Contractors’ Questions: Will IT contracting 'go Swiss' in a Brexit?
Contractor’s Question: If the UK goes the way of Switzerland after June 23rd and becomes a non-EU country, what would happen if the model that Swiss nationals use for IT contracting in EU countries was carved out for Britain? A Swiss national I know has just landed an IT contract in Belgium; he never seems to have a problem contracting in Europe.
Expert’s Answer: In terms of the Swiss model, the vast majority of contractors in Switzerland operate through an employed solution similar to an umbrella company in the UK. There are special licences required to operate a payroll company and they have a cost that is prohibitive for most individual contractors to pay, so they work through payroll companies who already have the correct licences in place.
We already have umbrella companies in the UK so with regards to emulating it, we do already.
And in terms of your colleague, just like all other EU nationals, Swiss citizens should pay their tax in the country of work, so if they are operating in Belgium they should be paying their taxes in Belgium, not Switzerland.
As to the thinking that I suspect is behind your question, consider that if the UK was to exit the EU, the real question is not how do the Swiss operate, it is ‘Will we keep the freedom of movement and freedom of work that we have at the moment?’ If there is a Brexit, and we don’t have freedom of movement and freedom of work in all EU countries, it would mean that you would need a work permit to live and work in these places and that would require a company in the country of work to sponsor your work permit and employ you.
As an example, an average work permit around the world would take at least 6 weeks to get and cost a minimum of €2,000, so an exit from the EU for the UK would mean it could become very expensive and time-consuming for UK nationals to work on the continent, all depending on the fine detail of what is agreed if we do exit of course.
The expert was Charles Daw, a director at overseas contracting advisory CXC Global EMEA.