UK Ltd company, UK contract, sitting in an office elsewhere in EU

[robm21]

I am looking at taking on a contract role, with a UK based company. The role will sit within the UK company and so I would be paid GBP in the UK, from the UK company into a UK bank account for a UK Ltd company. Simples.

However for various reasons (lets go with dual career couple, and my other half may be moving to another office, in said EU country, hence me moving there also), I will be sat at a desk in the companies office elsewhere in the EU. My role would have no relation to the office within the EU.

I plan to contract using a UK Ltd company

Is anyone else in this position, or can anyone shed light on how this would work (or not) in reality?

How does this work tax-wise? VAT? NI? Any other implications?

Many thanks

[BlasterBates]

You are taxed where you work, so you need to set up a company where you will be based and bill from there, particularly after 3 months (a Belgian tax collector said to a poster on here, he chases contractors who´ve worked longer than 3 months). If you are planning to live in that country indefinitely you need to register with the local authorities and get advice from a local accountant.

[robm21]

Thanks, similar to what I though it might be.

Is this taxed locally based on the salary taken from company, versus any dividends taken? Or is that country specific?

[Sue B]

It is country specific. You may operate a UK Ltd anywhere you like providing you adhere to both the local and HMRC reporting rules. These registrations, along with the in country reporting requirements, level of taxation and scope of double taxation treaties, can actually make Ltd Co less financially viable than in country PAYE, especially if where you are going to work has very different rules on Divs and salary.

Finally, Social Security overseas can be very expensive, and obtaining an exemption certificate (A1) can be challenging for a single contractor Ltd Co, so best to find out and apply for the A1 before you go to make sure you do qualify, rather then accept the contract, get there, and have any Ltd Co benefits wiped out by costly social contributions.

[BlasterBates]

Although you can run your Ltd whereever you want in the EU as long as you register it and adhere to the local rules, it is not always the best way. It will be best to go with a view of a new start and get advice from an accountant in the country where you´ll be based. That´s not to say that you shouldn´t use your Ltd, but it will have to be run differently than it was in the UK.

[yasockie]

Technically, you should set up shop where you live, or you can still run your UK LTd, just run your personal taxation through the local country.

In practice, I know quite a few people who have gotten away with this for many, many years as there is:
a) no signal for HMRC or a foreign tax authority to think anything is happening
b) no incentive for HMRC - they'd have to notify the foreign tax authority, and voluntarily deprive themselves of income.

One exception to that is Germany - there you really need to tread gently.

[robm21]

Technically, you should set up shop where you live, or you can still run your UK LTd, just run your personal taxation through the local country.

In practice, I know quite a few people who have gotten away with this for many, many years as there is:
a) no signal for HMRC or a foreign tax authority to think anything is happening
b) no incentive for HMRC - they'd have to notify the foreign tax authority, and voluntarily deprive themselves of income.

One exception to that is Germany - there you really need to tread gently.

Does this mean...

My salary from company is received in the EU country (Romania), paying income tax and social sec etc under local tax requirments?

My Ltd company is taxed based on UK tax requirements?

[BlasterBates]

Does this mean...

My salary from company is received in the EU country (Romania), paying income tax and social sec etc under local tax requirments?

My Ltd company is taxed based on UK tax requirements?

If you register your UK Ltd in Romania it will be run according to Romanian rules, although your company will be registered in the UK as well there will be no tax implications in the UK as the business will be "expat" so to speak. So yes you will be employed in Romania under their law. You will of course have to sort this out with both a Romanian and a UK accountant.

It´s best to see this as a completely new company even if you use your Ltd. I don´t necessarily see it as a convenience due to the admin involved of satisfying the UK authorities that you no longer do business there and employing an accountant in Romania to satisfy the local tax regulations. In other words continuing with your Ltd is not simply business as usual.

However, many small Germany companies, for example, use the Ltd rather than a GmbH because there are lower capital requirements and generally less red tape than for a GmbH, even though these small companies are not doing any business in the UK. So it is still possible that using your Ltd is advantageous. You really need advice from a local accountant.