Reply to: Is my contract compliant with the 183-day rule?

[cojak]

And with Sue at IPAYE post I will close this thread.

Boo if you continue posting your 'advice' I will begin infracting you. This will lead to a permaban.

[stek]

SE and stek are both saying that and they are both wrong. Your employer is YourCo whiche is a UK registered Ltd Co. having no permanentvestablishment in Belgium. Unless your parent's house is a permanentcestablishment of YourCo.

Boo

Remnds me of Blackadder, Boo is Rum, everyone else is everyone else, and the crew is 183 days.......

Edmund: Look, there's no need to panic. Someone in the crew will
know how to steer this thing.

Rum: The crew, milord?

Edmund: Yes, the crew.

Rum: What crew?

Edmund: I was under the impression that it was common maritime practice
for a ship to have a crew.

Rum: Opinion is divided on the subject.

Edmund: Oh, really? [starting to get the picture]

Rum: Yahs. All the other captains say it is; I say it isn't.

[stek]

This is not true, in order for there to be a permanent establishment in the destination state there must firstly be an establisment (constituting, at a mimimum, premises from which a business can be run) and secondly it must be permanent.

If the OP stays in a b&b then there are no business premises for his company and hence no establishment, and if s/he stays for less than 183 days then it is not permanent. Therefore not liable for Belgian taxes. QED.

ISTM the complicating factors are that the OP will stay at his/her parents' house (hence possibly an establishment) and also may be working for more than the initial year (probably still not permanent but a bit of a red rag to the BTA). Under these circumstances we are all left guessing as to the legal outcome if the situation arose but I personally would stay in a b&b instead.

Boo2

There is no 'exemption' for paying local tax, EU or not, simple as. You trot this miguided claptrap out everytime this topic comes up.

Would you expect to work in say Japan and pay no local tax? No, same for EU, there is no special treatment.

[Boo]

Hi Sue,

Thanks for the advice so far.

Question:
Article 15 says: "The remuneration is not borne by a permanent establishment which the employer has in the other state."

Are you saying that the UK based recruitment agency is a permanent establishment (PE) of the Belgian based end client?

SE and stek are both saying that and they are both wrong. Your employer is YourCo whiche is a UK registered Ltd Co. having no permanentvestablishment in Belgium. Unless your parent's house is a permanentcestablishment of YourCo.

Boo

[Boo]

If you are the only director when you move location e.g. out if the UK, so does the management of your company.

This is not true, in order for there to be a permanent establishment in the destination state there must firstly be an establisment (constituting, at a mimimum, premises from which a business can be run) and secondly it must be permanent.

If the OP stays in a b&b then there are no business premises for his company and hence no establishment, and if s/he stays for less than 183 days then it is not permanent. Therefore not liable for Belgian taxes. QED.

ISTM the complicating factors are that the OP will stay at his/her parents' house (hence possibly an establishment) and also may be working for more than the initial year (probably still not permanent but a bit of a red rag to the BTA). Under these circumstances we are all left guessing as to the legal outcome if the situation arose but I personally would stay in a b&b instead.

Boo2

[stek]

Stick to the mantra; tax is due where the work is done.

Simples.

[Sue B]

Rewording the DTA with places, to make more sense........

(1) Subject to the provisions of Articles 16, 18 and 19 of this Convention, salaries, wages
and other similar remuneration derived by a resident of a Contracting State (UK) in respect of
an employment shall be taxable only in that State (UK) unless the employment is exercised in
the other Contracting State (Belgium). If the employment is so exercised, such remuneration as is
derived therefrom may be taxed in that other State (Belgium).

(2) Notwithstanding the provisions of paragraph (1) of this Article, remuneration derived
by a resident of a Contracting State (UK) in respect of an employment exercised in the other
Contracting State (Belgium) shall be taxable only in the first-mentioned State (UK) if:

(a) the recipient is present in the other State (Belgium) for a period or periods not exceeding in
the aggregate 183 days within any period of 12 months; and

(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of
the other State (Belgium); and

(c) the remuneration is not borne by a permanent establishment or a fixed base which
the employer has in the other State (Belgium).

[Sue B]

No, the Belgian client is the Belgian based PE.

The economic employer is the person or entity which bears the cost of your employment, and benefits from your services. In this case that is not the UK recruitment agency. They are not paying for you to be in their offices in the UK, providing your services to them. The UK agency is an intermediary for a client. That client is paying them to pay you.

[rgeurts]

Hi Sue,

Thanks for the advice so far.

Question:
Article 15 says: "The remuneration is not borne by a permanent establishment which the employer has in the other state."

Are you saying that the UK based recruitment agency is a permanent establishment (PE) of the Belgian based end client?

[Sue B]

Hi Sue,

Thanks for your reply.



The entity ultimately paying for my services is a UK based recruitment agency with no establishment in Belgium.

Regards
Rim

You're welcome.

I doubt the UK recruitment agency is the economic employer, they will be billing your time onto someone else. If that someone else has a PE in Belgium, or is not based in the UK, then its caught.

[SueEllen]

The entity ultimately paying for my services is a UK based recruitment agency with no establishment in Belgium.

First don't put your name on threads as they are searchable from the internet and anyone including tax officials can see them.

Secondly the client has a permanent establishment in Belgium and they pay the agency who pay the company, which your wife is the director.

So while the chain of the companies involved management is:
Belgium -> UK -> UK the company who is your "economic employer" under Belgium tax law is permanently based in Belgium.

[rgeurts]

Hi CyclingProgrammer,

Thats correct, my wife is currently the only director.

[rgeurts]

Hi Sue,

Thanks for your reply.

If the entity ultimately paying for your services has a permanent establishment (PE) in Belgium, then part c) of Article 15 (extract below) is failed and so the 183 day rule does not apply.

The entity ultimately paying for my services is a UK based recruitment agency with no establishment in Belgium.

[TheCyclingProgrammer]

Is your wife also director* or are you the only director of the company?

If you are the only director when you move location e.g. out if the UK, so does the management of your company.

*It can be someone else e.g. a parent as long as they are UK based.

OP mentioned that their wife is the director (and by the sounds of it the only director).

[stek]

Thanks for the link Dave.
In addition to the details provided above, I own a house in the UK and my wife and 2 kids will remain based in the UK

According to my calculations I would spend around 126 days on-site in Belgium.

On the face of it you'll pay Belgian tax personally and be tax resident in UK and Belgium. There is a DTA in place but as Belgian tax is so high you most likely pay none in UK.

Ltd will be taxed in both countries too.