Tax question 3 different countries

[covenant]

Hi
I hope someone can help, i will shortly be starting a job in Germany. But will be working for a Dutch company, who will be paying me directly to my UK limited company from invoices i send them. They also suggest I apply for VAR status with the Dutch tax people so that i am not considered an employee of the Dutch company and thus can issue invoices without VAT.
So working at a site in germany, employed by a dutch company, being paid into uk limitied company.
So where on earth do i pay tax?
The German tax people will have no knowledge of me
The Dutch tax people will only want tax if i work in holland which i won't be
HRMC will not be in the loop at all as i will be working out of the country all the time
Something does not seem right about this i obviously have to pay tax somewhere, but where?
Does anyone have any experience of similair working arrangements?

thanks
Covenant

[Jessica@WhiteFieldTax]

If you are being paid through a UK company, the HMRC will have an interest. Also - I'm assuming - you are currently UK resident, which potentially gives HMRC an interest as well.

When you say the Germans will have no knowledge of you, I suspect that's not going to prove the case. Unless its a very short term gig, I suspect the client is going to have to declare your involvement, and you will be ensnared in the local German system.

There have been some threads in here recently about retrospective German tax demands, take a look at them?

I would (a) press the agent / management company for a very clear statement of how they think things work and where you pay taxes and (b) talk to a German accountant. Also (c) your UK accountant (which I presume you have for UK company)

I would imagine you will end up making returns in Germany and UK, and paying the bulk of your tax in Germany, but with a Uk liability assessed and covered by either Double Tax agreement or non residence.

[covenant]

I will be paid by a Dutch company for work they have employed me to perform in Germany, that fact that i will be invoicing them using my UK ltd company should not matter as i will not be living in the uk or working in the uk. So i don't see how hmrc have any claim on any tax at all. The German company will be paying a Germany agency for my services which they will then use their Dutch company to pay me so i will be on the books of the Dutch company but the german agency and the german company i will work at will not have me as an employee.

So how will the German tax people become aware of me? The only people that i can see that will be aware i am working are the Dutch tax as it will be a Dutch company paying me, but the company want me to apply for this VAR status. So the Dutch tax will be made aware but i will not be working in Holland at all.

Yes i need to find a tax specialist on EU working as i can't seem to find the correct answers myself.

[darmstadt]

I will be paid by a Dutch company for work they have employed me to perform in Germany, that fact that i will be invoicing them using my UK ltd company should not matter as i will not be living in the uk or working in the uk. So i don't see how hmrc have any claim on any tax at all. The German company will be paying a Germany agency for my services which they will then use their Dutch company to pay me so i will be on the books of the Dutch company but the german agency and the german company i will work at will not have me as an employee.

So how will the German tax people become aware of me? The only people that i can see that will be aware i am working are the Dutch tax as it will be a Dutch company paying me, but the company want me to apply for this VAR status. So the Dutch tax will be made aware but i will not be working in Holland at all.

Yes i need to find a tax specialist on EU working as i can't seem to find the correct answers myself.

Because the German company paying the German agency will have to declare it to the Finanzamt and the German/Dutch agency will also have to declare it as Germany and Holland have a mutual tax agreement. If you're going to be working in Germany then presumably you'll be living in Germany which means you're going to need a Germany address. Don't try and be clever and keep under the radar as you'll be found out. Read the numerous threads here about it.

[covenant]

Not trying to be clever just want to know where to pay tax, if what you say is true then it looks like i need to make arrangements to pay in Germany. In which case it would make more sense to use a German limited company or umbrella company service, wouldn't it?
Also you say that both Holland and Germany have a tax agreement, this then makes it even more likely that i will be paying at source of work (germany) regardless of status in Holland.
I will talk to the agenct to confirm this
thanks

[SueEllen]

Not trying to be clever just want to know where to pay tax, if what you say is true then it looks like i need to make arrangements to pay in Germany. In which case it would make more sense to use a German limited company or umbrella company service, wouldn't it?
Also you say that both Holland and Germany have a tax agreement, this then makes it even more likely that i will be paying at source of work (germany) regardless of status in Holland.
I will talk to the agenct to confirm this
thanks

Yes it would.

The reason HMRC would be involved if you use a UK company is because the company is a separate legal entity from you who has to file annually in the UK otherwise it would be struck of.

[sheer consulting]

Tax question 3 different countries

You will be liable for income tax in Germany if you rent a property or live there for greater than 183 days. You will also be liable for income tax in the UK since you are a tax resident here and hmrc have a claim over your worldwide earnings. However any tax paid in Germany can be used to reduce your uk liability due to the double tax treaty between Germany and the uk.

Should you bill through your uk company then you will be liable for uk corporation tax on any profits made whilst on this assignment.

As for the VAR, I am not sure how you can apply for this when you will not perform the work or have an address in The Netherlands.

Hope this helps

[BlasterBates]

The residency rule 183 days and rental means you are liable for tax on worldwide income. However regardless of that you are taxed from day one on locally sourced income eg if you have a business there, you are self-employed etc.

[sheer consulting]

Tax question 3 different countries

BB - I agree that there is a liability in Germany from day 1 for any income earned in Germany but the double taxation treaty between there and the UK allows an individual the option of declaring this income back in their home state if the are not in the country more than 183 days or rent a property.

[BlasterBates]

BB - I agree that there is a liability in Germany from day 1 for any income earned in Germany but the double taxation treaty between there and the UK allows an individual the option of declaring this income back in their home state if the are not in the country more than 183 days or rent a property.

Theoretically, yes but the interpretation of a permanent establishment for a one man company for many tax authorities is that it moves with the "one man" so they tax you even if you´re there for less than 6 months.

If you do want to try this you need to make sure it´s declared and claim exemption otherwise you´ll end up on the wrong end of a criminal investigation.