Reply to: Invoice - New to Contracting

[stek]

No, that is not correct. An employee of a UK company, seconded to work abroad in the EU is not liable for tax in the destination country provided their secondment lasts lkess than 183 days. That is the entire content and point of the 183 day rule in fact.

Boo2

Completely wrong I'm afraid.

[BlasterBates]

Sue Ellen is quite right on this issue.

Contractors' Questions: Can I use my limited company to work outside of the UK? :: Contractor UK

the 183-day rule, in the vast majority of cases, does not apply to contractors working through their Limited Company. If you start a contract in a foreign country, you are liable for income tax on that income in that country from day one: tax is due where money is earned.

The 183 day rule determines whether you are tax resident. However non-tax residents still pay tax. This is a bit of a myth that if you are not tax resident you have no tax obligations.

Just as an example here is the UK goverment site on the tax obligations of a non-tax resident.

https://www.gov.uk/tax-foreign-income/residence

Non-residents only pay tax on their UK income - they don’t pay UK tax on their foreign income.

As Sue Ellen has pointed out there are exceptions. In fact if you work for a UK based client in Germany for less than 183 days you can indeed use your Ltd and you are exempt from German tax. This does not apply though to a UK agency, i.e. it is the end client that counts. e.g. when the contractor is a supplier to a UK company installing equipment in Germany.

There are one or two posters who actually do that.

[SueEllen]

No, that is not correct. An employee of a UK company, seconded to work abroad in the EU is not liable for tax in the destination country provided their secondment lasts lkess than 183 days. That is the entire content and point of the 183 day rule in fact.

Boo2

Wrong for the reasons I listed above.

I'm on a phone so can't provide links.

There is a thread about Germany on this board anyway. The OP should read that.

[Boo]

So while a company can send an individual to work in another EU state, depending on that country's tax laws that individual may have to pay personal taxes on income earned in that country from day one. However the company will not have to pay company taxes in that country for at least 183 days if the company is not considered resident.

No, that is not correct. An employee of a UK company, seconded to work abroad in the EU is not liable for tax in the destination country provided their secondment lasts lkess than 183 days. That is the entire content and point of the 183 day rule in fact.

Boo2

[SueEllen]

No, you are wrong. The 183 day rule is a fundamental treaty obligation that each member state of the EU must honour and which is enforceable through the European court.

Boo

The treaty is interpreted differently in different EU countries.

So while a company can send an individual to work in another EU state, depending on that country's tax laws that individual may have to pay personal taxes on income earned in that country from day one. However the company will not have to pay company taxes in that country for at least 183 days if the company is not considered resident.

For example in the case of Germany, France and Norway the government tries to tax individuals from day one on income earned in that country. In the case of Sweden and Finland the government taxes individuals on income earned in that country only if they spend more than 183 days in the country.

Added to that there is not no consistency in the EU of how those days are calculated, and whether a limited company with one director is considered resident in that country or not.

Some of the large consultancies e.g. Accenture have tried to get around personal tax laws for their staff and found they can't.

[Boo]

Doesn't work like that unfortunately.

Each EU country has it's own rules about it.

No, you are wrong. The 183 day rule is a fundamental treaty obligation that each member state of the EU must honour and which is enforceable through the European court.

Boo

[SueEllen]

Or your Ltd Co can send any employee to work in any other EU country for up to 183 days per year without them falling under the destination countries tax laws under the 183 day rule.

Boo2

Doesn't work like that unfortunately.

Each EU country has it's own rules about it.

[Boo]

The right way is to pay tax on German earned income in Germany.

Or your Ltd Co can send any employee to work in any other EU country for up to 183 days per year without them falling under the destination countries tax laws under the 183 day rule.

Boo2

[TheFaQQer]

[stek]

Thank you for your reply mrv.

You are correct, I signed the contract myself ( with full name, no more details though ). Do you think that fact that I'm an authorised signatory/proxy in my relative's company would make some difference here? I could basically invoice Darwin and sign it myself on behalf of the mentioned company... Wouldn't that be similar to how umbrella companies work?
I did some research and it looks like there is no need for me to register a business in Germany for such a short contract. I also wouldn't have to pay a double tax..

Suggest iron guard on your arsehole.

fooked.de...

[EXPATTAX]

Hi OzBound, I wonder how things have developed for you. Let me know what you have done in the meantime. All sorted? Still questions? New questions arising? Let us know, maybe we can shed some more light on things for you.

[OzBound]

You have 2 issues here:
1. You have signed your contract as "you". That is bad, mmkay, because only the person/entity that signed the contract can invoice Darwin, not some friend, not a company of your neighbour, and this means you must be able to issue an invoice yourself. You could check with Darwin if they would accept an invoice from a 3rd party on your behalf, but 97,34% of the time they will say "no". So you must get some sort of business going on yourself asap. You can try becoming a freelancer in Germany, or you can get some sort of personal company or freelancer status in Poland as well, whatever is easier and quicker. But check if your polish freelancer or whatever status allows you to do business in the EU, because you're international man of financial mystery!

2. Taxes. This depends on how you sort #1. If you go german way, you will pay german taxes in Germany. If you go polish way, you need to check what does the double taxation treaty say about that. If it's only 5 weeks, doubt you will become resident for tax purposes in Germany, usually it takes 183 days yadda yadda, but I could be wrong here, so check. Then get an accountant to sort out your money for you, or do that yourself if you know how, and happy sailing!

Thank you for your reply mrv.

You are correct, I signed the contract myself ( with full name, no more details though ). Do you think that fact that I'm an authorised signatory/proxy in my relative's company would make some difference here? I could basically invoice Darwin and sign it myself on behalf of the mentioned company... Wouldn't that be similar to how umbrella companies work?
I did some research and it looks like there is no need for me to register a business in Germany for such a short contract. I also wouldn't have to pay a double tax..

[SueEllen]

2. Taxes. This depends on how you sort #1. If you go german way, you will pay german taxes in Germany. If you go polish way, you need to check what does the double taxation treaty say about that. If it's only 5 weeks, doubt you will become resident for tax purposes in Germany, usually it takes 183 days yadda yadda, but I could be wrong here, so check. Then get an accountant to sort out your money for you, or do that yourself if you know how, and happy sailing!

You are wrong.

The rule in Germany is:

Pay tax on your German sourced income in Germany otherwise the German taxman will chase you all over the world for the money and claim you owe them a bit more. Darwin and the client will be happy to oblige the German taxman and give them all information necessary to chase you.

[mrv]

You have 2 issues here:
1. You have signed your contract as "you". That is bad, mmkay, because only the person/entity that signed the contract can invoice Darwin, not some friend, not a company of your neighbour, and this means you must be able to issue an invoice yourself. You could check with Darwin if they would accept an invoice from a 3rd party on your behalf, but 97,34% of the time they will say "no". So you must get some sort of business going on yourself asap. You can try becoming a freelancer in Germany, or you can get some sort of personal company or freelancer status in Poland as well, whatever is easier and quicker. But check if your polish freelancer or whatever status allows you to do business in the EU, because you're international man of financial mystery!

2. Taxes. This depends on how you sort #1. If you go german way, you will pay german taxes in Germany. If you go polish way, you need to check what does the double taxation treaty say about that. If it's only 5 weeks, doubt you will become resident for tax purposes in Germany, usually it takes 183 days yadda yadda, but I could be wrong here, so check. Then get an accountant to sort out your money for you, or do that yourself if you know how, and happy sailing!

[SueEllen]

This is a UK based site OzBound so you are lucky people are giving you help at all.

In Germany if you are a contractor you need to make yourself a freelancer ('Freiberufler'). This means you do everything as a person not through a company structure.

I suggest you use google to find out the ins and out of how you need to register etc. There is plenty of stuff on the internet about it.