Contracting for an EU company

[galthop]

I've been away from contracting for a couple of years and have recently been contacted by an agent for a contract with a Danish company. I'm tempted as my permie job is not great and the rate on offer is good.

The agency is UK based and I'd have a limited company and payments will be in Euros.

I understand that ir35 will not apply because the client is not in the UK. Apart from being paid in Euros is there anything else making this different to a outside ir35 contract? Do I need to do anything about Danish tax?

Thanks for reading

[northernladuk]

Has the agency confirmed the client is Denmark only. No uk subsiduary or prescence at all?

[jamesbrown]

Nope, there is a UK entity in the supply chain, so the UK agency is the Fee Payer and the overseas client is responsible for the SDS (believe it or not).

[jamesbrown]

Anyway, IR35 always applies (I mean, assuming you have >5% shareholding etc.). The only change in the rules is who makes the determination and who is liable. In your case, the client makes the determination. In other words, you are under the Chapter 10 (new) rules, not the Chapter 8 (old) rules where YourCo can make the determination.

[galthop]

Thanks for the replies.

So the Danish client decides if the contract is inside IR35 and if it is then the agency would be responsible for paying employers NI, etc. It's this correct?

What happens if the client says the contract is outside if HMRC comes along later and says it is inside. Who is liable for the unpaid taxes?

[eek]

Thanks for the replies.

So the Danish client decides if the contract is inside IR35 and if it is then the agency would be responsible for paying employers NI, etc. It's this correct?

What happens if the client says the contract is outside if HMRC comes along later and says it is inside. Who is liable for the unpaid taxes?

The Feepayer (agency) except the feepayer will be doing everything they can to pin responsibility on to you.

[BlasterBates]

Here is a useful link:

https://www.qdoscontractor.com/news/...verseas-client

The rules are remarkably clear where the end user is based wholly overseas. In such cases, the rules state that the off-payroll rules do not apply. Therefore, the end client does not need to determine IR35 status, and the responsibility of determining IR35 status is then passed back to the contractor.

[eek]

Here is a useful link:

https://www.qdoscontractor.com/news/...verseas-client

That doesn’t cover the scenario when the agency is within the UK (which you would have thought QDOS would be explicitly covering).

as wtt does at https://wttconsulting.co.uk/ir35-ref...-based-abroad/

[jamesbrown]

Thanks for the replies.

So the Danish client decides if the contract is inside IR35 and if it is then the agency would be responsible for paying employers NI, etc. It's this correct?

What happens if the client says the contract is outside if HMRC comes along later and says it is inside. Who is liable for the unpaid taxes?

Yes.

The Fee Payer (UK agency) would be liable, in the first instance, so check your contract carefully for any transfer of liability clauses.

[BlasterBates]

That doesn’t cover the scenario when the agency is within the UK (which you would have thought QDOS would be explicitly covering).

as wtt does at https://wttconsulting.co.uk/ir35-ref...-based-abroad/

That article from 2019 is unfortunately out of date as the government clarified this in the Finance Bill 2020.

https://www.markeltax.co.uk/industry...nt-is-overseas

nsurprisingly, many end clients based abroad are not even aware of IR35 legislation and contractors have become increasingly worried about how they will obtain an SDS from an overseas end client and the impact this could have on their businesses. It also raised the question: how would HMRC enforce compliance from overseas end clients and fee payers?

The government took note of these concerns and in response clarified the issue in the Finance Bill 2020 to exclude wholly overseas organisations with no UK presence from having to consider the off-payroll working rules. This means that where the end client is wholly overseas, the old rules will apply and it will be the responsibility of the individual’s limited company to determine IR35 status. This will come as a huge relief for many contractors.