In advance of the Finalissima football (soccer) match between Italy and Argentina, being played at Wembley Stadium, London, on 1 June 2022, Her Majesty's Revenue and Customs (HMRC) has proposed exempting nonresidents of the U.K. accredited by the Union of European Football Associations (UEFA) for the purposes of playing in the match from liability for U.K. income tax. The regulations would come into force on 27 May 2022.

The exemption applies to income received by non-U.K. resident accredited players and officials and other non-U.K. resident accredited individuals for relevant duties or services performed in connection with the Finalissima football match provided that the income arises with respect to duties or services performed between 28 May and 2 June 2022, inclusive. Payers of such income will not be subject to the withholding tax obligations that would otherwise apply.

The proposed exemption includes individuals whose tax residence is split between the U.K. and another country in tax year 2022 to 2023 where such income arises in the part of the year when they are not U.K.-resident. Football competitors who are residents of the U.K. are not eligible for the exemption.

HMRC does not expect this measure to have significant economic impact. The agency explained that the government is committed to making the U.K. an attractive location to host international world-class sporting events and the income tax exemption furthers this objective.

Edward Kowalski, Esq., is Manager, Payroll Information Resources, for the American Payroll Association

Denmark and France recently signed a new treaty to prevent the double taxation of income, including income from pensions earned in one country but paid in the other. The treaty still must be approved and ratified by the parliaments of both countries before it can go into effect. Once approved, the treaty will go into effect in 2023, at a date yet to be determined [Denmark-France treaty (in French), signed 2 February 2022].

The tax treaty is aimed at preventing the double taxation of income, and is the first new double taxation treaty between the countries in 13 years. The main provisions relating to individual income taxation generally follow the standard provisions of the Organisation for Economic Co-operation and Development (OECD) tax treaty model.

Among other provisions, the agreement ensures income from pensions will be taxed in the country where the pension was earned (i.e., the country of source), rather than the country of residence.

According to the Danish Ministry of Taxation, Danish pensions paid to Danish citizens living in France will be taxed in Denmark via a method that takes the French tax rate into account. The ministry said it expects to capture more tax revenue from pension payments as a result, given that France has the lower tax rate of the two countries. The new treaty also will significantly reduce administrative burdens for Danish companies in France.

The treaty provides a tax credit method for eliminating the double taxation of the income of French citizens living in Denmark.

The two countries have strong trade relations, with recent news reports estimating there to be around 400 Danish companies doing business in France, with more than 40,000 employees working there. Correspondingly, more than 11 million euros' worth of French direct investment went to registered entities in Denmark during 2020.

Mavanee Anderson, Esq., is Editor of PayState Update and Payroll Information Resources for the APA.

The Internal Revenue Service (IRS) has issued a notice providing adjustments to the limitation on housing expenses for specific locations for purposes of the foreign housing cost exclusion under Internal Revenue Code (IRC) §911 [Notice 2022-10, 2022-10 IRB 815, 7 March 2022]. The U.S. Secretary of the Treasury makes annual adjustments to this limit based on geographic differences in housing costs.

Notice 2022-10 is effective for taxable years beginning on or after January 1, 2022. However, a taxpayer may elect to apply the 2022 adjusted housing limitations contained in the notice to his/her taxable year beginning in 2021.

Exclusions Allowed
IRC §911 generally allows a U.S. citizen or resident living abroad to exclude from U.S. taxable income certain foreign earned income. A qualified individual is also allowed an exclusion from gross income for certain housing costs paid or incurred on his/her behalf that exceed a certain base housing amount.

A qualified individual incurring housing expenses in one or more of the listed high-cost localities in 2022 may use the adjusted limit specified (instead of $33,600) in determining the housing cost amount on Form 2555, Foreign Earned Income. The $33,600 limit continues to apply to a qualified individual not incurring housing expenses in a listed high-cost locality.

Jyme Mariani, Esq., is Senior Manager of Payroll Information Resources for the American Payroll Association.

On 1 February 2022, during her presentation of India's proposed budget for 2022-23, Minister for Finance and Corporate Affairs Nimala Sitharaman announced a proposal to introduce a Digital Rupee using blockchain and other technologies. The Digital Rupee would be issued by the Reserve Bank of India starting 2022-23. Minister Sitharaman explained that the introduction of a Central Bank Digital Currency (CBDC) would give a big boost to the country's digital economy and lead to a more efficient and cheaper currency management system. The idea of a virtual currency for India has been under consideration for some time.

In addition to the Digital Rupee, Minister Sitharaman's speech to Parliament outlined a proposal for a 30% tax on virtual digital assets. The proposed budget would also allow taxpayers to file updated returns to correct errors and pay additional tax due to encourage voluntary tax compliance. It included other income and tax initiatives, such as the equalization of the income tax deduction for pension contributions by the central government and state governments on behalf of their employees.

Edward Kowalski, Esq., is Manager, Payroll Information Resources, for the American Payroll Association.

The Inland Revenue Department of the Hong Kong Special Administrative Region of the People's Republic of China has released its proposed 2022-2023 budget. Among other things, the budget proposed by the Region's Financial Secretary includes a one-time reduction of salaries (personal income) tax and profits (business income) tax for the 2021-22 assessment year by 100%, up to HK$10,000 per case. The measure requires amendment of the Region's Inland Revenue Ordinance.

For the salaries tax, the ceiling is applied to each individual taxpayer; however, for married couples jointly assessed, the ceiling is applied to each married couple (i.e., capped at HK$10,000 in total).

The ceiling on the profits tax will be applied to each business. A taxpayer separately liable for the salaries tax and profits tax will be eligible for tax reduction under each of the tax types. Additionally, the Financial Secretary has proposed waiving business registration fees for 2022-23.

The Inland Revenue Department advises taxpayers to file their profits returns and returns for individuals for the 2021-22 assessment year as usual. Once implementing legislation is enacted, the Department will reduce the final assessment. Taxpayers are not required to make any applications or inquiries to the Department.

Edward Kowalski, Esq., is Manager, Payroll Information Resources, for the American Payroll Association.

For 2022, the Canada Revenue Agency (CRA) has announced increased employee and employer contributions rates and the maximum pensionable earnings amount for the Canada Pension Plan (CPP) [CRA, Tax Tips, 1 November 2021].

Effective 1 January 2022, employee and employer CPP contribution rates will increase to 5.7% from 5.45%; the rate for self-employed persons will increase to 11.4% from 10.9%. Also effective 1 January 2022, the CPP maximum pensionable earnings amount will increase to $64,900 from $61,600. Contributors who earn more than $64,900 in 2022 are not required or permitted to make additional contributions to the CPP.

For 2022, the CPP maximum annual employee and employer contribution will increase to $3,499.80 each from $3,166.45 each; the maximum annual contribution for self-employed persons will increase to $6,999.60 from $6,332.90.

The increase in the contribution rates is due to the continued implementation of the CPP enhancement, explains the CRA. Also, the new threshold was calculated according to a CPP legislated formula that takes into account the growth in average weekly wages and salaries in Canada.

Laura Lough, Esq., is Director of Publications for the American Payroll Association

Citing the continuing concern about COVID-19 and the need to fight the spread of the virus, the governments of Belgium and Luxembourg have extended an agreement until 31 December 2021 that governs the taxation of teleworking cross-border workers.

An announcement issued by the Luxembourg Ministry of Finance on 9 September 2021 explained that under the agreement, which has been extended by the two countries several times since the beginning of the pandemic, the days during which cross-border workers are required to work from their homes due to measures taken to combat COVID-19 are not counted as days worked in the state of residence of the border worker. More than 48,000 Belgians working in Luxembourg are affected by the extension. A copy of the COVID-19 cross-border agreement is available on the Belgium Ministry of Finance website.

Earlier, at a meeting on 31 August 2021 the two countries agreed generally to amend their double-tax treaty to increase from 24 to 34 the number of days that a worker can work from home without a change in tax status. The change is effective 1 January 2022 and is intended to promote and facilitate teleworking for cross-border workers. Luxembourg's Minister of Finance explained that the agreement "is an important step towards more flexibility for the tens of thousands of Belgian cross-border workers and their Luxembourg employers, and for the post-COVID period."

Edward Kowalski, Esq., is Manager, Payroll Information Resources, for the American Payroll Association

An increase of 2% in the minimum wage that was announced by the Greece Office of the Ministry of Labor and Social Affairs on 26 July 2021, becomes effective 1 January 2022. The current minimum wage of €650 per month will increase to €663 per month at that time. The new minimum is effectively €773.5 per month because Greek workers are paid 14 monthly salary amounts a year ((€663 x 14) /12 = €773.5).

The increase seeks to enhance workers' purchasing power without jeopardizing the viability of businesses. The Minister of Labor and Social Affairs cited the recession caused by the COVID-10 pandemic and the economic crisis. The minister said the increase is a prudent measure that does not hinder the upward trajectory of the economy and keeps the Greece minimum wage in the middle range of the countries of the European Union.

Minimum wage and salary requirements in Greece vary based on an employee's years of service, marital status, and occupation. A detailed table comparing the current required minimum compensation with the minimum compensation required as of 1 January 2022 is also set out in the announcement.

Edward Kowalski, Esq., is Manager, Payroll Information Resources, for the American Payroll Association

By 27 September 2021, Australian employers (other than small businesses) needed to assess whether their existing casual employees had to be offered permanent employment. These changes were part of industrial relation reforms due to amendments to the Fair Work Act 2009. Although the changes went into effect on 27 March 2021, employers were given six months to adjust.

New Definition of Casual Employee
The amendments clarified that a "person is a casual employee if they accept an offer for a job from an employer knowing that there is no firm advance commitment to ongoing work with an agreed pattern of work." For example, if an employee is employed as casual, the roster can change each week to suit the employer's needs, and the employee can refuse or swap shifts.

Once a worker is employed on a casual basis, the worker continues to be a casual employee until either: they become a permanent employee through casual conversion or being offered and accepting an offer of full-time or part-time employment, or they stop being employed by the employer.

Information Statement Required
All employers now need to give every new casual employee a Casual Employment Information Statement (CEIS) before, or as soon as possible after, employees start the new job. Small business employers (those with fewer than 15 employees at a particular time) needed to give their existing casual employees a copy of the CEIS as soon as possible after 27 March 2021. Other employers had until 27 September 2021.

Employers can give casual employees the CEIS: in person, by mail, by email, by emailing a link to the Fair Work website, by emailing a link to a copy of the CEIS on the employer's intranet, by fax, or by another method.

Employers are not required to give casual employees the CEIS more than once in any 12-month period (for example, if an employer employs a casual employee temporarily at different stages in a 12-month period, they only need to the CEIS once).

The CEIS has information about:

• the definition of a casual employee
• when an employer has to offer casual conversion
• when an employer does not have to offer casual conversion
• when a casual employee can request casual conversion
• casual conversion entitlements of casual employees employed by small business employers
• the role of the Fair Work Commission to deal with disputes about casual conversion

Becoming a Permanent Employee
The National Employment Standards now include an entitlement for casual employees to become full-time or part-time (permanent) in some circumstances through "casual conversion." Casual employees can become permanent by their employer offering casual conversion or by making a request to their employer for casual conversion. Eligibility requirements and exceptions apply. Small business employers do not need to offer casual conversion to casual employees. Different rules also apply for offers of casual conversion to existing casuals employed immediately before 27 March 2021 who are not employed by a small business.

Jyme Mariani, Esq., is Senior Manager of Payroll Information Resources for the American Payroll Association.

 

On 21 September 2021, under Decree-Law 21 September 2021, n. 127, Italy extended its COVID-19 mandatory vaccination and "green certification" and screening system to virtually all public and private work within the country, including work done by independent contractors as well as volunteers and trainees. The measure came into force on 22 September 2021. Existing COVID-19 guidelines on masks, spacing, and sanitation remain in force.

The COVID-19 green certification was created to facilitate free and safe movement of citizens in the European Union during the COVID-19 pandemic. In Italy, the certification is issued exclusively through the National Platform of the Ministry of Health in both digital and paper format.

Decree-Law 21 September 2021, n. 127, amends an earlier decree-law, to provide that from 15 October 2021 until 31 December 2021, for access to workplaces within Italy, it is compulsory to possess and exhibit, upon request, a COVID-19 green certification. Public and private employers are required to enforce the mandate each time a worker enters a workplace. It is also possible for an employer to verify possession of the green certification in advance of the scheduled workplace access by a worker. Failure of a worker to provide the certification is considered an unjustified absence of the worker from work. Employers that do not carry out verifications are liable for fines ranging from €400 to €1,000.

Verification of the green certification can be done with a VerificationC19 app available to employers to allow for daily and automated verifications. There are provisions in the mandate for individuals who, for proven health reasons, cannot receive vaccination against COVID-19, as well as those waiting for certification, those cured of COVID-19 within the previous six months, and others. Although it is possible for a negative COVID-19 test result to be presented in place of vaccination, such tests would have to be conducted every 48 or 72 hours, depending on the test.

The Italian government posted an FAQ webpage addressing a range of questions about the mandate. The European Union's Italy webpage also has FAQs about green certification.

Edward Kowalski, Esq., is Manager, Payroll Information Resources, for the American Payroll Association

The government of New South Wales, Australia, announced tax relief measures to help businesses impacted by the COVID-19 pandemic. The relief has several components.

Payroll tax deferrals for all businesses. Payers of payroll tax have the option of deferring their payroll tax payments until 7 October 2021. Payroll tax taxpayers are still required to file the 2020/21 annual reconciliation by the due date which has been extended to 7 October 2021. These taxpayers also have the option of deferring their payments for the July and August return periods until 7 October 2021.

After filing their 2021 annual reconciliation, payroll tax taxpayers have the option of paying all of their outstanding liability in full or entering into a new Support Payment Arrangement. The tax payable from 2020/21 annual reconciliation and any monthly liabilities for the July, August, and September 2021 return periods can be included in a 2021 Support Payment Arrangement. The government plans to provide more information on how to establish a 2021 Support Payment Arrangement.

Note that the due dates for any Stimulus Payment Arrangement payments in July 2021 remain unchanged. Likewise, the due dates for any existing instalment plan payments in July 2021 are unchanged.

Payroll tax reduction in 2021/22 for certain businesses. The government also announced a 25% reduction in 2021/22 payroll tax liability for business with total grouped Australian wages of $10 million or less and also experienced a 30% decline in turnover. The payroll tax threshold from 1 July 2021 to 30 June 2022 is $1.2 million with a current payroll tax rate of 4.85%.

Edward Kowalski, Esq., is Manager, Payroll Information Resources, for the American Payroll Association

American companies that are spreading their wings in Europe to gain access to a wide range of business opportunities may also face a series of challenges. One of those potential challenges involves wrapping their head around the strict data security and privacy rules that apply in the European Union (EU)—commonly known as GDPR. For example, how do you ensure your German, French, or other European payroll is fully compliant with GDPR? The answer is surprisingly straightforward.

Entering European Labour Maze
The Old World is a patchwork of countries that all have their own laws and regulations. That means employing staff and managing local payroll requires a lot of expertise. From hiring your first employee to organising monthly payments and reporting taxes, U.S. employers should expect different layers of legal complexity. And there’s not a European counterpart for the American Payroll Association (APA) to guide you through the maze.

Did you know:

• France has the shortest official working week (35 hours) in Europe
• Luxembourg’s monthly minimum wage is as high as 2,201.93 euro/month
• German parents of new-born babies get a combined paid leave of 12 months
• Belgium workers receive 4.6% more perks on average, which include hospitalisation insurance, company bikes, and meal vouchers
• In the Netherlands, you need permission from a district judge or a national employee insurance agency to legally dismiss an employee

European countries all have their own language and their own cultural habits, and that applies to business and payroll. For example, setting up business in no-nonsense Amsterdam or in hierarchical Paris—although only 270 miles apart—are two separate things. It’s best to make those connections—particularly with someone who has the expertise and know-how to help your business navigate the local legal requirements. In the long run, simply copying and pasting your U.S. processes won’t cut it.

Data Protection, Privacy as Fundamental European Rights
Data security and privacy are regulated on the European level. The GDPR is an all-encompassing regulation that protects the sensitive data of all EU citizens. Corporations that violate this regulation may be subjected to hefty fines if they fail to comply with its key principles. Companies that violate this regulation could be fined up to €20 million, or 4% of a firm's worldwide annual revenue from the preceding financial year—whichever amount is higher.

After all, data protection and privacy are considered fundamental freedoms under the European Union Charter.

This is significantly different in the United States, where data protection is the subject of numerous laws that often vary from state to state. Some of the laws may be up to GDPR standards, while others may not. Moreover, the focus of U.S. legislation is very much on data security, while privacy is rarely addressed—contrary to the GDPR.

“In the EU, individual privacy rights come before the interest of businesses—something that is less obvious across the Atlantic,” says Sandra Korteweg, Global Partnership Manager at SD Worx.

Added Value of ISAE 3000 Attestation
So, how do you make sure your local payroll is GDPR compliant when you employ staff in Europe? Again, the answer is to partner locally with someone who has the expertise and know-how. However, not any European HR partner will do. You should always go for indisputable proof of data security compliance. The EU recommends using ISAE 3000 attestation—an international standard that provides auditors with the necessary guidelines to accurately assess the data processing controls of an outside organization and is considered the go-to standard for GDPR compliance.

ISAE 3000 attestation has three added benefits, which include:

1. Regulatory compliance: The corporation is confident they have chosen a reliable processor if the payroll provider has a with ISAE 3000 attestation
2. Contingency planning: U.S. businesses have confidence their partner can mitigate risks in the event of an incident
3. Internal support: An ISAE 3000 attestation provides HR outsourcing sceptics with confidence that your organisation can provide the needed data security

Pursue Your European Dreams With ISAE 3000 Payroll Partner
SD Worx, a global HR and payroll provider in Europe, earned its ISAE 3000 attestation in June 2021, making it one of the first companies to be able to provide secure outsourcing to U.S. companies.

The benefits of contracting with a partner that has an independently awarded ISAE 3000 attestation can hardly be overestimated. The peace of mind that comes with this type of ethical business conduct is something every organisation should look for.

Discuss your HR and Payroll requirements with SD Worx | SD Worx

Or, if you would rather have your own people on the ground, but need GDPR training, start here.

In today’s new world of work, people want to be inspired by what they do and have the freedom to focus on what matters. Organisations need a dynamic, motivated workforce empowered by smart technology. As a leading European provider of people solutions, SD Worx turns HR into a source of value for their customers’ business and the people that work for them. SD Worx delivers people solutions across the entire employee lifecycle, from paying employees to attracting, rewarding and developing the talent who make businesses succeed. SD Worx powers performance through four core capabilities: technology, outsourcing, expertise and data-driven insights. More than 76,000 small and large organisations across the globe place their trust in SD Worx and its +75 years' worth of experience. SD Worx offers its people solutions in 150 countries, calculates the salaries of approximately 5 million employees and ranks among the top five worldwide. The more than 5,300 employees at SD Worx operate in sixteen countries: Belgium (HQ), Austria, Estonia, Finland, France, Germany, Ireland, Luxembourg, Mauritius, Netherlands, Norway, Poland, Spain, Sweden, Switzerland and the UK. In 2020, SD Worx achieved a consolidated turnover of more than EUR 800 million (pro forma).

More info on www.sdworx.com / Follow us via LinkedIn and Twitter

On 8 June 2021, El Salvador became the first nation to make bitcoin legal tender. The law was published in El Salvador's Diario Official (Official Gazette) on 9 June, and takes effect 90 days after publication (7 September 2021). An unofficial English language translation of the law is available.

Under the law, providers of goods and services are required to accept bitcoin if offered as payment. Prices may be posted in bitcoin. Tax obligations can also be paid using bitcoin.

The U.S. dollar is still the official currency in El Salvador; the new law adds bitcoin as an additional form of payment. The exchange rate between bitcoin and the U.S. dollar is to be determined on a free-market basis. Exchanges in bitcoin are not subject to a capital gains tax.

The law also requires the government to provide alternatives to private sector mechanisms to allow the population to make transactions in bitcoin and have automatic and instant convertibility to the U.S. dollar, if desired. The government is tasked with promoting necessary training facilities so El Salvadorans can access bitcoin transactions.

Edward Kowalski, Esq., is Manager, Payroll Information Resources, for the American Payroll Association

The Irish government recently announced the details of a new law that gives all workers the right to paid sick leave beginning in 2022. The legislation is primarily intended to provide sick pay coverage to those employees, often in lower-paid jobs, who currently receive no sick pay or are not entitled to an illness benefit.

The sick pay scheme is being implemented over four years. Employees will be entitled to three paid sick days per year in 2022, five days in 2023, and seven days in 2024. Employers will provide 10 paid sick days per year beginning in 2025. The phased implementation is to help employers, especially small businesses, plan ahead and manage the additional cost.

The law is the latest in a series of actions providing improved social protections for workers and the self-employed over the last five years that include:

• Paternity benefits
• Parental leave benefits
• Enhanced maternity benefits
• Treatment benefits
• Social insurance benefits for the self-employed

Sick pay is to be paid by employers at 70% of an employee's wage up to a daily threshold of €110. The €110 cap is based on the mean weekly earnings in 2019 of €786.33 and equates to an annual salary of €40,889.16. The cap can be revised by ministerial order to account for inflation and changing incomes. The government said the earnings cap would ensure that employers do not face excessive costs in relation to employees who are on high salaries and noted that the cap for sick pay in Northern Ireland is £95.85 per week.

Edward Kowalski, Esq., is Manager, Payroll Information Resources, for the American Payroll Association

 

Canada and the United States each have created a new federal holiday that will be observed by their respective federal governments.

Canadian Holiday: September 30
On June 3, House Government Bill C-5 became a law designating September 30 as a federal holiday that will be named a "National Day for Truth and Reconciliation." The bill amends the Canada Labour Code to provide for annual observance of the date by the federal government and federally regulated workplaces.

U.S. Holiday: June 19
On June 17, S. 475 was signed into law (Pub. L. 117-17) to make June 19 a legal public holiday for the U.S. federal government starting in 2021, which will be named the "Juneteenth National Independence Day." Private-sector employers are not required to recognize any federal or state holidays or provide paid or unpaid leave for the Juneteenth holiday.

Jyme Mariani, Esq., is Managing Editor of Payroll Information Resources for the American Payroll Association

The Ministry of Finance for the Netherlands has announced that the government will extend its COVID-19 support package for jobs and the economy into the third quarter of 2021. The government noted that while the outlook for economic recovery after the pandemic is positive and the virus appears to be on the decline, there remain many uncertainties for businesses and workers that necessitate further relief.

TVL and NOW
The government plans to continue the Fixed Costs Grant Scheme (TVL) and the Temporary Emergency Scheme for Job Retention (NOW) in the third quarter. The TVL grant ceiling for large companies will be raised to €1.2 million for the second quarter. The new reference month for NOW grants will be February 2021. The scheme's extension and adjustment are expected to cost €2 billion.

TOZO and TONK
The government also intends to continue the Self-employment Income Support and Loan Scheme (TOZO) and the Temporary Support Scheme for Necessary Costs (TONK) in the third quarter of 2021. When future applications are considered, TOZO will focus more on supporting and encouraging businesses so that they can get back on their own feet as quickly as possible. Repayment of TOZO working capital loans has been deferred by six months to 1 January 2022. Until then, no interest will be charged.

Tax Payments
The extension of support includes the ability of businesses to further defer their payment of tax debt incurred as a result of the COVID-19 pandemic. Businesses will now be required to start payments beginning 1 October 2022 and will have five years to do so, instead of the previous repayment period of three years beginning 1 October 2021. However, businesses are expected to begin making normal tax payments again beginning 1 July 2021.

The rate for of interest for late tax payments is also being relaxed. On 1 January 2022, late payment interest is to be set at 1% instead of 4% and will be raised in steps until it returns to 4% on 1 January 2024. Over 250,000 businesses have been granted tax deferrals worth €16 billion. Many businesses have already paid at least part of the amount they owe; a total of €36 billion in deferred tax was outstanding.

Other tax measures taken in response to the pandemic, such as mortgage payment holidays and tax-free travel allowances, are extended until 1 October 2021.

Edward Kowalski, Esq., is Manager, Payroll Information Resources, for the American Payroll Association

The United Kingdom's Coronavirus Job Retention Scheme (CJRS) is further extended until the end of September. The CJRS had already been extended until the end of April [HM Treasury, The Coronavirus Act 2020 Functions of Her Majesty's Revenue and Customs (Coronavirus Job Retention Scheme) Direction, 15 April 2021].

Changes for the Extension Here are some of the changes due to the extension:

• Eligibility. For claim periods on or after 1 May 2021, employers can submit claims for employees who were employed and included on a Pay As You Earn (PAYE) Real Time Information (RTI) submission to Her Majesty's Revenue and Customs (HMRC) between 20 March 2020, and 2 March 2021. Previously, employees had to be included on a PAYE RTI submission to HMRC between 20 March 2020, and 30 October 2020.
  
  
• Support percentages. The level of government support will change for claim periods starting in June, as follows:
  
  
• June claim period. The level of government support remains at 80% of an employee's usual wages for any hours they would normally work spent on furlough (up to £2,500 per month).
  
  
• July claim period. Employers can reclaim 70% of an employee's standard pay for any hours they would normally work spent on furlough (up to £2,187.50 per month). Employers must contribute 10% for this claim period.
  
  
• August and September claim period. Employers can reclaim 60% of an employee's usual wages for any hours they would normally work spent on furlough (up to £1,875 per month). For these two claim periods, employers are required to contribute 20%.

Jyme Mariani, Esq., is Managing Editor of Payroll Information Resources for the American Payroll Association

 

The United States and Switzerland entered into a new Competent Authority Arrangement (CAA), which lists pension and retirement arrangements, including individual retirement savings plans, eligible for an exemption from tax withholding on dividends received, provided all other requirements of the U.S.-Switzerland Tax Treaty are satisfied. The CAA is effective for dividends paid on or after January 1, 2020 [U.S. Internal Revenue Service (IRS) Announcement 2021-11; 2021-23 IRB 1196].

The CAA implements a provision of the September 23, 2009, Protocol to the Treaty that added individual retirement savings plans to the list of U.S. and Swiss pension or other retirement arrangements that may be eligible for beneficial treatment. The U.S. has entered into more than 55 tax treaties with foreign countries.

More Retirement Plans Allowed
The CAA revises paragraph 3 of Article 10 (Dividends) of the Treaty to provide a list of U.S. pension and other retirement arrangements that will qualify for an exemption from tax withholding. A pension or retirement arrangement will qualify for an exemption only if it does not control the Swiss company paying the dividend, and it satisfies all other requirements of the Treaty.

Here are the qualified U.S. pension or other retirement arrangements:

1. A trust providing pension or retirement benefits under an Internal Revenue Code (IRC) §401(a) plan (which includes an IRC §401(k) plan) and a profit-sharing or stock bonus plan
2. A trust described in IRC §457(g) providing pension or retirement benefits under an IRC §457(b) plan
3. An IRC §403(a) qualified annuity plan and an IRC §403(b) plan
4. A group trust described in IRS Rev. Rul. 81-100 (as amended by Rev. Rul. 2014-24, 2014-37 IRB 529, and Rev. Rul. 2011-1, 2011-2 IRB 251), provided that it is operated exclusively or almost exclusively to earn income for the benefit of pension funds for U.S. residents
5. The Thrift Savings Fund

These qualified U.S. individual retirement savings plans also now are eligible: a trust that is an individual retirement account under IRC §408; a Roth individual retirement account under IRC §408A; a SIMPLE plan under IRC §408(p); and a trust providing pension or retirement benefits under a simplified employee pension plan under IRC §408(k). The CAA also lists Swiss pension or other retirement arrangements and individual retirement savings plans that qualify for the Treaty benefit.

Jyme Mariani, Esq., is Managing Editor of Payroll Information Resources for the American Payroll Association

 

Effective 1 July 2021, France will begin determining the unemployment insurance rate paid by employers on a Bonus-Malus system. The first adjustment of employer contributions under the Bonus-Malus system will begin 1 September 2022 and will be calculated from the end of the employment contract or temporary assignments noted between 1 July 2021 and 30 June 2022.

The new system replaces the system under which an employer paid a standard unemployment insurance rate of 4.05%. Under Bonus-Malus, the employer's rate can increase (Malus) or decrease (Bonus) to reflect the number of contracts that are terminated at the company and result in a claim to Pôle Emploi for unemployment benefits within three months of the termination. The Bonus-Malus will apply to companies with 11 or more employees in sectors of activity where the average separation rate is greater than 150%. Under Decree No. 2021-326 of 30 March 2021, ordinary resignations, the end of apprenticeships, and certain other contracts are not taken into account.

The sectors affected will be specified in a future decree. The new system takes into account the COVID-19 pandemic and excludes employers most affected by the crisis.

The bonus or penalty applied to the employer's unemployment tax rate will be calculated based on the comparison between the separation rate of the companies concerned and the median separation rate of their sector of activity. The bonus can result in a rate as low as 3%, with a penalty rate as high as 5.05%.

More information about the Bonus-Malus unemployment insurance reform is available on the website of the Ministry of Labor, Employment and Integration, which is responsible for execution of the new scheme.

Edward Kowalski, Esq., is Manager, Payroll Information Resources, for the American Payroll Association

The IRS announced that the United States and Japan have entered into an arrangement to implement the arbitration process provided for in the countries' Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income agreement [Announcement 2021-5; 2021-13 IRB 965].

Details on the Arrangement
The arbitration process will apply to cases, subject to certain listed exceptions, that Japan and the U.S. have determined are suitable for assistance under the mutual agreement procedure in accordance with published guidance. The published guidance for the U.S. is Revenue Procedure 2015-40 or its successor. The arrangement states both countries will follow its procedures in good faith and will ensure the presenter of the case and the arbitrators will follow the procedures in good faith.

The arrangement explains which cases are and are not eligible for arbitration and how to appoint arbitrators and determine their eligibility. Other details are also explained, including costs, the determination of the arbitration panel, and how to terminate the proceedings.

Jyme Mariani, Esq., is Managing Editor of Payroll Information Resources for the American Payroll Association