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Not in any country for 183 days in a year - where can company be registered/tax paid?

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    Not in any country for 183 days in a year - where can company be registered/tax paid?

    Hi all,

    I'm currently trying to negotiate the minefield that is international tax residency, and wanted to get some opinions. I'm trying to seek expert advice but it's proving hard to find anyone who's expertise can cover more than a single country, so any info is useful so I at least know the right questions to ask when I do speak to people!

    My basic question is - if I am not in the UK for 183 days in a given year, but am also not in any other country for 183 days, where should/can my company be registered and tax paid? I'm hoping the answer is "in the UK", as my company is already set up here and this is my home country, but it's unclear to me. I've asked my accountant for his interpretation, but they can't speak on international matters.

    My interest here isn't to avoid paying tax that I owe anywhere, but to minimise the hassle for me to keep contracting (for UK clients only) while temporarily abroad.

    More detail:

    Later this year, I will be moving to Italy for my partner to study. I'll be there from September this year until March next year, and then for a couple of months from June. For the period in between (March - June) it's likely we will be somewhere else in the EU (for a work placement for my partner), but I won't know where until nearer the time - it could be the UK. After finishing in Italy, we may return to the UK, or choose to relocate elsewhere.

    Last time I asked about moving to Italy on the forum, I got some useful advice on UK umbrella companies who can pay me "PAYE" in Italy, which may still be the route I go, but I have since realised I won't be there for more than half of any given tax year (which is Jan - Jan in Italy) so am currently trying to ascertain whether I can avoid becoming tax resident in Italy (under the 183 day rule). I've hopefully found an Italian accountant who can advise me on this.

    Assuming that I can avoid becoming at Italian tax resident, and so keep working through and paying myself through my UK limited, I am wondering if it is OK for me to keep running my UK limited company next year given that I will most likely only be in the UK for a few months maximum - but I won't be in any other country for more than half a year either.

    This area is a total minefield it seems, it might be that its easiest for me to just pause my company for a year and work through an umbrella company who can deal with the relevant countries taxation, but if there is a way to keep running my UK company, that's my preferred option.

    To me, it would be logical to say that as I am UK resident, my company has been operated in the UK for last 3 years, and the clients will be UK based, then the company is UK based - but as we all know, these things aren't always logical!

    I met someone when in Italy last weekend who told me not to worry about it and just keep my UK company running and paying UK tax as that is what he did, but that doesn't seem that sound to me

    Any thoughts welcome!

    Thanks,
    Tom
    Last edited by newcontractor08; 5 July 2017, 07:55.

    #2
    Even if you remain UK tax resident in fairly sure you become liable to pay tax in each country you work in from the day you get there. You will also be liable to pay tax wherever you are tax resident subject to any double taxation treaties in place.

    Comment


      #3
      You are liable for tax in any country you earn money.

      If you live in Italy and work for two months, then go to Bulgaria and work for three months, then you will be liable for tax in Italy for the money you earned there and in Bulgaria for the money you earned there. You will need a separate company for each country you work in. You don't need to be in Italy or Bulgaria for 183 days to be liable for tax.

      The tax residency 183 days simply means it becomes your main tax residency and that you declare not only your income from the country in question but also income from other countries as well.

      Think of the 183 day rule as when your tax liability is unrestricted, rather than when you have a tax liability. In Germany for example there is a box and if you have you been there less than 183 days you tick restricted tax liability and if you've been there longer than 183 days you tick unrestricted tax liability. The same rule applies in every other country.
      Last edited by BlasterBates; 5 July 2017, 09:41.
      I'm alright Jack

      Comment


        #4
        When you fill in the UK tax form, there is a section for overseas earnings. You enter the country code(s) and claim relief under the dual taxation agreement for those country(s). So you will be taxed in the UK on your worldwide income as a UK tax resident and the tax paid in the UK will offset the liability from the other countries. You will not pay double tax bit there might be a liability if the tax owed is higher than you paid in the UK. Read the HMRC guides, this is fairly easy to get your head round. I have three tax jurisdictions at the moment.
        Public Service Posting by the BBC - Bloggs Bulls**t Corp.
        Officially CUK certified - Thick as f**k.

        Comment


          #5
          Originally posted by BlasterBates View Post
          You are liable for tax in any country you earn money.

          If you live in Italy and work for two months, then go to Bulgaria and work for three months, then you will be liable for tax in Italy for the money you earned there and in Bulgaria for the money you earned there. You will need a separate company for each country you work in. You don't need to be in Italy or Bulgaria for 183 days to be liable for tax.
          I see, thanks for clarifying. There's a lot of misleading/contradictory advice online.

          So as far as you know, even if I was only in Italy for a few months, I'd either have to register a new company there, or go through an umbrella company? I couldn't use my UK limited company to work for UK clients for a period of time?

          Hoping the Italian accountant I have contacted can guide me more on this!

          Comment


            #6
            Originally posted by Fred Bloggs View Post
            When you fill in the UK tax form, there is a section for overseas earnings. You enter the country code(s) and claim relief under the dual taxation agreement for those country(s). So you will be taxed in the UK on your worldwide income as a UK tax resident and the tax paid in the UK will offset the liability from the other countries. You will not pay double tax bit there might be a liability if the tax owed is higher than you paid in the UK. Read the HMRC guides, this is fairly easy to get your head round. I have three tax jurisdictions at the moment.
            Ah okay! So I would e.g. pay tax in Italy for six months, pay tax in Germany for six months, and also pay that tax again in the UK, then under the dual taxation agreement, claim it back?

            Do you have a link to the guides in question please? Really trying to wrap my head around the best way to do this but I'm struggling to find the right sources and people to speak to. Equally if you know any experts in this area it would be great to be put in touch.

            Thanks!

            Comment


              #7
              Originally posted by newcontractor08 View Post
              Ah okay! So I would e.g. pay tax in Italy for six months, pay tax in Germany for six months, and also pay that tax again in the UK, then under the dual taxation agreement, claim it back?

              Do you have a link to the guides in question please? Really trying to wrap my head around the best way to do this but I'm struggling to find the right sources and people to speak to. Equally if you know any experts in this area it would be great to be put in touch.

              Thanks!
              No, you don't claim anything back. If you pay tax on your worldwide income in the UK (which is normally the case for a UK citizen) and your liability in the other countries for that portion of income is greater, then you pay the top up to the other country. Same also applies in reverse. All the guides and tax treaties are readily available and understandable on the HMRC website. I recently completed my 16/17 return for three tax jurisdictions*** using a copy of TaxCalc Personal software and a copy of the RDR3 guidelines from HMRC.
              *** I am slightly different in that my jurisdictions apart from UK are not EU. Though the principle is exactly the same.
              Last edited by Fred Bloggs; 5 July 2017, 10:51.
              Public Service Posting by the BBC - Bloggs Bulls**t Corp.
              Officially CUK certified - Thick as f**k.

              Comment


                #8
                Originally posted by newcontractor08 View Post
                Last time I asked about moving to Italy on the forum, I got some useful advice on UK umbrella companies who can pay me "PAYE" in Italy, which may still be the route I go, but I have since realised I won't be there for more than half of any given tax year (which is Jan - Jan in Italy) so am currently trying to ascertain whether I can avoid becoming tax resident in Italy (under the 183 day rule). I've hopefully found an Italian accountant who can advise me on this.
                Careful here - no two countries are the same. The UK makes the determination on a tax year basis, but in addition to the 183 day rule also has a 90 day rule (e.g. you are taxable in the UK on your worldwide income if you have spent more than 90 days in the UK as an average over the past four years).

                Certain other countries instead make the determination on a rolling 365 day basis, so planning around the tax year dates obviously won't work then.

                Comment


                  #9
                  Originally posted by newcontractor08 View Post
                  I see, thanks for clarifying. There's a lot of misleading/contradictory advice online.

                  So as far as you know, even if I was only in Italy for a few months, I'd either have to register a new company there, or go through an umbrella company? I couldn't use my UK limited company to work for UK clients for a period of time?

                  Hoping the Italian accountant I have contacted can guide me more on this!
                  You can use your UK company in Italy, but if it has a permanent establishment (such as you being there and managing the company from there), you will have to register it as a foreign branch and maintain a separate, Italian bookkeeping for the business of the branch.

                  Comment


                    #10
                    Originally posted by m0n1k3r View Post
                    You can use your UK company in Italy, but if it has a permanent establishment (such as you being there and managing the company from there), you will have to register it as a foreign branch and maintain a separate, Italian bookkeeping for the business of the branch.
                    Popular opinion is that using a UK MyCo Ltd elsewhere is a bad idea. I'm not sure how it would be if your uncle had a UK MyCo Ltd and seconded you to Italy as an employee? I really don't know TBH. My old BigCo PLC employer did that with me all the time right around the EU.
                    Public Service Posting by the BBC - Bloggs Bulls**t Corp.
                    Officially CUK certified - Thick as f**k.

                    Comment

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