Reply to: Contracting for UK company whilst overseas..advice please?

[jamespoole]

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Thanks

[jander]

If you submit a P&L to HMRC they'll simply charge tax, that will mean the Greeks will get no tax or virtually no tax.Now if you live in Greece and pay no tax eventually some Greek tax investigator will start to do enquiries. The same thing would happen in the UK, you pay little or no tax they start to investigate. Now the first thing they'll request is proof you spent most of your time in the UK. If you can't prove you were in the UK then they might charge you full tax and ignore what you paid in the UK. They would argue that you shouldn't have paid tax in the UK tax in the first place, because you were working in Greece.

Just make sure you only pay UK tax your liable for and check this through with a UK accountant, particularly if this arrangement is a long term one.

Don't simply assume as long as you have a UK tax return this will simply be accepted by the Greek authorities. Not necessarily.

Thank you . You're correct, no assumptions are being made (the mother of all f***ups, after all!). I'm going by what the Greek law stipulates with regards to *foreign income* earned,whilst resident on Greek soil, and the bilateral tax treaty. Obviously, already getting a Greek accountant's take on it, but thus far it looks reasonably kosher.

[BlasterBates]

Thanks again. I have started discussing it already with one

As it turns out, there is the reciprocal tax agreement in force. I would be liable for tax in Greece, but it would be offset against the tax I've paid in the UK. If I paid more in the UK than what I'm liable for in GR, then tax in Greece would effectively be nil.

If you submit a P&L to HMRC they'll simply charge tax, that will mean the Greeks will get no tax or virtually no tax.Now if you live in Greece and pay no tax eventually some Greek tax investigator will start to do enquiries. The same thing would happen in the UK, you pay little or no tax they start to investigate. Now the first thing they'll request is proof you spent most of your time in the UK. If you can't prove you were in the UK then they might charge you full tax and ignore what you paid in the UK. They would argue that you shouldn't have paid tax in the UK tax in the first place, because you were working in Greece.

Just make sure you only pay UK tax your liable for and check this through with a UK accountant, particularly if this arrangement is a long term one.

Don't simply assume as long as you have a UK tax return this will simply be accepted by the Greek authorities. Not necessarily.

[jander]

Correct.

You're only going on business trips to the UK. 5 days a quarter would be perfectly acceptable.

I would talk it through with a Greek accountant.

Thanks again. I have started discussing it already with one

As it turns out, there is the reciprocal tax agreement in force. I would be liable for tax in Greece, but it would be offset against the tax I've paid in the UK. If I paid more in the UK than what I'm liable for in GR, then tax in Greece would effectively be nil.

[BlasterBates]

Thank you, I'm in the process of trying to find someone competent enough in the particular area. So, if I understand this correctly, if I where to form a UK Ltd and with what's been said here, I wouldn't be paying any tax whatsoever in the UK?

Correct.

You're only going on business trips to the UK. 5 days a quarter would be perfectly acceptable.

I would talk it through with a Greek accountant.

[jander]

Since you will be working in Greece with occasional visits this is taxable in Greece and not the UK.

You will need to run this through a Greek company, which can be UK Ltd but set up as a Greek company.

If you do pay tax in the UK, the Greek tax authorities can ignore it, because it's not UK taxable income.

You need advice from a Greek accountant.

Thank you, I'm in the process of trying to find someone competent enough in the particular area. So, if I understand this correctly, if I where to form a UK Ltd and with what's been said here, I wouldn't be paying any tax whatsoever in the UK?

[BlasterBates]

Working in Greece, and once per quarter spending some time "on-site" in the UK for about a week.

Since you will be working in Greece with occasional visits this is taxable in Greece and not the UK.

You will need to run this through a Greek company, which can be UK Ltd but set up as a Greek company.

If you do pay tax in the UK, the Greek tax authorities can ignore it, because it's not UK taxable income.

You need advice from a Greek accountant.

[jander]

If you pay tax in the UK then they will credit this to tax liable in Greece. Sometimes the Double Taxation Treaty stipulates you only pay tax in one country.

Will you be working in Greece or commuting to the UK ? This is vital information in determining whether you pay tax in the UK. Running your business through a UK Ltd doesn't mean you pay tax in the UK. The UK Ltd is very popular in Europe. Many German businesses are run via UK Ltd companies, but they pay no UK tax just German tax.

If you work in Greece there is no UK tax to pay. If you pay UK tax when it's not due the Greek authorities will not credit the tax, they will just expect you to claim it back from the UK authorities.

It's not whether you're working for a UK company that counts, what is important is where you are "physically" when you do the work.

Working in Greece, and once per quarter spending some time "on-site" in the UK for about a week.

[BlasterBates]

Thank you. How does that align with the treaty for the avoidance of dual-taxation though? I.e. If I pay *all* (corporation,dividend,salary) taxes in the UK, by virtue of the treaty for dual taxation, don't I only need to pay the difference in Greece, if at all ? (see my previous post for an example)

If you pay tax in the UK then they will credit this to tax liable in Greece. Sometimes the Double Taxation Treaty stipulates you only pay tax in one country.

Will you be working in Greece or commuting to the UK ? This is vital information in determining whether you pay tax in the UK. Running your business through a UK Ltd doesn't mean you pay tax in the UK. The UK Ltd is very popular in Europe. Many German businesses are run via UK Ltd companies, but they pay no UK tax just German tax.

If you work in Greece there is no UK tax to pay. If you pay UK tax when it's not due the Greek authorities will not credit the tax, they will just expect you to claim it back from the UK authorities.

It's not whether you're working for a UK company that counts, what is important is where you are "physically" when you do the work.

[jander]

If you do the work in Greece working from home, then all your income is taxed in Greece. There is no UK tax to pay.

If you commute to the UK then your salary and corporate tax will be taxed in the UK, dividends are somewhat more complicated.

A UK Ltd can be taxed anywhere you do business, so you can use your UK Ltd but you need to register for tax wherever you do business.

i.e. if you work from Greece through your UK Ltd company, which you can do, you need establish a "branch" which you register with the Greek tax authorities. In the UK you then will have no tax to pay.

Thank you. How does that align with the treaty for the avoidance of dual-taxation though? I.e. If I pay *all* (corporation,dividend,salary) taxes in the UK, by virtue of the treaty for dual taxation, don't I only need to pay the difference in Greece, if at all ? (see my previous post for an example)

[BlasterBates]

If you do the work in Greece working from home, then all your income is taxed in Greece. There is no UK tax to pay.

If you commute to the UK then your salary and corporate tax will be taxed in the UK, dividends are somewhat more complicated.

A UK Ltd can be taxed anywhere you do business, so you can use your UK Ltd but you need to register for tax wherever you do business.

i.e. if you work from Greece through your UK Ltd company, which you can do, you need establish a "branch" which you register with the Greek tax authorities. In the UK you then will have no tax to pay.

[jander]

I am at a loss to understand why you want to undertake this business via a UK company ? Is there an agency in the loop ? If not then the simpleset thing would be to start a Greek Company and run everything from Greece, then you will entirely fall within Greek law.

I say "the simplest thing" because there is another alternative which is not legal but is equally simple and that is to start a UK Co. and just not tell the Greek authorities anything about it. You may end up in gaol if you do that but you will have the satisfaction of only paying UK taxes (lowest in Europe) up to the point they catch you.

Hth,

Boo

Hi Boo, thanks that is indeed helpful. There is no agency in the loop, this is purely a tax matter and also trying to avoid all the damn capital controls that are in place at the moment. It also simplifies things for my employer paying me in GBP. As I mentioned, I'm doing this for family reasons, so I'm trying to avoid the additional headache and I'd rather stay on the right side of either tax enforcement agency..

From what I've read on the HMRC website, there's also the option of remaining on their PAYE scheme, but I'm not at all clear on how this is worked out.

[Boo]

For family reasons, I need to be out of the UK (been living here for the past 19 years) for the next 3 years, living in Greece. My current employer would like to retain my services whilst I'm there, in the form of contracting out for them. The following questions arise:

1)If I'm not physically resident here, is it ok to have formed an LTD before I leave?

Don't know the law on that but AFAIK you will need a UK address for HMRC to send you tax returns etc. My accoutant is registered with HMRC as acreddited to MyCo but I still get stuff from them at my home address so you will need to ask a UK accountant for the skinny on this.

2)Tax-wise, what are my obligations, if the LTD is formed in the UK? I tried the residency Test on HMRC but it keeps crashing

Your UK Co. will be taxed in the UK as stated in posts above above. Your income from YourCo will be taxed in any country where you are resident for tax purposes (see below) under the terms of the Double Taxation Treaty between Greece and the UK. Generally these treaties have the effect that the total tax owed is the higher of the rates applied by the two countries and both countries get a share. If you stay in the UK more than 183 days in any year you will be tax resident here, AFAIK the same is true for Greece.

From what you say I think your company income will be taxed (corporation tax, VAT, etc) under the UK law but your personal income from the company (dividends, wages etc) will be taxed under Greek law, this is predicated upon you not spending any appreciable time in the UK while you perform the work.

3)Am I liable for income earned in the UK to be taxed in Greece (difficult question, I am aware)

Usually your worldwide income is taxed in any country in which you are tax resident. This is generally the country where you live and work so if you spend literally zero time in the UK during the 3 years then you should not need to pay any UK tax on income earned during those 3 years.

and finally..any specialist accountant you would recommend?

You will most likely need both a UK and a Greek accountant and I would try to ensure the Greek accountant has good enough English that comms between him/her and your UK accountant are good because they will need to confer.

3)Am I liable for income earned in the UK to be taxed in Greece (difficult question, I am aware)

and finally..any specialist accountant you would recommend?

I am at a loss to understand why you want to undertake this business via a UK company ? Is there an agency in the loop ? If not then the simpleset thing would be to start a Greek Company and run everything from Greece, then you will entirely fall within Greek law.

I say "the simplest thing" because there is another alternative which is not legal but is equally simple and that is to start a UK Co. and just not tell the Greek authorities anything about it. You may end up in gaol if you do that but you will have the satisfaction of only paying UK taxes (lowest in Europe) up to the point they catch you.

Hth,

Boo

[jander]

1)If I'm not physically resident here, is it ok to have formed an LTD before I leave?

Yes. Nothing stopping you. Your company will still have to pay tax in the UK based upon its turnover just like another company regardless of where you choose to call home.


2)Tax-wise, what are my obligations, if the LTD is formed in the UK? I tried the residency Test on HMRC but it keeps crashing


Your tax obligations and your company's obligations are separate. You company will pay tax based on its turnover less expenses as normal.


3)Am I liable for income earned in the UK to be taxed in Greece (difficult question, I am aware)

More than likely if you're the only director. Becomes more difficult for the authorities to claim a slice in the turnover if another director exists in the UK. But is it really worth the hassle? A fat no in my opinion.

Much obliged..given the scope of falling within IR35 and tax on turnover plus my tax obligations I'm now wondering whether an umbrella is a more sustainable solution. I'm trying to have numbers based on what's going to be my monthly net. I've been trying to find a calculator that would give me that, based on corporation + personal tax (just for the UK) but i've drawn a blank. Perhaps something that would be better addressed to UK based accountant?

[jander]

Does the OP need to be concerned by IR35. Normally his arrangement would put him inside IR35 being a fridaybto Monday contractor.

And then there's that too...