South Korea Personal Tax Liability

[Alan @ BroomeAffinity]

Steve,

Have a look at the guide Deloitte's have produced here

From what I can ascertain, your company has been taxed correctly but there is a tax treaty with UK so there may well be scope to offset. Its not my area though, I hasten to add.

[Fred Bloggs]

Steve,

Have a look at the guide Deloitte's have produced here

From what I can ascertain, your company has been taxed correctly but there is a tax treaty with UK so there may well be scope to offset. Its not my area though, I hasten to add.

I suspect the agency has paid S Korean income tax though, not corporate tax? The agency should not have engaged the UK Ltd Co in my opinion. They should have engaged the individual to do the work, IMHO.

[Proconsoftware]

Correct, I believe you are stuffed but I'd like to be wrong.

Ha ha i hope you're wrong too....
Thanks anyway.

[Proconsoftware]

I suspect the agency has paid S Korean income tax though, not corporate tax? The agency should not have engaged the UK Ltd Co in my opinion. They should have engaged the individual to do the work, IMHO.

Thanks Just1MoreThen, i'll look at the Deloitte's guide.

To follow up what Fred Bloggs said, yes the agency have paid South Korean income tax not corporation tax.
The correct way would have been for the agency to employ us individually.
However, I would have never considered doing the work direct for the agency, all my work is done through my limited company.

I'm just struggling to understand how the agency can dictate how my company operates its taxation. It just doesnt make sense.

[Fred Bloggs]

Thanks Just1MoreThen, i'll look at the Deloitte's guide.

To follow up what Fred Bloggs said, yes the agency have paid South Korean income tax not corporation tax.
The correct way would have been for the agency to employ us individually.
However, I would have never considered doing the work direct for the agency, all my work is done through my limited company.

I'm just struggling to understand how the agency can dictate how my company operates its taxation. It just doesnt make sense.

I believe the agency has made a mistake. They should have hired you as an individual not as a Ltd Co, IMO.

[ASB]

I can't comment about SK but can offer some hope.

Portugal operates a 20% withholding tax on personal services provided in portugal. A certificate is issued by the authorities and this tax is described as personal income tax.

My accountants, after advice from hmrc mentioned the amounts onthe ct return and it was deducted from the uk ct.

I suspect it depends upon the terms of the tax treaty.

Probably worthwhile reading it and then talking to hmrc.

[Proconsoftware]

I can't comment about SK but can offer some hope.

Portugal operates a 20% withholding tax on personal services provided in portugal. A certificate is issued by the authorities and this tax is described as personal income tax.

My accountants, after advice from hmrc mentioned the amounts onthe ct return and it was deducted from the uk ct.

I suspect it depends upon the terms of the tax treaty.

Probably worthwhile reading it and then talking to hmrc.

Hi ASB,

I have spoken to my accountant this morning and he also believes there may be a way to offset this against Corporation Tax.

I'm no sure how the process works but we are now looking into this.

Thanks,

Steve

[ASB]

Hi ASB,

I have spoken to my accountant this morning and he also believes there may be a way to offset this against Corporation Tax.

I'm no sure how the process works but we are now looking into this.

Thanks,

Steve

If it turns out you cannot offset this against CT another alternative might be to check whether this tax can be offset against your personal income tax. If this is the case then check whether it can only be offset against earned income (ie whether or not it can be offset against unearned - dividend - income).

If it can be offset against income tax paid as a result of dividend income then one possibility would be to pay enough dividend (assuming the retained funds are available) to generate a higher rate taxation liability broadly equivalent to the Korean liability.

It doesn't matter if the actual cash funds are not available to pay the increased dividend, it can simply be journalised to the directors account. In this way you will have a credit balance on the DCA which you can draw on when funds allow with no further tax to pay. [Of course this will only actually really be effective if there were a point that the level of dividends you require is such that you would be in the higher rate band anyway]

In any event to get any offset it will be important to obtain a certificate of tax deducted (however they call it or produce it) from the Korean authorities.