Contracting in Germany through UK company

[Boo]

I have been offered 1 year contract running between March 2013 and Feb 2014 in Germany by a German Agency and they can pay me Euro in UK company.

Please advise on tax. I know similar question may have been asked but I am thinking of using my UK company for the purpose.

What is the legal status and what is practical status from HMRC and from German tax people?

You can only work through your UK Ltd Co. in Germany for 183 days. I don't know how it is calculated in German law but it is pretty unlikely you could wangle a whole year out of it (easily possible in Belgium though).

<Edit> The posted Double Taxation Convention says :

a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned...

So presumeably they count days that you are actually present in Germany, if so then there is basically no way of working a 5 day week for 1 year and staying under the 183 day count so you would need to negotiate your way into a 4 day week or else work 10 weeks or so from outside Germany.</Edit>

Sorry to bear bad news,

Boo

[BlasterBates]

One or two posters on here are facing a criminal investigation for working in Germany using their Ltd for less than 183 days, so don´t assume you can.

Best is to set yourself as a freiberufler, particularly if you are going to be there several months.

[Boo]

One or two posters on here are facing a criminal investigation for working in Germany using their Ltd for less than 183 days, so don´t assume you can.

You can certainly work in Germany for 183 days a year through your UK Ltd Co. European law guarantees this and in fact the King of Belgium was recently in the dock over a related issue and got his bottie spanked by the judge.

Boo2

[BlasterBates]

You can certainly work in Germany for 183 days a year through your UK Ltd Co. European law guarantees this and in fact the King of Belgium was recently in the dock over a related issue and got his bottie spanked by the judge.

Boo2

It is not clear cut.

This is worth a read:

its international

As this article suggests many contractors are getting on the wrong side of the tax authorities using their Ltd companies.

For example with regard to Belgium:

The Minister of Finance maintains the minimum period of 6 months stated in the OECD only has suggestive value. In his view whether a place of business with less than 6 months of activity qualified as a PE depends on the activity

So it is unclear at best.

The thing is that it just isn´t worth taking the risk because you probably won´t save much if any tax.

My advice always register you business when you work abroad, and then try and claim tax exemption. Since the difference in tax probably isn´t very much I don´t think it is worth contesting it.

As the article points out tax officials are much stricter in their definitions than they perhaps used to be.

[Boo]

It is not clear cut.

It is completely clear cut : European Law guarantees the right for any company to send it's employees to work for 183 days in another EU country without them being subject to that countries' tax system. It is a treaty obligation and overrides all EU countries' internal tax laws and indeed anything the Belgian King or Mister of Finance may happen to think. This has been satisfactorily demonstrated by the EU cout's verdict finding the King of Belgium's LIMOSA to be illegal, along with the King of Denmarks equivalent systems.

Fact, dear boy, but don't let it get in the way of your Umbrella's propoganda...

Boo

[darmstadt]

To be on the safe side I would speak to a Steuerberater but here are a couple of interesting links:

Tax residence - Wikipedia, the free encyclopedia

What do we say to a contractor who wants to use a UK limited company for contracting outside of the UK? | Crescenzi Consulting

Why can

Germany



They all say basically the same:

The 183-day rule does not apply in situations where a one man Limited company is the employer. As soon as the director of the company moves, the permanent establishment of the company moves with him. Contractors operating through UK Limited companies outside the UK are consequently running the risk of being liable not only for unpaid personal income tax, but also for corporate tax, having created a permanent establishment in the country where they are working.

[Brussels Slumdog]

My Conservative tax theory

It is completely clear cut : European Law guarantees the right for any company to send it's employees to work for 183 days in another EU country without them being subject to that countries' tax system. Boo

You are the LTD company, controlled by you, sending yourself to work in another EU county. This is not the same as Nokia sending you from Finland to Germany. When you move to Germany then your LTD company which is controlled by you moves, with you.

[Boo]

You are the LTD company, controlled by you, sending yourself to work in another EU county. This is not the same as Nokia sending you from Finland to Germany. When you move to Germany then your LTD company which is controlled by you moves, with you.

That is nonsense. Your Ltd Co. is registered and based in the UK and remains there. There is absolutely no legal concept of a Ltd Co. registered in one country "moving", it is fixed in the domain of registration.

Boo

[aalvarez]

That is nonsense. Your Ltd Co. is registered and based in the UK and remains there. There is absolutely no legal concept of a Ltd Co. registered in one country "moving", it is fixed in the domain of registration.

Boo

Try convincing the Finanzamt with this argument. As a general rule, income is paid where it is earned, the exception is actually if you work for less than 30 days or so, maybe even less. The 183 day rule applies to all OTHER income "interest, dividends, etc". With exceptions, such as property, do note that divident treatment changed with the most recent DBA between germany and the UK. All EU countries are in the process of changing all DBAs to comply wit the OECD model.

Now, if you are the owner of a real company, then you would have a bit more freedom in regards to structuring. A real company, meaning that it passes a number of german tests, which, a a director and employee of a limited, would not.

This only applies to taxes, not the social security contributions which are a slightly different animal. And, btw, this is not tax advice.

[Ignis Fatuus]

There is a concept of economic activity and centre of direction of a company. If the Finanzamt decide that Yourco Ltd has those in Germany, what are you going to reply to them? That there is no such concept?

Regardless of Yourco Ltd's corporation tax liability, you personally are likely to be liable for German tax on German income from Day 1. From Day 184 it gets more interesting: you will be liable for German tax on all income anywhere. That would include things that you thought were "tax-free", like ISAs and SIPPs. They are only "tax-free" in the sense that Hector has agreed not to tax them. The German taxman has not agreed not to tax them.....