Remote european IT contract (client in Germany, Ltd company in UK)

[bazuzu]

Hello

I'm an IT contractor (currently under an umbrella company). I have been offered a contract (fully remote) with a German company, and the recruiter (who is UK based) has mentioned this is outside IR35. I still have my own Limited company operational, although I am trading (at the moment) via an Umbrella.

The question I have is that this company will pay in Euros, and my recruiter and I have agreed upon a day rate in GBP. I wanted to know how does this work?

The german company will need to pay a set day rate (say x euros per day). This will vary daily in terms of GBP due to daily currency fluctuations. I assume I bear the brunt of any fluctuations in conversion rates (which I'm hoping wont be too much), however I'm not sure what the implications then are for the conversion charge (or other charges) when EUR and deposited into my company's bank account (which is UK based in GBP)

Does anyone have any experience of potential pitfalls to look out for when dealing with a european contract?

Thanks in advance
Baz

[Fred Bloggs]

Perhaps I am being especially thick today. But I don't understand how you can fix a day rate with the agency in GBP and the agency fix a day rate with the client in EUR. Every month someone is going to gain or lose on the FX. It usually isn't the agent or the client. If this is in fact the case then happy days for you.

Perhaps the agent has a massive mark up and is happy to soak up a bit of FX variance along the way?

I invoice and am paid foreign currency, but I have no agency between myco and the client.

[bazuzu]

I have asked the agency, but it seems like they will not be involved in the supply chain, so my contract will be directly with the payroll company in germany (I guess the agency gets a one off fee)

What about the currency conversion fee, who absorbs that? A monthly invoice would lead to a significant fee, but I don't know who bears that cost

[Fred Bloggs]

I have asked the agency, but it seems like they will not be involved in the supply chain, so my contract will be directly with the payroll company in germany (I guess the agency gets a one off fee)

What about the currency conversion fee, who absorbs that? A monthly invoice would lead to a significant fee, but I don't know who bears that cost

Open an account with TransferWise (now Wise). Invoice in EUR and get paid in EUR. Cost of converting EUR > GBP at Wise is buttons.

[eek]

What Fred Bloggs says - without Wise it’s blooming expensive and painful but they will give you a Euro account with local details to make things painless for whoever is paying you - international transfers scare people so I try to avoid those

[BlasterBates]

I have asked the agency, but it seems like they will not be involved in the supply chain, so my contract will be directly with the payroll company in germany (I guess the agency gets a one off fee)

What about the currency conversion fee, who absorbs that? A monthly invoice would lead to a significant fee, but I don't know who bears that cost

If you go on payroll then will they be taxing you in Germany? If you work remotely you should be paying tax in the UK. If you pay tax in Germany and that is then declared in the UK HMRC may enquire whether you were working remotely and if so will tax you on the full amount. You would then need to go through a very bureaucratic process to get any tax back from the German authorities.

[eek]

I have asked the agency, but it seems like they will not be involved in the supply chain, so my contract will be directly with the payroll company in germany (I guess the agency gets a one off fee)

What about the currency conversion fee, who absorbs that? A monthly invoice would lead to a significant fee, but I don't know who bears that cost

As BlasterBates says that makes things way more complex as you are not physically in Germany so you should not be paying any tax in Germany.

I would keep on contract hunting if I were you as that is just going to be a world of complete pain...

[bazuzu]

I checked with an accountant and they confirmed I will not be paying any tax in germany since this position is fully remote. to be clear, I'm not going on payroll, just that the payroll of the end client is outsourced to a third party company, and its this third part company that I will have a direct contract with.

Good call on the option for Wise, I'll look into that if they allow it.

Thanks everyone for your response, much appreciated!

[Fred Bloggs]

I checked with an accountant and they confirmed I will not be paying any tax in germany since this position is fully remote. to be clear, I'm not going on payroll, just that the payroll of the end client is outsourced to a third party company, and its this third part company that I will have a direct contract with.

Good call on the option for Wise, I'll look into that if they allow it.

Thanks everyone for your response, much appreciated!

Using Wise as your European business bank account is nothing to do with anyone else. You invoice them in EUR with the Wise Euro account details for them to remit to. That's all they need. It's your European business bank account. It has nothing to do with a 3rd party whatsoever.

[eek]

I checked with an accountant and they confirmed I will not be paying any tax in germany since this position is fully remote. to be clear, I'm not going on payroll, just that the payroll of the end client is outsourced to a third party company, and its this third part company that I will have a direct contract with.

Good call on the option for Wise, I'll look into that if they allow it.

Thanks everyone for your response, much appreciated!

It doesn't matter what your / any accountant thinks - what matters is how the German Payroll company plans (and does) handle your payments. They may be happy to pay your gross before tax but I would be getting that in writing off them before continuing any further.