UK contracting for non UK-citizen

**Rebecca Loos** · 9 November 2005, 18:18

As an EU citizen, I would have thought you are OK to come here and work (whether it's through an umbrella or any other structure). Of course, you'll still need an National Insurance number and a tax code, which you may not get from day 1 (you might be on a temporary tax code initially)

Also you might need a UK bank account for the umbrella to pay you. You might therefore provide a UK address. Not sure umbrellas would pay money on a Swedish account but maybe they do, not sure.

For taxes, is there a double taxation treaty between England and Sweden? If there is, you shouldn't be double-taxed. If you work in the UK, you'll have to pay taxes in the UK, and show the Swedish tax authorities proof of taxes paid here for them to leave you alone?

**BMX** · 9 November 2005, 18:30

thanks for the answer.

This would be good because the income tax is much higher in sweden. I have and limited company based in sweden and before I have always invoiced the foreign clients and paid myself salary through the swedish ltd. This however is taxed aproximately 80%.... and an umbrella company could let me of with 25 %

There is a tax treaty between sweden and UK and I've read it and did not iunderstand it. These lawyers write in a way that normal people just don't understand.

I did see something in there that said that I had to be away from sweden 183 days in a 12 month period to be able to pay taxes in uk. I have to call the tax people tomorrow

**Lucifer Box** · 9 November 2005, 18:59

Yup, we're all one big happy EU family now, so BMX is perfectly entitled to come and live/work in the UK. Coming to work in the UK as an EU citizen is comparatively simple compared to many other EU countries as the UK does not require you to do things like register with the local police or anything like that. Just come on over and start looking for work. There is a reciprocal tax treaty between the UK and Sweden, so no worries there.

**mcquiggd** · 9 November 2005, 20:51

Apparently the only legal requirement is that you bring with you your passport, and at least two attractive, single, Swedish ladies of child-bearing age, who have a friendly disposition.

**boredsenseless** · 10 November 2005, 07:58

Are you planning to live in the UK for the duration of the contract? If you are commuting back to sweden each weekend (or even once a month) you'll probably be deemed to be a Swedish taxpayer working in the UK and hence paying Swedish taxes.

I'd ask a tax adviser for help on this one as I am sure most of us will only be able to give you informed guesses based on similar situations

**ASB** · 10 November 2005, 12:39

BMX,

You need some specialist advice.

It is perfectly possible to be resident - for taxation purposes - in both the UK and Sweden.

Your UK tax position is likely to be that you will be UK resident, not ordinarily resident and not UK domcilied. The effect of this is HMRC will only seek to tax you on your UK generated income. However this may give you some tax planning opportunities by carefuly structure of your affairs.

Your Swedish tax position will be as governed by Swedens fiscal code. I think Sweden operates a mondiale tax system. Also I doubt that your sojurn to the UK will get you out of their clutches. [It wouldn't necessarily get you our of the UK HMRC clutches for example].

The result of this is that Sweden is likely to want to tax you on your UK based income as well.

This is where the DTA comes in. Generally the higer charging authority will credit what the lower charging authroity has claimed against the bill. But it does depend totally on the terms of the treaty. It really is a difficult area and things can easily go wrong.

As an example myco is in disputhe with HMRC and the Portuguese fiscal authorities. Although I do quite a lot of work in portugal neither I nor my company have been resident in Portugal. Recently they changed their rules so that 15% of all bills for service from non resident co's are wthheld as a withholding tax. Normally I would expect to offset this against UK corporation tax. Currently the IR office are refusing to allow this, because it doesn't exactly meet the DTA which was not changed when Portugal changed the rules]

As I said, you need specialist advice that is specific to your situation.

**BMX** · 10 November 2005, 17:19

lawyer advice

Hi,

I've now talked with the swedish tax athoroties and my tax-lawyer and the rules are very complicated. As far as I can understand:

1. If I move to UK for a period of more than 6 months and not are going back to sweden for more than an ore two occasionally holidays during this period. Then I will pay all my taxes in UK.

2. If I commute between Uk and sweden (this is what I will do) then I pay taxes in UK and then taxes in sweden but can claim deduction of the already paid tax in UK when I pay the swedish tax.

Simple? No. Because this rules only cover the income tax and not the social security taxes. So in addition I have to convince my UK umbrella company to register at the swedish tax-people and then let them now how much social security tax they pay for me in the uk.

I dont think this will work.

What I really want to do is tho just invoice the UK-client for the consultant service and then pay myself salary in my own company in sweden. This is not acceptble for the client because they fear that then they have to pay my taxes later. Is this correct?

**ASB** · 10 November 2005, 19:31

In theory any EU citizen can elect to pay social security in their country of residence. You should be able to find some information about this on the HMRC website. You *should* be able to pay no UK SS and continue paying swedish. Or vice versa. Here is somewhere to start looking (see part 3). http://www.hmrc.gov.uk/pdfs/ir20.htm

There is no real reason why a company should be reluctant to accept invoices from a Swedish company. But if there is an agency involved they often simply won't. In the case where the company happens to be resident in a tax haven it can be very difficult, the IR do try and keep an eye on this sort of arrangement.

There is nothing to stop you:-

Incorporate a UK company.
Bill client through that.

That company then pays you a salary in the UK (or not as the case may be).

It could be that the company is in fact a wholly owned subsiduary of a swedish company.

Of course whatever you do in this sort of arrangement could complicate your affairs in Sweden.

It is not entirely unusual for someone in this sort of position to incorporate via nominees and do a runner with the cash whilst waiting for the company to get struck off. This is a very tax efficient way of dealing with things but leads to jail time when they catch up with you.

**Joe Black** · 10 November 2005, 20:07

I agree with ASB and boredsenseless.

If you're travelling back and forth then you will most certainly come under the jurisdiction of the Swedish tax authorities, unless of course you're away for more than 6 months and return home only occassionally. Of course given the UK's wonderful system of keeping no record of when anyone comes into or leaves the country whether you're considered to have returned home at all would depend on the Swedish side of things.

As ASB said you need decent advice. Your last post though suggests a little confusion in what you're being told and I would recommend a second opinion from someone who has experience with contractors working in various countries, not just your average local tax advisor.

If you can show you're in the UK the required period then all the UK options become open to you and its much simpler. If you can't then you either invoice from Sweden, go through some 'offshore' type thingy (hmm!), or you go through a UK Ltd/umbrella, the latter options of course complicate things one way or another.

"There is no real reason why a company should be reluctant to accept invoices from a Swedish company."

Indeed.

UK contracting for non UK-citizen