Will the dividend tax hike take the heat off IR35?

[m0n1k3r]

Vote brexit! You know it makes sense.

Apparently it does if you own a curry house.

[AtW]

It is the same in most of Scandinavia.

Scandinavia is supposed to be high taxing countries!!!

Basically UK is now heavy taxing country minus quality services which will get worse because of underinvestment - when was the last time you heard in papers about problems in Germany's equivalent of NHS???



This country now is basically like Monopoly game - whoever buys real estate gets to screw over those who could not and will not be able to get onto property ladder. As long as you don't build Hotels you are ok - because hotels will be real business which is taxed to death by Govt, just stick to vanilla property renting and count millions.

HTH

[m0n1k3r]

Corp tax should have been harmonised long time ago to provide level playing field, OR paid based on profits derived in each EU member based on their corp tax rate just like it happens with VAT for exports now.

It only happens like that with VAT if your customers are consumers. The intra-community VAT rules are still in effect if your customers are VAT registered businesses (most EU countries require VAT registration from the first €).

[m0n1k3r]

I'd still be contracting.

£500-600/day after dividend tax > £50-60k pa PAYE

At the basic rate level, with corporation tax, employer's NI etc taken into account but pensions contributions excluded, the gain with taking small salary + dividends is 8.3% compared to PAYE.

[AtW]

It only happens like that with VAT if your customers are consumers. The intra-community VAT rules are still in effect if your customers are VAT registered businesses (most EU countries require VAT registration from the first €).

Yes I know, some countries like Spain got internal VAT numbers that don't work for external trade

[m0n1k3r]

But how many Germans are directors of their own 1 man company's paying themselves in dividends?

Many are, but not all. For freelancers/contractors, being self employed is far more common. There are no rules that prohibits that when working through agencies.

If you insist on a company structure for limited liability, a GmbH requires €25,000 in capital to set up. There is now an 'entrepreneurial' GmbH option, whereby one can start with €1, but 25% of profits must be retained in the company until the €25,000 threshold has been met.

A GmbH is not quite a limited company either. It doesn't have shares, only a percentage ownership like an LLP. In that sense it is very similar to an American LLC. If you want a proper Ltd in Germany you have to go for an AG, which is like a plc. For that you need at least five directors and €50,000 in paid-in capital. It also requires a separate supervisor board.

If the requirements are too high, then set up a GmbH or AG in the tax havens of Austria or Switzerland instead, where they are far lower.

Most other countries within the EU require at least two directors to set up a limited company.

At the EU level there is the SE company that is the same throughout the EU so that such a company can move its place of registration from one member state to another easily. An SE is a public company and must be set up by first registering a plc or any national equivalent, and then converting it into an SE.

There has also been a proposal for an SPE company, where the 'P' stands for Private. It can be registered outright and it is modelled after UK limited companies, with no minimum capital requirements other than one share, one director etc. Like an SE, it can be moved from country to country easily. It has been blocked by Germany for a number of years because they want to capitalise on their own entrepreneurial GmbH first.

[m0n1k3r]

I don't want to be drawn into any FLC discussion but Germany has sensible rules for freelance workers that the UK just doesn't have.

Remember that we have to work through an umbrella or limited company due to the law regarding agency workers dating back to the mid 1970s

That is not the reason. The real reason is because of more recent tax laws, whereby the agency could become liable to pay deemed NI + income taxes in the case the gig would be shown to not be a proper, genuine self employment.

Repeal that section of the tax laws, and many contractors would revert to self employment - problem solved. Instead they are going for the bazooka to kill a few fleas.

[m0n1k3r]

Scandinavia is supposed to be high taxing countries!!!

They are. The amount of dividends that can be taxed as dividends is contingent upon what the company has paid in wages on the not too unreasonable presumption that wages should cover the basics - rent, utilities, food, etc - while dividends are for the extras.

Basically UK is now heavy taxing country minus quality services which will get worse because of underinvestment

Yes. It used to amaze me that we get so much less for our taxes than in most other EU countries, but after having worked as a consultant in the public sector it doesn't amaze me anymore. Directors and civil servants with budget responsibility waste money to further a career or political agenda with no regard to benefiting society, which is what their job really is all about.

[AtW]

They are. The amount of dividends that can be taxed as dividends is contingent upon what the company has paid in wages on the not too unreasonable presumption that wages should cover the basics - rent, utilities, food, etc - while dividends are for the extras.

This sounds reasonable.

This country should have done two things:
1) reflect corp tax paid in UK down to the pount - actual amount, not notional, pro rata allocated to all shareholders
2) any PAYE taxes (income tax, both NICs) are offsetable against corp tax, pound for pound

This will encourage companies actually not treat workforce as cost base because high taxes will be offsetable against corporation tax - suddenly outsourcing isn't such a great idea and also keeping profits in UK because any corp tax will be reflected in dividend taxation.

Simples.

[unemployed]

This country now is basically like Monopoly game - whoever buys real estate gets to screw over those who could not and will not be able to get onto property ladder. As long as you don't build Hotels you are ok - because hotels will be real business which is taxed to death by Govt, just stick to vanilla property renting and count millions.

HTH

what happens when they decide they only want faces that fit. grease the pole some more for the wannabees ?