Regulatory Updates in Northern & Western Europe
Throughout Northern and Western Europe, various new labor laws have been implemented, and many notable amendments have been made to those already in effect for the year of 2021 and beyond. Below are some of the highlights of these new laws and amendments in specified European countries.
Social Security salary ceiling will be held constant for the remainder of 2021.
As of January 1, 2021, French government officials implemented an ordinance mandating that a ceiling for social security salary be set in place as of January 1, 2021. Considering the detrimental effects that the COVID-19 pandemic has brought upon employers and employees, the government decided to refrain from raising the cap from the preceding year.
The following salary basis will determine the ceilings for social security throughout 2021:
- Monthly: EUR 3,428
- Daily: EUR 189
Current requirements for new companies requesting tax numbers in 2021.
As of January 1, 2021, newly established companies in Germany must electronically submit a request for a tax number. A tax registration questionnaire form must be filled out to complete this request, and the form can be found on the ELSTER webpage (www.elster.de). ELSTER requires registration to be completed before the form can be accessed.
Changes in Employment Law
Beginning July 1, 2021, all employers must implement and maintain compliance with the revised German labor law. Below are the notable changes to the employment law which must be observed:
- The hourly minimum wage rate will rise from EUR 9.50 to EUR 9.60
- The short time allowance decree will be applicable until the end of the year
Tax incentives proposed for businesses in the 2021 budget law.
The following are significant tax incentives presented in the budget law:
- Induction of the Italian Law No. 160/2019 (research and development tax credit) – provides an extension on tax credits for investment initiatives in research and development and other innovation or technical projects until the end of 2022.
- The research and development tax credit has risen to 20%, and the expense cap has increased to EUR 4 million
- The tech innovation design/aesthetic growth tax credit has risen to 10%, and the spending cap now sits at EUR 2 million
- For southern Italy: research and development tax credits are valid for investments in projects in accordance with Italian Law No. 160/2019. This includes COVID-19 research and development initiatives directly affecting manufacturing plants in Calabria, Puglia, Sardinia, Molise, Abruzzo, Sicily, and Basilicata. This tax credit will be applicable for the remainder of 2021 and 2022
- Advertisement investments tax credits – throughout 2021 and 2022, any ad investments made in magazine or newspaper publications are eligible for a tax credit of 50%, with a cap of EUR 50 million
- Training tax credits – investments in training for improving technical knowledge are granted tax credits for expenses laid out in Commission regulation (EU) 651/2014, Article 31 (3) for the December 31, 2020 – December 31, 2022 tax period.
Paternity Leave Increase
In addition to the aforementioned tax credit implementations, Italian government officials have also amended the paternity leave policy. Paternity leave time has been raised to 10 days for childbirth or adoption, making it an additional three days than it had previously been.
New E-invoicing policies for cross-border transactions
Italy has proposed a mandatory e-invoicing issuance and reporting requirement, Sistema di Interscambio (SDI), for B2B cross-border transactions. Beginning January 2022, this will be a mandatory reporting practice that will replace the original tax reporting measure, Esterometro, which was implemented in 2019.
All invoices in correspondence will have to be filed to Sistema di Interscambio (SDI), the Italian Revenue Agency’s e-invoicing platform. The invoices must be submitted in FatturaPa format, and as of January 2021, must comply with the newly adopted XML format as well.
Foreign suppliers must submit invoices of purchases to SDI by the 15th day of the month subsequent to the month in which the invoice was received. Invoices of sales for foreign consumers must be submitted by the 12th day following the date of the invoice.
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