IR35 and a contract abroad in Europe.

[gooddayall]

AIUI A2 countries citizens are only allowed to be self employed?

And that is what contractors are.

[The Wikir Man]

And that is what contractors are.

No, they aren't.

They are employed either by an umbrella or by a company (that they may or may not own). They are not self-employed.

[stek]

No, they aren't.

They are employed either by an umbrella or by a company (that they may or may not own). They are not self-employed.

In fact self-employment is expressly forbidden if working via an agency, something to do with the Agencies Act and missing tax money in the dim and distant past....

[gooddayall]

I asked another question in the OP and here it is:

Q2. In Sweden I will be paying something like 40 % to the local authorities ( because I am physically in Sweden) . Is there point at all to have this contract signed with my UK limited company ? I mean , if I am taxed 40 % already then whatever tax break the HMRC gives me is pointless and I am better off skipping the UK LTD entirely ?

[gooddayall]

In fact self-employment is expressly forbidden if working via an agency, something to do with the Agencies Act and missing tax money in the dim and distant past....

The Border's agency self employed includes setting up your own LTD and is different than the HMRC's distinction you are referring to.

[SueEllen]

I asked another question in the OP and here it is:

Q2. In Sweden I will be paying something like 40 % to the local authorities ( because I am physically in Sweden) . Is there point at all to have this contract signed with my UK limited company ? I mean , if I am taxed 40 % already then whatever tax break the HMRC gives me is pointless and I am better off skipping the UK LTD entirely ?

The entire point of using your UK Ltd is to stay out of their equivalent of National Insurance.

In most other European countries the equivalent of NI is really high so if you can work out how to stay in the UK system at a minimum rate then you are quids in.

[stek]

I asked another question in the OP and here it is:

Q2. In Sweden I will be paying something like 40 % to the local authorities ( because I am physically in Sweden) . Is there point at all to have this contract signed with my UK limited company ? I mean , if I am taxed 40 % already then whatever tax break the HMRC gives me is pointless and I am better off skipping the UK LTD entirely ?

AIUI as you will be physically in Sverige for over 183 days a year you will be liable for Swedish Tax. I was reading a horror story on a Swedish forum regarding a UK contractor who got stiffed by the Swedish Tax people for £90k, they took his flat!

Sweden's a great place tho, I'd love to contract there, despite the low salaries (dunno what rates are tho) and high tax...

I'll try and find the link to the Swedish Forum I mentioned....

[gooddayall]

The entire point of using your UK Ltd is to stay out of their equivalent of National Insurance.

In most other European countries the equivalent of NI is really high so if you can work out how to stay in the UK system at a minimum rate then you are quids in.

I see , anyway I am waiting for an YES and I will be getting deep into all the details.

[Churchill]

I see , anyway I am waiting for an YES and I will be getting deep into all the details.

Oi Sas, you've failed.

[BlasterBates]

Your Ltd needs to be registered in Sweden, ortherwise you'll probably get into trouble with the Swedish authorites, i.e. you have an employee registered and paying tax in Sweden.

If your Ltd does business in the UK you need to set up a seperate branch and register it in Sweden. It will have a seperate accounts and corporation tax will only be paid to the Sweidsh authorities. The DTA means you pay no corp tax in the UK, for your Swedish branch.

It would be easier to setup a different co, could be Swedish or UK Ltd, doesn't matter. EU rules allow you to set up a branch wherever you like. For example many Germany co's are UK Ltd, simply because the costs of setting up a GmbH in Germany are higher. They are completely German, they don't pay UK tax because they don't have a UK operation, they're just registered there.

Your dividends however, if you pay divis will be taxable in the UK and Sweden, taking into account tax already paid in one country, if you maintain your UK residency. If you pay yourself a salary in Sweden and assign yourself to the Swedish branch, your salary will be fully exempt from UK tax, and will not be subject to IR35.

Don't fall into the trap of thinking a UK ltd is just UK and is only subject to the UK system. It isn't. All European companies are equal under the law of all EU states, well more or less, and have to register themselves whereever they set up business with a permanent presence i.e. employ at least one tax resident.

If you pay divis normally the UK will tax first, and then the Swedes will tax after deductions. Paying most of your earnings as dividends seems like a complicated thing to do an needs to be checked with a UK and a Swedish tax advisor.

The cleanest alternative is to operate as a contractor in Sweden, and then declare that income in the UK after the Swedes have taxed it.

Simply working through a UK co, won't exempt you from Swedish national insurance. The Swedes won't see it that way.

Think "I'm Swedish" and you won't go wrong.