IT Contract in Germany, work based mostly out of home in UK

[Boo]

The golden rule of contracting abroad is simple: tax should be paid where money is earned. The only instance where this rule is waived is in the case of a permanent employee (not the director of a one-man company: see above) of a foreign company who has been seconded to work abroad. In this instance, tax may be paid to the authorities of the employer's country for the first 183 days.

The first statement clearly indicates that a director of a Ltd company should be paying tax on local-source income until the point that they are required to pay tax on worldwide income (including local source), as dictated by the 183 day rule (which is, in fact, one of many rules that determine tax residency). Read it again. There is no contradiction.

That's not what it says. What it says is that tax need not be payed where the money is earned in the case that the employee of a company is seconded to work abroad. Maybe it is you who needs to learn to read. It makes the further erroneous statement that the number of employees the firm has is significant and that the director and also the share ownership status of the employee is relevant to whether the 183 day rule applies, which they do not.

I would also dispute your statement about directors being employees of their own company. In fact, they are office holders and there is unlikely to be a contract of employment in place (otherwise, among other things, they'd be obliged to take at least NMW in a UK context).

You are also mistaken on this point. There is almost certain to be a contract of employment between a contractor and the limited company they own and are a/the director of. In fact both the PCG and the QDOS contracts refer to the person placed in a contract as an employee of the Consultancy Co. That there is no piece of paper in place reflecting that status is neither here nor there, the contract of employment exists due to the nature of the relationship.

Look on this webpage for more on the status of directors :

If a person does other work that’s not related to being a director, they may have an employment contract and get employment rights

Also, I'd be rather more careful about the language you use in a public forum, especially when directed to the expert advice of an international tax consultancy. For that reason, I haven't quoted you, in case you want to re-think that.

No thanks, James, I'm completely comfortable in calling ITECS and the like ****. The evidence on these pages shows them up for what they are.

FYI, I'm basing my opinions on >10 years contracting in various parts of the world outside the UK...

To be competely clear, James, you are not a contractor yourself, but an agent / recruitment specialist, right ? And you get kickbacks from umbrellas and management companies when you are able to purvey your snake oil, no ?

...and the general advice in the above link is completely consistent with the general advice I've received from local experts in various places that have absolutely nothing to gain, other than providing their best professional advice on local compliance (but plenty to lose in terms of reputational damage for giving wrong advice). If you've contracted overseas, perhaps you'd like to clarify how you've approached this in the past and on what advice? Otherwise, all I've read so far is a series of bullish statements with little attempt to engage by way of presenting evidence....

It is pernicious nonsense promulgated by people who live by leeching the lifeblood from others. I have stated many times on these pages that the advice to me to act under the 183 day rule was given to me by a Belgian accountant when I was working in Belgium. The EU law applying to the 183 day rule is no different for Germany than it is for that country, or any other, but I believe there is wriggle room in the way the days are counted.

Boo

[stek]

Having read through pages and pages on this subject, read the directives and listed to everyone and been in it myself a bit, this is what I think, FWIW...

1. The 183 day is right and proper if you are a seconded employee from one EU state to another.

2. If you are a one-man company, your sphere of interest/business shifts from home state to new state from day one, therefore 1. above does apply to us as Contractors, since we are effectively one and the same.

3. That's it.

Options are to stay under the radar by never registering locally, staying in hotels not apartments, but watch the flight records, who knows what the immigration computers are recording. Risky, probably will work in Ireland since we have the CTA which means more or less a walk in walk out state, but for in and out of Schengen, too risky.

So Blaster et al are correct, Boo, is adhering to the freedom of movement directive etc correctly but doesn't grasp that's for seconded employees of essentially large corporates, not effectively moving our small businesses from A to B as we are doing.

Simples!

[jamesbrown]

Boo: OK, I think the OP has two very different opinions to consider and, along with anyone else, can make their own judgment I see little value in arguing the point further.

[BlasterBates]

This post speaks for itself:

Just got home to find a letter from the German Tax people saying they had "initiated criminal proceedings involving a fiscal offence, summons for being questioned as an accused."

WTF !

They mention the year 2007. I did a short term contract in Munich - just under 5 months. I stayed at hotels during the week and flew home at the weekend. I had a UK Ltd company and paid money into that than therefore paid tax to the UK Government. I was advised at the time - by my agency :-( - that as my stay was less than 6 months, this was all ok.

http://forums.contractoruk.com/accou...an-prison.html

[Boo]

1. The 183 day is right and proper if you are a seconded employee from one EU state to another.

Yes. And this is as true for one man bands as for any other company.

2. If you are a one-man company, your sphere of interest/business shifts from home state to new state from day one, therefore 1. above does apply to us as Contractors, since we are effectively one and the same.

Complete nonsense. Your sphere of interest depends upon many things, including your accountant's address, your car registration, your address abroad and all of the myriad details of your life.

Show me where in the EU legislation it states where your "sphere of interest" lies ? Or even where that phrase is used ?

Options are to stay under the radar by never registering locally, staying in hotels not apartments, but watch the flight records, who knows what the immigration computers are recording. Risky, probably will work in Ireland since we have the CTA which means more or less a walk in walk out state, but for in and out of Schengen, too risky.

There is essentially no risk in working in any EU country for less than 183 days, agents James Brown and Blaster Bates notwithstanding. You are within your rights not to declare income commplying with the 183 day rule in the state in which it is earned. But be very careful not to stay longer...

So Blaster et al are correct, Boo, is adhering to the freedom of movement directive etc correctly but doesn't grasp that's for seconded employees of essentially large corporates, not effectively moving our small businesses from A to B as we are doing.

Show me, Stek, where the EU legislation makes a distinction between corporations based upon their size ?

Again, your post is nonsense and does nothing but play into the hands of companies like ITECS who steal from contractors based on the FUD promulgated by agents in this thread and others.

Boo

[Boo]

This post speaks for itself:



http://forums.contractoruk.com/accou...an-prison.html

That post means nothing without the full background and the thread does not give the outcome either. You could as well show post from UK contractors complaining that HMRC has stitched them for IR35 when it does not apply as evidence that it is illegal to run a one man band Ltd Co in the UK without paying tax as employees. We all know that tax authorities misrepresent the rules in their own favour and need to deal with it by arguing positions that are already plain. Nothing new in your linked thread and post at all.

I repeat for everyone's benefit that the kings of Denmark and of Belgium have been had up for behaviour that breaches the EU guaranteed freedom of travel to employment in EU countries and the 183 day rule is no different.

It applies to any company that is well formed in its home state. Them's the rules, but people like BB have had the relevant legislation provided to them and quoted in these forums but choose to ignore it. They must suffer the consequences that other people are going to doubt their integrity as a result...

Boo

[eek]

That post means nothing without the full background and the thread does not give the outcome either. You could as well show post from UK contractors complaining that HMRC has stitched them for IR35 when it does not apply as evidence that it is illegal to run a one man band Ltd Co in the UK without paying tax as employees. We all know that tax authorities misrepresent the rules in their own favour and need to deal with it by arguing positions that are already plain. Nothing new in your linked thread and post at all.

I repeat for everyone's benefit that the kings of Denmark and of Belgium have been had up for behaviour that breaches the EU guaranteed freedom of travel to employment in EU countries and the 183 day rule is no different.

It applies to any company that is well formed in its home state. Them's the rules, but people like BB have had the relevant legislation provided to them and quoted in these forums but choose to ignore it. They must suffer the consequences that other people are going to doubt their integrity as a result...

Boo

You don't need the full story as the facts themselves are quite simple:

He worked in Germany for less than 183 days
The German tax man thinks he owes money
He doesn't have the expert to hand or expertise to resolve the problem.

Regardless of what eu law says, if a foreign tax man decides that you owe him money, until you prove otherwise you owe him money. And hmrc will happily collect it for the foreign tax man in return for similar favours later.

[Boo]

You don't need the full story as the facts themselves are quite simple:

He worked in Germany for less than 183 days
The German tax man thinks he owes money
He doesn't have the expert to hand or expertise to resolve the problem.

Regardless of what eu law says, if a foreign tax man decides that you owe him money, until you prove otherwise you owe him money. And hmrc will happily collect it for the foreign tax man in return for similar favours later.

What you say is true. But you ignore what seems to me to be the salient point, which I have already made :

You cannot read into that story that it is illegal for a one man band Ltd Co to operate the 183 day rule in Germany any more than you can read from the hundreds of IR35 investigations that it is illegal to do so here. Tax Authorities take strange stances sometimes and need to be fought.

The EU treaty oblications regarding the 183 day rule makes no distinction in terms of company size. That's a simple matter of fact.

Boo

[eek]

What you say is true. But you ignore what seems to me to be the salient point, which I have already made :

You cannot read into that story that it is illegal for a one man band Ltd Co to operate the 183 day rule in Germany any more than you can read from the hundreds of IR35 investigations that it is illegal to do so here. Tax Authorities take strange stances sometimes and need to be fought.

The EU treaty oblications regarding the 183 day rule makes no distinction in terms of company size. That's a simple matter of fact.

Boo

That wasn't my attack on you which is that your argument that you don't need tax expertise to work abroad as the EU law will protect you.

My statement above is that while you may be correct (and personally I don't think you are) it would be totally and utterly stupid to do work abroad without expert advise from someone who knows what they are doing. And only someone as masochistic or stupid as you, Suity or BP would do so......

[Boo]

That wasn't my attack on you which is that your argument that you don't need tax expertise to work abroad as the EU law will protect you.

I have never made such an argument. For the record (yet again), I have repeatedly stated on these forums that when I worked abroad I found a local accountant who was able to advise me. The advice he gave was that it is permissable for a one man band UK Ltd Co to send myself, as an employee, to Belgium for up to 183 days to work without that employee (myself) becoming liable for tax under Belgian law.

The same is true in every other EU country, and there is no reason to go to the tax authorities of another EU country to ask them. They are bound by treaty obligations which override national law anyway.

My statement above is that while you may be correct (and personally I don't think you are) it would be totally and utterly stupid to do work abroad without expert advise from someone who knows what they are doing. And only someone as masochistic or stupid as you, Suity or BP would do so......

Did you put up this straw man because you can't admit you're wrong ?

Boo