New Contract in the Netherlands & NEW questions

[Fred Bloggs]

I will just point out to the OP that some of this stuff isn't 100% true.

Form P85 - Look at the P85 form, it says that if you are normally completing a UK SATR then you do not fill in a P85. As a UK contractor you are 99.9% certain to be doing a SATR so P85 is not required.

UK and overseas tax residency - It is true that for the first year of being outside the UK for tax purposes you will be entitled to split year treatment. But there are conditions attached. The main one being that you must be overseas tax resident for the following full tax year or you will automatically not qualify for split year treatment. For example - Leave the UK in March 2017 to qualify for split year treatment in 16/17 you must be out of the UK tax net for the whole of 17/18 as well. IE until April 5th 2018. Regarding qualifying for split year or none UK tax residence there are now the "automatic tests". Three layers of them. If you pass the first test that is the end of the story, you are qualified for outside UK tax status. Take a look at the first "automatic outside" test, it is not so hard to pass if you are genuinely full time employed in a foreign country. Look also at Form SA109 which you fill in to claim the split year treatment along with the SATR. There are software packages available that walk you through the returns and are pretty cheap, you may well not need to go to the expense of engaging a specialist tax adviser to fill in the SATR and SA109.

Hope that helps, but to the OP - DYOR.

[DotasScandal]

State is going to let you in, work and not pay any tax there for six months...

That's not strictly correct. There are one or two that do.

[hunterbrit]

I will just point out to the OP that some of this stuff isn't 100% true.

Form P85 - Look at the P85 form, it says that if you are normally completing a UK SATR then you do not fill in a P85. As a UK contractor you are 99.9% certain to be doing a SATR so P85 is not required.

UK and overseas tax residency - It is true that for the first year of being outside the UK for tax purposes you will be entitled to split year treatment. But there are conditions attached. The main one being that you must be overseas tax resident for the following full tax year or you will automatically not qualify for split year treatment. For example - Leave the UK in March 2017 to qualify for split year treatment in 16/17 you must be out of the UK tax net for the whole of 17/18 as well. IE until April 5th 2018. Regarding qualifying for split year or none UK tax residence there are now the "automatic tests". Three layers of them. If you pass the first test that is the end of the story, you are qualified for outside UK tax status. Take a look at the first "automatic outside" test, it is not so hard to pass if you are genuinely full time employed in a foreign country. Look also at Form SA109 which you fill in to claim the split year treatment along with the SATR. There are software packages available that walk you through the returns and are pretty cheap, you may well not need to go to the expense of engaging a specialist tax adviser to fill in the SATR and SA109.

Hope that helps, but to the OP - DYOR.

Thank you. Very helpful.
Now let me summarize. If I will accept the offer (still sitting on nails waiting for the recruiter), I'll need to do the following:
1. Speak to my recruiter and the end-client whether they are happy with my choice of umbrella company. Hopefully they will, or suggest some partners, but should not force me... they might..
2. Once agreed on using one of the umbrellas, I'll have a contract with them, and would be treated as an employee of the umbrella, where they would invoice the UK (in my case) recruitment company, and the UK recruitment company will invoice the end client in the NL. My timesheet would be signed by the end client and the umbrella would invoice based on that.
3. Hopefully the umbrella would help me to apply for the 30% tax rule. This might take some months. After that cannot be applied from day1, just from approval?
4. Umbrella would apply for my A1 (HMRC form 101) to let me continue to pay UK NI, therefore it would not be necessary to pay NI in the NL (Netherlands). Now this is in conflict with many statements saying it is mandatory to pay private medical insurance in the NL.
Based on my research, in the NL there is no national insurance system like NHS where you pay NI, and get the services. They have a system where it is mandatory to have a private medical insurance, where you select a cover level, an insurance company, and then you can use certain health facilities, GP etc... So the statement is true that in the NL you MUST have private medical insurance which si mandatory, but is that still mandatory if you got an approved A1 from HMRC? Can the HMRC paid UK NI cover your medical issues in the NL where there is no national system???
(Really I haven't seen my doctor for 5 years, but if my family would come with me, we need some medical cover there, as I have a 2yrs old)
5. TAX: this is the fun part. Just checked with HMRC and P85 would only be needed if I leave permanently, or would leave for more than a year. They advise you against doing a P85 if you would leave for a temporary time to do a contract.
As TAX is calculated on annual income basis, and the contract is only 6 months long, and lets say I had no income in the UK in the tax year, just in NL, that case I'll get some tax refunded from NL, as I was paying tax on the assumption that my annual income would be xyz amount. This is not simple as I might need to consider the UK income as well, but as you mentioned above, I will have some fun with some software, or might hire someone who can help (not sure if anyone on Earth would understand multi-country EU taxation)
6. I'll end up living in hotels, or in some b&b's as renting an apartment in NL needs a perm job or a min 12 months contract. All short term lets are minimum 2x or more expensive. (I need a 2 bed place, not just a room).
7. :-) Might need to incorporate a company who can inform people thoroughly, and deal with dual country taxation, as many UK international umbrellas simply brokers.
I assume there are 100s if not 1000s of British contractors in the NL today, and cannot believe they spent months researching all of the above. It would be great to find someone who is there now, or were there last year and to understand what had to be done...

[SueEllen]

That's not strictly correct. There are one or two that do.

Stek is aware of that as we have discussed it many times. However we are talking about the vast majority of European countries.

[Fred Bloggs]

From what you (the OP) have just said, you will not be able to qualify for split year tax treatment in the UK. It seems to me that you will not qualify on any of the grounds that are tested for. So, you will be tax resident in NL and UK. As I understand it, you will complete tax returns in both jurisdictions and under the UK/NL dual taxation treaty will not be double taxed on one set of income. I really doubt you will have any benefit from the NL 30% scheme, as any income untaxed in NL will be taxed in the UK (after personal allowance) but I am not knowledgeable about it.

FWIW, I have always avoided contracting in Europe, it hasn't been worth my while dealing with all the cross border taxation hassle. I am now outside Europe and will be for the foreseeable future. It is so much less complicated for me than dealing with the European cross border tax rules.

[hunterbrit]

From what you (the OP) have just said, you will not be able to qualify for split year tax treatment in the UK. It seems to me that you will not qualify on any of the grounds that are tested for. So, you will be tax resident in NL and UK. As I understand it, you will complete tax returns in both jurisdictions and under the UK/NL dual taxation treaty will not be double taxed on one set of income. I really doubt you will have any benefit from the NL 30% scheme, as any income untaxed in NL will be taxed in the UK (after personal allowance) but I am not knowledgeable about it.

FWIW, I have always avoided contracting in Europe, it hasn't been worth my while dealing with all the cross border taxation hassle. I am now outside Europe and will be for the foreseeable future. It is so much less complicated for me than dealing with the European cross border tax rules.

Thanks,
May I ask where are you contracting now?
I am looking around and might end up somewhere else :-)

[Eirikur]

If you work through a Dutch umbrella, compulsory health insurance will be deducted from your pay

[Fred Bloggs]

Thanks,
May I ask where are you contracting now?
I am looking around and might end up somewhere else :-)

Middle East and Far East, sorry I don't wish to be more explicit than that.

[rawly]

There's quite a lot of confusing information on here! We had legal tax advise from the company I occasionally contract for in the Netherlands, which uses quite a lot of UK contractors actually. The over riding conclusion from respected Dutch tax advisors is as a Director of your own Ltd company you must bill to a U.K. Agency in £'s , they then do the usual dealings with the NL company and send you over as a full UK resident in a temporary work place. It's as simple as that really to cut a long story short, you don't need to register or get caught up in any NL Health insurance, Tax, Resident status as long as you return to the UK at least once or twice a month. Then you apply the full Overseas Scale Rate for each 24 hours your sent here, as per the HMRC set rates for each main City, and you really will be far better off than working on a comparable contract working within the UK.

[stek]

There's quite a lot of confusing information on here! We had legal tax advise from the company I occasionally contract for in the Netherlands, which uses quite a lot of UK contractors actually. The over riding conclusion from respected Dutch tax advisors is as a Director of your own Ltd company you must bill to a U.K. Agency in £'s , they then do the usual dealings with the NL company and send you over as a full UK resident in a temporary work place. It's as simple as that really to cut a long story short, you don't need to register or get caught up in any NL Health insurance, Tax, Resident status as long as you return to the UK at least once or twice a month. Then you apply the full Overseas Scale Rate for each 24 hours your sent here, as per the HMRC set rates for each main City, and you really will be far better off than working on a comparable contract working within the UK.

100% wrong, ignore this..