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Contracting in UK tax resident abroad.

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    Contracting in UK tax resident abroad.

    I am struggling to find information on how tax is handled when contracting in the UK using an overseas company (EU) but where I, as the contractor, am actually resident in that country and don't plan on "moving" to the UK.

    Let me explain my situation a little more - I am living in Spain and have been for 4 years, where I am tax resident and have a spanish limited company with an EU VAT number that provides IT consultancy services. I am interested in taking on a contract for a UK company, for simplicity I would like to run this via my already established Spanish company. If I contract for a UK company I will still be resident in Spain, I will be providing some work onsite in the UK (where I will not have a permanent base and will most likely stay in hotels) and the rest of the work remotely from Spain. I don't know the exact split of offsite/onsite, but for arguments sake, let's say 50/50 working hours.

    I thought this would be a fairly simple matter of signing the contract and invoicing from my Spanish Ltd co since I will continue to be resident in Spain even though part of the work will be provided onsite in the UK - but the agency I am dealing with is insisting on me going through a UK umbrella company. I do not want to end up having to pay income tax in the UK and then offsetting it under the double taxation treaty with my spanish income tax since it's more tax efficient, and way less complicated, for me to invoice from my Ltd company in line with other income streams I have. And how would that even work when only half of the services (estimated) would be provided in the UK?

    Im feeling like I'm opening pandoras box searching around for answers on this so I'm hoping someone more clued up here can give me some advice.

    Thanks

    #2
    Believe it or not, the HMRC guides on this subject are very helpful. Try there first before you listen to a bunch of strangers. I am tax resident in three countries and I worked it all out OK.
    Public Service Posting by the BBC - Bloggs Bulls**t Corp.
    Officially CUK certified - Thick as f**k.

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      #3
      The mantra is simple, tax is due where the work is done.

      Comment


        #4
        Originally posted by stek View Post
        The mantra is simple, tax is due where the work is done.
        So if I work 50/50? That sounds like an administrative nightmare.

        Comment


          #5
          Originally posted by crussell View Post
          So if I work 50/50? That sounds like an administrative nightmare.
          If you read the double taxation treaty a company operating in more than one country should split its income proportionately.

          I would suggest setting up a UK Ltd and then bill from your Spanish company for the work you do from Spain.

          Keep records of where you are as it may well be queried by one or other of the tax authorities.
          I'm alright Jack

          Comment


            #6
            If you read the documents at HMRC that I mentioned above, they will tell you exactly how many days you can or can't work in the UK in a year and not or have to pay tax. But to understand the implications of all this you need to read it all properly rather than just cherry pick the questions that you feel need an answer here. If you read about it and digest it, it will be a lot easier then to understand.
            Public Service Posting by the BBC - Bloggs Bulls**t Corp.
            Officially CUK certified - Thick as f**k.

            Comment


              #7
              Originally posted by BlasterBates View Post
              If you read the double taxation treaty a company operating in more than one country should split its income proportionately.

              I would suggest setting up a UK Ltd and then bill from your Spanish company for the work you do from Spain.

              Keep records of where you are as it may well be queried by one or other of the tax authorities.
              Most jurisdictions, UK included, say you HAVE to declare your world wide income on your tax return (unless you already have overseas tax residency, then different rules apply). What tax is paid where is then down to the tax treaties. You will not pay tax twice on the same money (normally).
              Public Service Posting by the BBC - Bloggs Bulls**t Corp.
              Officially CUK certified - Thick as f**k.

              Comment


                #8
                There are two different problems here - where does he pay tax, and what setup will the agency allow.

                It's likely that you can talk to the agency about double-tax agreements and HMRC, but they either won't get it or won't care. See if they will accept a UK company (which might take some time to get a bank account if you're non-resident) or suck it up and use a brolly.

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                  #9
                  Incorporate me uk ltd. Bill from there.

                  Me uk ltd subs to me spain ltd.

                  The uk co will obv be uk resident and liable to tax on its income of nil.

                  If it so happens that you personally become tax resident run for the hills. Otherwise get a letter from the spain tax authorities that me spain is resident in spani and declares and pays tax kn its worldwide income.

                  Will this be ok? Dont know so run it past uk accountant. But i have had to do the above in reverse for portugal and it was ok.

                  Comment


                    #10
                    As mentioned by others, forming a UK company might be the best option both from a tax efficiency perspective and keeping things as simple/tidy as possible.

                    The first question though is what will the agency allow. If you were to form a UK company would they still insist that you operate through an umbrella company?

                    Also, is the client part of the public sector? I wonder if the agency's insistence on using an umbrella company is because of the changes to IR35 and off-payroll workers in the public sector that came in to effect earlier this year. I presume they aren't as you called them a UK company, but thought it best to check.

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