Working in UK for US company with German office

[Iainfk]

Hi

First off thanks to all involved for such a helpful site & forum, has really helped this newbie. Just been made redundant but been offered a 6-month contract with a US company; hadn't particularly fancied contracting but it's a great job and may lead to something permanent so am going to give it a go. I'm not sure what form the contract will take but trying to get some background info. There are a number of posts here covering this situation so I've got a reasonable idea of how it might be handled, either by setting up my own company or using an umbrella, billing the US company. I'd just like some thoughts on another alternative: they have a German office, is there any mileage in me contracting to them, rather than the US Head Office? It may be that this would just make things even more complicated, but thought that potentially the EU might work in my favour here ? Ta

[TheCyclingProgrammer]

Are you planning to work here in the UK? If so, I'm not sure what difference it makes. Umbrella, Ltd...ask an accountant which is best for you financially and just bill either company (if you do register for VAT, you won't charge VAT to either as it would be outside the scope of UK VAT).

If you have to work on-site, then both will have tax implications however there shouldn't be any visa issues working in Germany so that would probably be the easiest route. You will need to get tax advice if working abroad though.

[jamesbrown]

The OP mentions in the title that they'll be working in the UK.

Factors that may influence your choice of whether to contract with the US company or German company include: currency; jurisdiction and governing law; insurance; and payment terms. Without knowing the details, it's difficult to comment. However, depending on your area of work, it's more difficult to secure PI insurance for the US market and it's also more difficult to get a US company to agree to UK jurisdiction and governing law (which may be problematic for the umbrella route).

Otherwise, there's really no difference. For VAT, there are place of supply rules but, as indicated above, the services are likely to be outside of the scope of UK VAT, so they wouldn't factor into your FRS calculation, for example (if you're using the FRS).

[Iainfk]

Thanks all for the feedback (apologies for not responding sooner, I thought the forum would notify me when I got a reply). It looks like they're going to set the contract up through the German office. Presumably I am right in asking to be paid in GBP rather than EUR?

[jamesbrown]

Thanks all for the feedback (apologies for not responding sooner, I thought the forum would notify me when I got a reply). It looks like they're going to set the contract up through the German office. Presumably I am right in asking to be paid in GBP rather than EUR?

Certainly, that's what I'd push for. Being paid in another currency is always a risk as a small company (because hedging is expensive/impractical), and EUR is not a risk I'd want to take at present (USD is another story, but it would still involve risk).

[cojak]

Thanks all for the feedback (apologies for not responding sooner, I thought the forum would notify me when I got a reply). It looks like they're going to set the contract up through the German office. Presumably I am right in asking to be paid in GBP rather than EUR?

For the site to notify you, you will need to subscribe to the thread.

Look above the 1st post and you'll see ' Thread Tools'

Thread Tools > Subscribe to this Thread

Click on that and you'll get your notifications...

[Iainfk]

Having read a lot of the posts and discussions on contracting for a Germany company, even if based in the UK, I'm starting to wonder if it might be easier to bill the US office! However assuming the German route is the way they go, I have some further questions; apologies for the length but wanted to make it as clear as possible:

First off I should explain that this is intended to be a one-off 6 month contract, to bridge the time it takes the parent company to set up a UK office. After that I will either be employed from there or not at all . Also, I am hoping to be on a rate of £400-500pm. I would probably have to do a proportion of my work out there on a Mon-Fri basis, say 1wk in 4. Let's assume I fall outside IR35 for now, so I set up a Ltd, which makes a big difference in net income. From reading the many discussions on the forum this opens up the tax liability question, though, to which there seem to be two approaches: assume I am still covered by the 183-day rule for employees, or register as a Freelancer over there. What are the tax implications of going down the latter route (at my sort of rate) vs the former, apart from the overheads of German accountants etc.? If I did do this, would it be pointless creating the Ltd if it's only for this job?

Going back to the 183-day issue, it seems to hinge on whether, in the German taxman's eyes, I would be an employee of my Ltd, and whether the Ltd would remain in the UK when I'm working over there. If I had other directors of the Ltd that remained in the UK, would that clear things up? There'd be plenty of other evidence of my residency (house, family etc).

Is there a 3rd possibility - to use a payroll company in Germany to 'employ' me while over there (billing the client), but bill the client for the rest of the time using my Ltd?

Phew, it'll be nice to get on with some engineering eventually

[Eirikur]

First contract and thinking of going back to perm after that.
Go for umbrella.

[SueEllen]

You aren't covered by the 183 rule while working in Germany.

If you personally work in Germany you personally have to pay tax there you can't hide behind a company structure. There are a few threads on this and how you need to approach working in Germany.

In your case as you are going to be permanent afterwards the simplest solution would be to use an umbrella company.