UK individual with a UK contract but wanting live in Germany again - TAX?

[daven]

A bit of a strange request for information but.

I'm currently working on a contract (Mon-Fri) in London, I'm English by birth, lived here most of my life (though not for the past year) and as such have paid UK taxes most of my life.

I'm currently claiming expenses on my accomadation in London and living at the weekend with my parents again being as I dont own property in the UK and have at the moment moved back to work on this contract. In some ways I would say that I have no real roots as such.

Being as my contract times are somewhat fexible I want to live in Germany again (until I can find work there) and commute on Monday to London and back to Germany on Friday.

I'd be spending most of my time in the UK (4 nights) compared to 3 nights in Germany so I dont know which country I would say I'm resident in (maybe both?).

Who would I owe tax and NI to?

Would both Countries want a peice out of me for tax and NI?

Could I claim travel expenses to and from Germany?

- Dave

[northernladuk]

<Scottish Accent> Too stange for me. I am out</scottish accent>

[stek]

<Scottish Accent> Hav'nae a mind wit yooz is an aboot -I'm away fae here, kenwaramin?</scottish accent>

FTFY

[BlasterBates]

A bit of a strange request for information but.

I'm currently working on a contract (Mon-Fri) in London, I'm English by birth, lived here most of my life (though not for the past year) and as such have paid UK taxes most of my life.

I'm currently claiming expenses on my accomadation in London and living at the weekend with my parents again being as I dont own property in the UK and have at the moment moved back to work on this contract. In some ways I would say that I have no real roots as such.

Being as my contract times are somewhat fexible I want to live in Germany again (until I can find work there) and commute on Monday to London and back to Germany on Friday.

I'd be spending most of my time in the UK (4 nights) compared to 3 nights in Germany so I dont know which country I would say I'm resident in (maybe both?).

Who would I owe tax and NI to?

Would both Countries want a peice out of me for tax and NI?

Could I claim travel expenses to and from Germany?

- Dave

You'll be taxable in both states. Since you are working in the UK you pay tax and National Insurance in the UK. Employment income is taxed only once, ie your salary. Your dividends will probably not be subject to any top-up tax because dividends are taxed at a flat 25% in Germany.

[aalvarez]

Be aware that the UK-DE Double Taxation Agreement is currently changing!

It used to be that you didn't have to pay any taxes in Germany for any income (Salary & Dividends) as a result of your independent activities in the UK. So you would normally file a nil return in Germany and that was it (all taxes paid in the uk).

If they now decided to tax the dividends you would have to pay 25% extra taxes in Germany on top of the typical 20% on the UK -> For an effective tax rate of about 45%!

I guess if you "live" in the uk, and just fly weekends to Germany but don't register there you would simply have less than the 180 days/year to qualifiy as an ordinary resident and wouldn't have a problem.

[BlasterBates]

Be aware that the UK-DE Double Taxation Agreement is currently changing!

It used to be that you didn't have to pay any taxes in Germany for any income (Salary & Dividends) as a result of your independent activities in the UK. So you would normally file a nil return in Germany and that was it (all taxes paid in the uk).

If they now decided to tax the dividends you would have to pay 25% extra taxes in Germany on top of the typical 20% on the UK -> For an effective tax rate of about 45%!

I guess if you "live" in the uk, and just fly weekends to Germany but don't register there you would simply have less than the 180 days/year to qualifiy as an ordinary resident and wouldn't have a problem.

You never file a nil return, everything has to be declared. But it is true if you are there less than 183 days they wouldn't require a tax return if you only had income earnt outside Germany.

[BlasterBates]

I've just checked the new rule. There are now anti-abuse rules which means they check whether the tax on paid on UK dividends is bonafide. This means for a normal contractor paying himself dividends the rule hasn't changed. You are still exempt from tax. However there are now several provisions where the Germans may tax it again, but this is to stop abuse, and would not affect a bonafide contractor who is obliged to pay tax in the UK, because he earnt it there. This is more to do with ownership of shares in the UK which pay dividends and where the individual doesn't reside in the UK.