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Non UK company contract with a UK agency for work done outside of the UK

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    Non UK company contract with a UK agency for work done outside of the UK

    Complicated subject line for complicated situation ;-)

    I am still UK resident but effectively out of the country since 4 month.

    I am about to take a contract via a UK agency. The client is in Canada, but the work is almost exclusively remote based (no need to register for residency or start a company in Canada).

    I will deliver the work from central America. And as soon as I sign the contract I will inform HMRC that I leave the UK for good.

    Now the question: what are the options to contract with the UK agency?
    - I have my UK limited company, but I find it unfair to pay corporation & dividends tax in a country where none of the work is done.
    - I am thinking of creating a Cyprus company for that purpose but the UK agency doesn't seem to like this option. I agree the work wouldn't be done in Cyprus, but on the paper I don't see this as more dodgy as working through a UK limited company who would do no work in the UK.

    Keen to hear your thoughts on this one.

    #2
    Your UK company is resident in the UK - therefore corporation tax is due in the UK. That's why people like to incorporate in e.g. Cyprus, because then they pay corp tax there = 0.

    Set up a company in Cyprus, and have that company invoice your UK company. Your UK company makes no profit = no tax due.
    Down with racism. Long live miscegenation!

    Comment


      #3
      Originally posted by Cari View Post
      - I have my UK limited company, but I find it unfair to pay corporation & dividends tax in a country where none of the work is done.
      - I am thinking of creating a Cyprus company for that purpose but the UK agency doesn't seem to like this option. I agree the work wouldn't be done in Cyprus, but on the paper I don't see this as more dodgy as working through a UK limited company who would do no work in the UK.

      Keen to hear your thoughts on this one.
      If you think it is unfair to pay tax where the work isn't done, then set yourself up in Canada. You can't claim that you don't want to be resident in the UK because it is unfair, then try to do some sort of dodge, considering it to be OK.

      My thoughts: discuss it with the agent and your accountant.
      …Maybe we ain’t that young anymore

      Comment


        #4
        I wouldn't be located in Canada though. Thanks a lot for your thoughts both!

        Comment


          #5
          Originally posted by Cari View Post
          I wouldn't be located in Canada though. Thanks a lot for your thoughts both!
          Where would you be located?
          …Maybe we ain’t that young anymore

          Comment


            #6
            The Canadian client cannot find the resource they want in Canada.
            They go to the UK. UK agency find the resource the client wants.
            This is in effect an export of services from the UK to Canada.

            You want to export the service from a tax haven (Cyprus) to the UK. All well and good except the agency doesn't want to import the service. It's complex for them, they're not very bright and by the time they've gone through their legal and compliance checks they might as well find someone else, who is in the UK, to deliver the service.

            Consider yourself lucky that they'll consider using you at all if you don't live in the UK.

            If you've asked the agency to do something different and they've said no then suck it up or walk.



            As for fairness..... Tough. Life isn't fair.

            HTH
            Last edited by Lance; 23 February 2018, 09:12. Reason: grammar
            See You Next Tuesday

            Comment


              #7
              Originally posted by NotAllThere View Post
              Your UK company is resident in the UK - therefore corporation tax is due in the UK. That's why people like to incorporate in e.g. Cyprus, because then they pay corp tax there = 0.

              Set up a company in Cyprus, and have that company invoice your UK company. Your UK company makes no profit = no tax due.
              Cyprus corporation tax is 12.5% on trading income. It is 0% on dividends and on capital gains from abroad.

              It is also quite expensive to run a company in Cyprus. Look at Malta instead - 5% effective corporation tax provided you take all profits as a dividend. If you need money in the company you can always lend it back to the company (with interest).

              Also, depending on where you live, dividends might not be very effective at all. In many countries they are taxed exactly the same as wages, less the national insurance/social security.

              Comment


                #8
                Originally posted by m0n1k3r View Post
                Cyprus corporation tax is 12.5% on trading income. It is 0% on dividends and on capital gains from abroad.

                It is also quite expensive to run a company in Cyprus. Look at Malta instead - 5% effective corporation tax provided you take all profits as a dividend. If you need money in the company you can always lend it back to the company (with interest).

                Also, depending on where you live, dividends might not be very effective at all. In many countries they are taxed exactly the same as wages, less the national insurance/social security.
                Thanks, I'll check Malta, not sure why I didn't think about that one before.

                I agree Cyprus companies seem to be quite expensive to run. The corporation tax falls to 0% though when your activity and tax residence are outside of Cyprus.

                Comment


                  #9
                  From tour deacription your UK company would quite likely cease to be UK resident.

                  Its residency would likely become wherever you are resident.

                  Dependant upon what the services are, even though they are supplied from elsewhere, Canada will have a rule as to how they should be treated.

                  You may find issues if you are planning to invoice a UK agent from a non UK company.

                  Comment

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