Working overseas - invoicing own limited company

[soleil]

Hi all,

I've been offered a contract in Eastern Europe and plan to accept it via my existing UK Ltd co. The client is based in EU/non-UK and work is to be done for them outside of EU. The short of the question is whether I'd be able to invoice my own UK based Co. for services performed abroad and then deal with tax as a personal income in the destination country as it may have advantages?
Plans may include to remain in UK NI (destination country allows this/has an agreement in that regard with the UK) - would this have any bearing on being able to invoice my own Ltd. Co? (ie. currently am paying NI on salary paid to me as an employee director - would NI be due on ammounts invoiced as well if I remain in UK NI while abroad)

Hope the question makes sense - and that someone can shed some light on it.

J.

[Taxless]

Hi all,

I've been offered a contract in Eastern Europe and plan to accept it via my existing UK Ltd co. The client is based in EU/non-UK and work is to be done for them outside of EU. The short of the question is whether I'd be able to invoice my own UK based Co. for services performed abroad and then deal with tax as a personal income in the destination country as it may have advantages?
Plans may include to remain in UK NI (destination country allows this/has an agreement in that regard with the UK) - would this have any bearing on being able to invoice my own Ltd. Co? (ie. currently am paying NI on salary paid to me as an employee director - would NI be due on ammounts invoiced as well if I remain in UK NI while abroad)

Hope the question makes sense - and that someone can shed some light on it.J.

On the NI question it depends on a number of variables. The following HMRC link is a decent place to start:
HM Revenue & Customs: National Insurance for people going abroad

I'm not quite sure how you would invoice your company for work you do for a foreign entity. If the contract was with you then it is probably a self employed contract. If the contract is with your company then the company could pay you as a company director for work you undertake on the company's behalf on the foreign contract.

If you fail to meet the non-residence tests (at least a full tax year working out of the UK) then those earnings will probably remain taxable and NICable in the UK anyway.

[soleil]

On the NI question it depends on a number of variables. The following HMRC link is a decent place to start:
HM Revenue & Customs: National Insurance for people going abroad

I'm not quite sure how you would invoice your company for work you do for a foreign entity. If the contract was with you then it is probably a self employed contract. If the contract is with your company then the company could pay you as a company director for work you undertake on the company's behalf on the foreign contract.

If you fail to meet the non-residence tests (at least a full tax year working out of the UK) then those earnings will probably remain taxable and NICable in the UK anyway.

Thanks taxless; I'll have a look at NI now - regarding invoicing own company, I've known a few people with UK Ltd's who were non resident and mentioned they invoiced their own company (as self employed individuals I suppose), so was wondering how they were able to do this - one of them actually worked with me for about 9 months.

Regards

[BlasterBates]

Generally, if you do business in a foreign country, you'll have to register and tax the business there.

The fact that is outside the EU, means it is doubtful using your Ltd is a legal option. Even if it were in the EU you would be expected to register your Ltd with the authorities.

You don't need to worry too much about HMRC, your main concern should be the country you are about to be working in.

You need to take advice when you get there.

...and the 6th month rule on personal tax residency does not apply to businesses.

[SueEllen]

Europe has lots of different tax jurisdictions the onus is on you to find out for each individual country whether:
1. You are allowed to use your UK based limited company and what structures you have to put in place in the few countries you are allowed to.

2. Ensure you are paying the correct tax on your personal affairs.

[soleil]

Europe has lots of different tax jurisdictions the onus is on you to find out for each individual country whether:
1. You are allowed to use your UK based limited company and what structures you have to put in place in the few countries you are allowed to.

2. Ensure you are paying the correct tax on your personal affairs.

Thanks for the answer - though it didn't really touch on anything I've asked - working via a UK Ltd co. is perfectly legal where I'm going.
The original question still stands though - are there any limitations on UK side on invoicing own Ltd. co - without this being subject to NI/seen as employment income?

Thanks

[SueEllen]

Thanks for the answer - though it didn't really touch on anything I've asked - working via a UK Ltd co. is perfectly legal where I'm going.
The original question still stands though - are there any limitations on UK side on invoicing own Ltd. co - without this being subject to NI/seen as employment income?

Thanks

You need to find out the rules in the tax jurisdiction you are in on how much tax you need to pay on income you personally take out of the business.

Then work out if there is a dual tax agreement with UK and work out from there if you need to pay income tax and NI on the amount.

[BlasterBates]

working via a UK Ltd co. is perfectly legal where I'm going.

Who told you that?

If it was your agent or other contractors, then it maybe baloney.

Even if this is a tax haven like Dubai you still need to make sure you know how it is legally, not what everyone is getting away with.

Working in a foreign country is full of pitfalls, and many a contractor has had the nasty surprise of a "flying squad" of VAT inspectors or whoever. Hundreds of contractors in Germany have been facing very hefty penalties, sometimes years after they left.

So you really want to double check.

A good start is the Double taxation treaty. If there is one and it covers businesses in both jurisdictions then you know you have to tax yourself there as a business. Difficult to imagine a country where you're personally taxable but not as a business.

[soleil]

Who told you that?

If it was your agent or other contractors, then it maybe baloney.

Even if this is a tax haven like Dubai you still need to make sure you know how it is legally, not what everyone is getting away with.

Working in a foreign country is full of pitfalls, and many a contractor has had the nasty surprise of a "flying squad" of VAT inspectors or whoever. Hundreds of contractors in Germany have been facing very hefty penalties, sometimes years after they left.

So you really want to double check.

As mentioned, that's beyond the scope of this discussion - am trying to find out about UK rules.

[Greg@CapitalCity]

Be careful

Thanks for the answer - though it didn't really touch on anything I've asked - working via a UK Ltd co. is perfectly legal where I'm going.
The original question still stands though - are there any limitations on UK side on invoicing own Ltd. co - without this being subject to NI/seen as employment income?

Thanks

There is no problem invoicing your UK company. The fact that you are outside the EU has no bearing on this - just have a contract in place between you and your company that explains the commercial relationship. No NI issues then. Then however you deal with the income that is paid to you from your company must just comply with tax regulations in the country you live, and also the UK.

The two areas to watch are;
(1) Personal tax - make sure you understand the tax residency rules of the UK, and the country you will be living - is quite probably at sometime you will be resident in more than one country for tax purposes. Also, if you receive a salary from your UK limited company when tax resident of a different country, you will most likely need to declare that salary in your resident country also.
(2) Company tax - most double taxation agreements are the same these days - if a UK company is managed/controlled by a director/shareholder who is not UK resident, the company become liable for tax on earnings from operations in the country where you are resident - meaning you would also need to register your company for tax in the country you reside.

If you are going to be working and living overseas for say 6 months or more, these areas will become a problem for you. If this is the case you might just be better off just taking the UK ltd company out the equation.