case for the general population, this means that the percentage of working-age EU migrants claiming Jobseekers’ Allowance is lower than the proportion of the general labour force claiming this benefit. The DWP document (see link above) shows that the picture is similar for other benefits.

The comparison is even more marked when looking at EU migrants from Poland and the other seven Member States which joined the EU in 2004. Under 13 000 JSA claimants (0.9% of total claimants) in February 2011 were from those Member States which joined the EU in 2004. These included for instance 6 390 claimants from Poland – or just over 1% of the estimated number of Polish nationals residing in the UK – compared to an overall figure of 2.4% of the UK population claiming JSA.

The level of EU migration into the UK is itself also often overestimated. In fact, according to Oxford University, net (arrivals minus departures) migration of non-British EU citizens into the UK in 2011 was 82 000, compared to 204 000 net arrivals from other parts of the world. So EU migration accounted for around 28.7 % of net migration into the UK in 2011.

EU rules – the facts

First, it is important to note that the EU rules have all been agreed by all Member States, including the UK.

Rules on free movement

EU citizens have a right to stay in the UK, or any other Member State that is not their own, for up to three months with a valid passport or identity card. But to stay for longer, they need to be:

Œ         in employment; or

         continue to seek employment and have a genuine chance of being engaged; or

Ž         to be able to show that they have sufficient resources not to be a burden on public funds and sickness insurance.

In other words, as UK Immigration Minister Mark Harper recently put it in the Daily Mail: “European nationals do not have unrestricted access to the UK. They must be exercising their treaty rights. This means they must be working, studying or self-sufficient.”

Individuals can also be excluded or expelled on the grounds of public policy or in the event of abuse or fraud.

The full and exact legal provisions are to be found in this EU law adopted by the European Parliament and by national Ministers in 2004.

Rules on rights to claim benefits

To get a full picture of how the EU rules work, we need to distinguish between two categories of benefits.

Social assistance benefits – such as Income Support or Housing Benefits– are typically means tested and given to people in need. These benefits are not financed by contributions paid by the individuals, but through general taxation.

EU citizens who are workers or self-employed in the UK (and their family members) are eligible for social assistance benefits without any conditions. That is only fair as they contribute, like all other UK workers, through their taxes to the public funds from which the benefits are financed.

Conversely, EU citizens who are not employed should not be eligible for these benefits as EU law requires them to have resources higher than the income threshold under which the benefits are granted.

Social security benefits are granted to provide cover against the classical social security risks – sickness, maternity and paternity, accidents at work and occupational diseases, old-age and invalidity, unemployment and having to assume financial responsibility for a family. Depending on the social security system of the Member State in question, they may be financed out of contributions (in the UK for example State Pension and contribution-based Jobseeker’s Allowance) or out of general taxation (in the UK for example healthcare in the NHS)

Again, EU citizens who are workers or self-employed persons in the UK (and their direct family members) are entitled to social security benefits on the same terms as UK citizens, provided that they meet certain conditions established by national law, such as for example reaching the retirement age for an old-age pension or having made sufficient contributions for an unemployment benefit.

On the other hand, EU law says that before EU citizens not active in the labour market become eligible for social security benefits they have to pass a strict “habitual residence test” proving that they have a genuine link with the UK.

This test has been agreed by all Member States, including the UK, under this EU Regulation.

In practice, a significant number of those who pass the habitual residence test have worked and paid taxes in the UK for a certain period or are living in the UK as a direct family member of someone working.

(The full criteria EU Member States should apply under the habitual residence test include the duration and continuity of the person’s presence in the Member State concerned; the nature of any activity pursued, including its stability or whether it is habitually pursued and the duration of any work contract, the exercise of any non-remunerated activity; the person’s family status and family ties; in the case of students, the source of their income; the person’s housing situation and its permanence; and in which country the person pays tax.)

These criteria for assessing habitual residence are strict and thus ensure that only those persons who have genuinely moved their centre of interest to a Member State are considered habitually resident there. This is a powerful tool for the UK and other Member States to make sure that social security benefits are only granted to those who are entitled to receive them.

Of course, in order to receive those social security benefits that are directly linked to a certain length or value of contribution, EU migrants must also meet those criteria as well as the habitual residence test.

So reports that the European Commission is insisting that the UK should provide benefits for non-active EU migrants “from day one” are quite simply untrue.

What is true is that the Commission, as it is legally obliged to do under EU treaties and rules to which the UK has signed up, has formally asked the UK to cease applying an additional “right to reside” test specific to the UK and which goes beyond the habitual residence test agreed by all Member States.

In many cases EU nationals living in the UK are indeed receiving the social security benefits to which they are entitled. But applying this additional right to reside test is depriving some other EU nationals living in the UK, in full compliance with EU rules and within the strict limits set by those rules, of social security benefits to which they are entitled.

In many cases, these EU nationals have worked and paid their tax and social security contributions in the UK, yet are still being refused benefits.

The fact that the UK continues to apply this test means that it is applying different criteria to EU nationals in the UK than those being applied to UK nationals resident elsewhere in the EU (of which there are up to two million according to some estimates).

Rights to National Health Service (NHS) treatment

First, EU law certainly does not make the UK a safe haven for EU citizens who would like to come to get healthcare at the expense of UK taxpayers.

Those who come for short periods, for example on holiday, can receive basic and emergency care, by using the European Health Insurance Card (EHIC – formerly known as an E111).

However, under the EHIC system, that care is ultimately paid for by their own Member State of residence. Such visitors are in general not entitled to non-urgent treatment for existing medical conditions and neither are they entitled to come to the UK specifically to obtain NHS treatment.

EU law on the coordination of social security systems provides that those EU citizens – and only those – who can show that they are either employed or self-employed in the UK or non-active but habitually resident in the UK (see above for the criteria) are fully entitled to treatment by the NHS on the same terms as resident UK citizens.

UK law is in line with this principle and does allow EU citizens who are genuinely resident in the UK to have full access to NHS treatment.

UK citizens in other Member States have access to state funded healthcare systems there on the same basis.

But the UK does not recognise entitlement to NHS treatment as comprehensive sickness insurance cover within the meaning of EU law on free movement of EU citizens. It is on that issue that the Commission launched “infringement proceedings” (legal action) in 2011 against the UK.

In the Commission’s view, EU law requires that in assessing whether a non-active EU citizen should be entitled to remain in the UK under the free movement rules, the UK authorities must consider NHS cover – IF the person qualifies for it – as sufficient sickness insurance, without requiring them to obtain private insurance. It is worth emphasising again that the mere fact of being present in the UK is NOT enough to ensure qualification for NHS cover.

EU rules do not prescribe to EU countries how they should set up their national health-care systems. They can shape those systems as they see fit and the only obligation is that they cannot discriminate against EU citizens from other EU countries.

Like a number of other Member States (Spain, Portugal, Denmark, Sweden, Finland), the UK has decided to set up a scheme which does not link entitlements to individual contributions.

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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