Payroll and HR in Europe
Why Expand Your Business to Europe?
Expanding your business to Europe can be a smart decision for many businesses, particularly with the EU’s brilliant cross-border cooperation, free movement and a common currency used across the majority of its member states. This means trading within the EU is effortless, and as many countries in Europe also speak English, business communication is a breeze.
However, as with any expansion, certain difficulties can arise. There can be a lot to remember when tackling a global expansion to Europe, not to mention the different legislation and tax considerations.
Differing EU Employment Law
Whilst there is some commonality between the EU’s member states, every EU country has its own employment and legislative differences. EU employment law protects the right of employees in EU, member states, including conditions of employment, data protection and collective redundancy. Whilst these laws apply to the whole of the EU, they will operate differently between EU countries because of how they were implemented at a national level.
For European countries outside of the EU, employment laws and legislation can differ even more greatly, therefore, one set of laws cannot be assumed from one country to another and need to be carefully adhered to.
Differing Tax Rules
With Italy’s regional products taxes (IRAP), the Netherlands’ 30% ruling, and France’s annual personal income tax deductions, it can be a real difficulty to maintain compliance across different European countries. That’s why IRIS FMP is here to help. We have the in-country experience you need to make your payroll and HR management easy.
Since the UK left the EU on 31st January 2020 there have been various changes announced regarding the implications of employment law.
While the UK was part of the EU, payroll managers enjoyed the use of the EU’s payment-integration initiative SEPA. This made it easy to pay salaries, tax, and social security contributions from the UK, for employees across Europe. It looks like this arrangement will continue until at least 31st December 2020, however it is yet to be announced whether this will be continued. If not, company owners may need to open foreign bank accounts in order to pay employees working in the EU.
Visas & Work Permits
After Brexit arrangements have been finalised, it might be that British employees working in the EU will require more visas and work permits to do so. Currently, EU citizens have the right to move to any country to live, work, and/or study, however, individuals from outside the EU must apply for the relevant permits. It is likely that this will be the case for British citizens now.
Details correct at time of publication. You should not rely on these details without first seeking professional international advice.
Examples of the following reports which must be submitted to strict deadlines in Europe:
- Monthly Social
- Social Security Statements
- Company tax returns
- VAT Returns
- E.O.Y Reports
Payroll in Europe
In Europe there are many different tax considerations depending on where you are planning on expanding your business to. For example, Switzerland has three levels of income tax to consider – federal, cantonal and municipal level. If your expansion entails opening branches or subsidiaries, you must register with tax and VAT authorities, social security offices and the national companies’ register.
With different social security, benefits and healthcare systems in place, it can be a challenge to keep in line with individual country requirements.
As of 2018, there were 22/28 EU member states with an official minimum wage set by the government. The minimum wage for each country in the EU varies greatly, so it is important to stay on top of any changes. For European countries outside of the EU, minimum wage will also vary.
Much like the US, there are also a number of payslip requirements employers must adhere to in Europe, including what is necessary to display on payslips, as well as the legal requirements of paper and e-payslips to protect employee data.
HR in Europe
Employment Contracts & Terms
The EU law on employment contracts sets out guidelines for the minimum information employers must give to employees in writing. The EU employment law on contracts has been implemented into every member state’s own individual legislation, which means there will be local variations to take into consideration. This is also the case with laws on fixed-term, part-time and posted workers.
Collective Bargaining Agreements
Another complexity to consider in the EU is the vast negotiations between trade unions and employers which dictate working conditions, employment terms, pay, working hours and employer-employee relations. This is known as collective bargaining, of which the outcome are agreements that regulate procedures and terms of employment.
The amount of paid annual leave an employee is entitled to is different throughout Europe. The set minimum for annual leave in the EU is 4 weeks, however some countries set a higher minimum for paid leave.
The United Kingdom
Whilst the UK will be leaving the EU in March 2019, the UK still remains an attractive location for many businesses looking to expand to Europe. Explore more about the benefits of expanding your business to the UK, as well as how payroll and HR in the UK can differ here as well.
Find Out More About International Payroll
To read more about the complexities of international payroll, download our international payroll guide today.
IRIS FMP’s HR & Payroll Services for Europe
No matter if you are looking for payroll and HR services in the UK, Germany, France or elsewhere in Europe, IRIS FMP will help ensure your business is compliant. Our services include but are not limited to:
- Employment Contracts
- Payroll Processing
- Handling of payments (salaries)
- Annual declarations (lodging, apprenticeship & training taxes for concerned companies)
- Relations with social bodies
- Regulatory Compliance
- Tax and Labor Law Consulting
- Assisting in payroll audit (or payroll department audit)
- Handling of confidential payroll
- Assistance in company restructuring plan
- Assistance in implementation of procedures
- Assistance with start-up (in link with lawyers)
Stay Compliant with European Payroll
We’ll take the stress out of your global expansion. Speak to IRIS FMP today and we’ll support you with all aspects of European payroll and HR.