How about a Contractor Owned ManCo?

[Magic]

Added to this that each state you work in will hound you for years to come to declare your income, no matter where its been earned, and you may end up paying accountants in several jurisdictions just to keep the local hounds at bay.
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This is a real problem, I still get get hounded by Uk Hector, (earned anything here lately?) I left the country 6 years ago, have no property, accounts or anything there.

This is a total failure of the EU because even though we are "one man bands" why should we be persecuted which is what I feel it is.

Has anyone ever approached an MEP about this issue, I doubt it is good for anyone in the sense of business cost because it costs more to everyone.

I am not saying we should evade tax but be able to elect to pay it in one country, be able to prove we are (legally) ... some type of card "tax payer in Country EU.xx

Obviously there should be rules around this but if contractors doing gigs are only in a country Monday to Friday and their Economic centre of interest, home, family, kids, etc then they should be able to elect to pay there.

My experience so far trying to work out the tax implications is a bit shocking, as really, really bad advice from a couple of ManCo's, challenged them and quite soon showed them I knew more than they did.

Trouble is every f#$%^ is after your money and honestly the one person that really cares should be you.

Unable to get appointment yet with Tax Lawyer but had breif converstaion which went along the lines of... This country (outside EU) is part of the OECD however there are some unilateral agreements which means you can effectively operate for corparate and individual tax purposes without having to file anything in the other country. "bingo" except we do not advice to go bragging about this ... (no kidding) Will try and get chapter and verse etc early next week.

End of Rant..!

[nodric]

...This country (outside EU) is part of the OECD however there are some unilateral agreements which means you can effectively operate for corporate and individual tax purposes without having to file anything in the other country.
End of Rant..!

This is the nirvana of contracting, but I wonder how sound that advice really is...

Pinch of salt for now, but very interested to learn how that is explained, and I bet everyone else on this board will eagerly wait such a revelation. This does sound a bit too much like Swiss ManCo waffle, but maybe it is doable. Question is, is it doable without being a non Dom millionaire?

Keep us posted

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[Coalman]

I am potentially interested in this as well, although not quite yet.

I have the option to to some ad-hoc work for a German firm (the work will be based all over Europe) but will still be resident in UK (and earning majority of income here) so not sure about all the tax implications.

I will be asking my Accountant about this when I have something more solid (before someone suggests I do!).

[Brussels Slumdog]

Future of Dividends

Hi Lisa,


The problem in Europe is the very high SS and personal tax levels. There is no SS on dividends, hence a major saving, and corporate tax rates of 10% in Cyprus mean a massive saving over the 50-60% average personal taxes in Europe.


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It is only a matter of time as to when governments crack down on one man operations paying small salary+ Dividends.
Earning €25000 a year + €75000 in dividends on €1 share in a company

Would income smoothing be possible with your set up ie
€500 a day Belgium 6 months pay yourself €350 a day
€400 a day Spain 5 months pay yourself €650 a day
Pay the difference in the UK to pay the minimum SS charges(Which I pay anyway to keep up my required years for UK pension)
You declare the lions share in the country you worked during the year with the lowest SS and Tax
Your Yearly declared income is still the same and you have not hidden any cash

[nodric]

It is only a matter of time as to when governments crack down on one man operations paying small salary+ Dividends.
Earning €25000 a year + €75000 in dividends on €1 share in a company

Would income smoothing be possible with your set up ie
€500 a day Belgium 6 months pay yourself €350 a day
€400 a day Spain 5 months pay yourself €650 a day
Pay the difference in the UK to pay the minimum SS charges(Which I pay anyway to keep up my required years for UK pension)
You declare the lions share in the country you worked during the year with the lowest SS and Tax
Your Yearly declared income is still the same and you have not hidden any cash

You’re probably right, that one day they’ll make it impossible for us to use the low salary big dividend approach, but for now we have to utilise what we can

Whilst the idea of ‘income smoothing’ is an interesting one, the ability to exploit low tax jurisdictions for dividends is more appealing, and must for now be the focus. I do know people who live in Spain and work in Belgium, and pay all there dues and demands in Spain. However, they haven’t told the Belgies Wonder how much ‘manyana’ would be involved if the Belgies asked the Spanish for cooperation, especially if it meant the Spanish would be the tax losers

I can also see the possible loopholes for stating your permanent residence and centre of economic interest is in the cheaper country, but that does mean you would have to avoid too many days per year in the 3rd party country. Remember the UK has the 183 day rule, but also applies the 90 days in anyone year across 4 years averaging

As for the general idea of allocating your annual total across different EU state borders, this would come down to how you invoiced it, or rather to whom you invoiced it. You could then claim the income was earned in this country and that country. If however, this is corporate income, you’d just funnel it all through the company in the lowest tax jurisdiction. Personal tax residence is always going to be the hindrance to doing it as an individual.

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[Magic]

If you have enough people let us say 50 then it is not a one man co, therefore a bit more clout.

However assume the scenario UK contractor work in Belgium and person registers LIMOSA etc, pays minimum wage... who pays the other half i.e. the "Employers" half. Does that = Zero?

This is where I find it hard to work out the distinction between "The Company" & the "Individual" and as a "one man limited co" the various governments wants to blur the line in the case of Belgium.

One thing I have been told is that it is agreed that you can only be "tax resident" in one country at any moment in time. The normal basis/precedence is based on the Economic centre of interest, i.e. where you normally live on weekends, your, wife, kids, house & to a point where you pay SS.

One of the problems that was mentioned to me is that some countries count the number of days differently so you could end up in a grey area if you are not careful.

[Magic]

You’re probably right, that one day they’ll make it impossible for us to use the low salary big dividend approach, but for now we have to utilise what we can
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But for agruements sake if you had 50 contractors who were all married and there was 50 shares and each of the contractors wife's owned one share. Then if the contracotrs are the employees then there is a clear distinction, they are just that.

The wifes would get the money on the dividends.

Legally a company and a person are seperate legal entities in most countries but some juristictions try to blur this.

Definitely forming something larger with more people sheilds you from that, I think!

Taking it to the next logical conclusion you would grow this company to have some people win contracts and use it's own contractors and take the whole chunk of the action.

[ASB]

One thing I have been told is that it is agreed that you can only be "tax resident" in one country at any moment in time.

Sadly I think you'll find you have been told wrong. It is entirely possible to be tax resident in any number of countries simultaneously.

Whether you will ever pay tax on the same income in more than one jurisdiction is a different matter - though it is entirely possible. This is dependant upon the DTA's involved. Should be unfortunate enought to be tax resident in more than 2 countries (difficult but not impossible) then it can become fairly complex to say the least.

[Magic]

Sadly I think you'll find you have been told wrong. It is entirely possible to be tax resident in any number of countries simultaneously.

Whether you will ever pay tax on the same income in more than one jurisdiction is a different matter - though it is entirely possible. This is dependant upon the DTA's involved. Should be unfortunate enought to be tax resident in more than 2 countries (difficult but not impossible) then it can become fairly complex to say the least.

Apologies, you are correct, I did not put enough words around this to frame it correctly. Words like if the countries are part of the OECD etc, etc, However the important part is that you do NOT want to get into this area because you have to prove which country it is payable in.

I am not even going there to try and explain this further as it looks like one big minefield and I am not a "tax expert"

[najafchuddy]

Seems that Nodric knows all the answers. Where have you got all this information from? You seem to be an expert.
More to the point, where have you found the time during the day to compile such information.