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Moving to Germany - Set up German Company, but still receiving income to UK Ltd

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    Moving to Germany - Set up German Company, but still receiving income to UK Ltd

    So I moved to Germany at the end of the year.

    I was previously a self employed consultant working through a UK Ltd company. I stopped paying myself any salary before I arrived.

    When I arrived, I began the process of applying as self-employed (gewerbetreibende) which is still dragging on for almost 3 months now - that's Germany bureaucracy for you. I'm still waiting for my business tax number to arrive so I haven't been able to invoice any old or new clients yet, which have gone through the UK company. I'm already paying social insurance, etc, in germany and I want to transfer all my business to my new German form.

    In the meantime, my UK company still has income coming into it from my previous clients, as well as new contracts signed which last for a few months more. So it's likely that income will continue to come in even as I start to operate in germany under the new form.

    I want to know what is the "right" way to transfer my income from the UK company to my German business form. I've heard about the possibility of my german company contracting the UK company for services, which seems like it would be the simplest. I also know I could also pay myself dividends which would be taxed as part of my income in Germany, but ideally I would want it to go to the business, as I need to use the income to pay for business expenses and an employee.

    I eventually want to wind down the UK company at the end of the tax year.

    Has anyone been in a similar situation and can offer some advice? I will of course be seeking some professional help, but any pointers would be appreciated. My UK accountant wasn't particularly helpful in this area, so I'm going to try someone on the german side.

    #2
    Originally posted by ashuri123 View Post
    So I moved to Germany at the end of the year.

    I was previously a self employed consultant working through a UK Ltd company. I stopped paying myself any salary before I arrived.

    When I arrived, I began the process of applying as self-employed (gewerbetreibende) which is still dragging on for almost 3 months now - that's Germany bureaucracy for you. I'm still waiting for my business tax number to arrive so I haven't been able to invoice any old or new clients yet, which have gone through the UK company. I'm already paying social insurance, etc, in germany and I want to transfer all my business to my new German form.

    In the meantime, my UK company still has income coming into it from my previous clients, as well as new contracts signed which last for a few months more. So it's likely that income will continue to come in even as I start to operate in germany under the new form.

    I want to know what is the "right" way to transfer my income from the UK company to my German business form. I've heard about the possibility of my german company contracting the UK company for services, which seems like it would be the simplest. I also know I could also pay myself dividends which would be taxed as part of my income in Germany, but ideally I would want it to go to the business, as I need to use the income to pay for business expenses and an employee.

    I eventually want to wind down the UK company at the end of the tax year.

    Has anyone been in a similar situation and can offer some advice? I will of course be seeking some professional help, but any pointers would be appreciated. My UK accountant wasn't particularly helpful in this area, so I'm going to try someone on the german side.
    You won’t have a German company, only a German business. You are registering yourself as a sole trader so there’s no separate legal entity to funnel any money to in Germany. That is the normal way of operating as a one-man-band in Germany (and the Netherlands etc) and there are better tax breaks than by setting up a company as a sole trader.

    For now, just invoice your U.K. company for the income you need (once your registration has gone through). In order to transfer contracts to your German business you would need to sign new contracts, or at least agree to Novato the existing contracts to your German business.

    If your U.K. company has lots of distributable assets that you’d rather now transfer to yourself and trigger a tax liability, then set up a proper company (UG in Germany, but there might be better options elsewhere in the EU for assets and capital coming from outside the EU - Cyprus tend to be best for this hut is also a very expensive jurisdiction to run a business in if you are not resident there) and transfer the shares in the U.K. company to that entity. The precise mechanics varies by jurisdiction so you should speak to an accountant about cross-border fusioning of companies.

    Comment


      #3
      Originally posted by moniker View Post
      You won’t have a German company, only a German business. You are registering yourself as a sole trader so there’s no separate legal entity to funnel any money to in Germany. That is the normal way of operating as a one-man-band in Germany (and the Netherlands etc) and there are better tax breaks than by setting up a company as a sole trader.

      For now, just invoice your U.K. company for the income you need (once your registration has gone through). In order to transfer contracts to your German business you would need to sign new contracts, or at least agree to Novato the existing contracts to your German business.

      If your U.K. company has lots of distributable assets that you’d rather now transfer to yourself and trigger a tax liability, then set up a proper company (UG in Germany, but there might be better options elsewhere in the EU for assets and capital coming from outside the EU - Cyprus tend to be best for this hut is also a very expensive jurisdiction to run a business in if you are not resident there) and transfer the shares in the U.K. company to that entity. The precise mechanics varies by jurisdiction so you should speak to an accountant about cross-border fusioning of companies.
      You are right, it's probably best described as a business, not a company. I wasn't sure what the correct term was. Basically the only assets in the company are the paid invoices from the consulting work, there isn't much else of value in the British company.

      Comment


        #4
        How about the money sitting in your UK business, you just declare as a dividend. Then it will treated exactly as if you owned shares in BT. (I know nothing about German tax, but if the work was already done and already in England, invoicing the UK business is wrong).
        Down with racism. Long live miscegenation!

        Comment


          #5
          If the income from the UK is as a result of remote working in Germany you should transfer the contracts to run from the beginning of the year. Any work in Germany including remote UK work should be run through your German business. If this is the case then hold back the invoices until your business is registered.

          Classifying income as German or UK is based on where you carry out the work not whether it is through a UK Ltd.
          I'm alright Jack

          Comment


            #6
            But if Germany had a lower dividend tax then could this person invoice his UK Ltd for "consultancy" services and drain teh Uk Ltd thereby moving the warchest to his german Gmbh and then extract out as dividends in germany the warchest?

            I think that is what the OP was asking

            Comment


              #7
              I was very specifically advised against doing this by my Steuerberater. If the work was carried out in the UK, moving it to Germany with some "creative" accounting is tax evasion pure and simple. Of course, all the big companies do it by being in Ireland or Luxemburg but they have much better lawyers and accountants than an individual contractor can afford.

              Comment


                #8
                Originally posted by RasputinDude View Post
                I was very specifically advised against doing this by my Steuerberater. If the work was carried out in the UK, moving it to Germany with some "creative" accounting is tax evasion pure and simple. Of course, all the big companies do it by being in Ireland or Luxemburg but they have much better lawyers and accountants than an individual contractor can afford.
                The work was done in Germany, just through the UK company. The tax needs to be paid in Germany somehow. Probably I will pay myself the dividend and pay the German tax on it. My German accountant wasn't too sure either.

                Comment


                  #9
                  Originally posted by BlasterBates View Post
                  If the income from the UK is as a result of remote working in Germany you should transfer the contracts to run from the beginning of the year. Any work in Germany including remote UK work should be run through your German business. If this is the case then hold back the invoices until your business is registered.

                  Classifying income as German or UK is based on where you carry out the work not whether it is through a UK Ltd.
                  The income is from work I have done in Germany. I can't retroactively issue invoices as some have been issued and paid already, and some contracts signed before I even arrived in Germany. The question is only about this overlap time before I've been able to set up the german business - should I just pay myself the dividend from the UK company or move the money to my german business by another means, such as invoicing my german business to move the income there. It seems like the former is the only way I can do it - as far as I understand this will be taxed in Germany since the work was done here and I am resident here.

                  Comment


                    #10
                    Find a good Steuerberater and ask them. Steuerring *may* be able to help you but I doubt it. You need someone who understands taxation between multiple countries. And I'm fairly certain what they will tell you.

                    Comment

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