Posted worker clarity

[stek]

Thanks for your answer... it looks like doing remote contract is only worth it if you get big pay check

Well not really, tax is pretty much the same with some exceptions. The biggest additional expense is travel and accommodation, the cost of two homes and getting there.

If you live at home it's no problem, or if you relocate full time, just need to stay out of UK and not be tax resident in UK. Then you are just a local.

Trouble is it's a bit of a minefield being non-tax resident, and staying/working 24/7 for an extended period in a foreign country might sound like fun but believe me it can get to you. Language, culture and bureaucratic differences can get on your tits after a while.

[cwah]

Thanks for your answer... it looks like doing remote contract is only worth it if you get big pay check

[SueEllen]

That's a lot tax to pay for a contract abroad. I'd like to work a bit more abroad and I'm competing against local, and rate are usually quite low.

If I pay half of my day rate into tax, and I have to cover accommodation and transport, it just blow all the value to contract abroad.

Is there anything I can do about that? Or is contracting abroad out of reach for people on low day rate?

It's out of reach.

You need to find a permie job where some of your extra costs are covered.

[cwah]

EU Freedom of Movement is a wonderful thing, but a few things to remember;

1. It doesn't extend to companies etc.

2. Tax is due where the work is done.

3. There is no tax harmonisation in the EU.

WRT to working out costs you do what I've done and others do, price up flights, accommodation, general costs to eat etc, check for local tax incentives (30% rule in DK for example). You can either do this yourself or pay someone, or tell us which EU state and one of us might have some insight. Every EU state is different.

Subject to the above, the safest and easiest route is to go local payroll, mostly you have to, you can use your limited if you insist but that's a huge can of worms as others have alluded to. Doable, but not worth the effort.

Expect to pay around 500 Euro a month for the payroll (they will sort your tax too).

Another think to consider is in most EU states (well, all except UK and IRL) there is a legal requirement to register your presence locally, EU law says within three months (when you cease to be a visitor) but best to do it ASAP within 30 days so your local tax and entitlements align etc.

Factor in another £150 a day on the rate to pay for all this.

That's a lot tax to pay for a contract abroad. I'd like to work a bit more abroad and I'm competing against local, and rate are usually quite low.

If I pay half of my day rate into tax, and I have to cover accommodation and transport, it just blow all the value to contract abroad.

Is there anything I can do about that? Or is contracting abroad out of reach for people on low day rate?

[Sue B]

Hi Grabri,

In all cases please note that the reality of what happens is important, not the contract. As I do not know all of your circumstances then I cannot advise you.

However, generally speaking, taking the circumstances you are describing here as an example, you are not contracted to deliver your services in Denmark, but rather to deliver them from the UK to a Danish client.

If this is the case, and if you visited your client on an ad hoc basis then it probably would be a business trip, as it is ancillary to the contract. This would be taxable only in the UK through your UK Ltd Co.

Even non contractual, ad hoc trips can add up to be an assignment so be careful. If you visit your client every month for a few days this could be considered to be a contractual requirement. Contractual visits are not business trips they are assignments. Assignments are normally taxable in country.

Please note that although the definition of business trip is rather woolly in most countries, it is normally acceptable for this to be a maximum of 30 days. Anything longer would be considered an assignment.

HTH

[grabri]

Once your PSC has a permanent establishment its profits, (at the minimum those attributed to work there), is taxable locally, the 183 day rule does not apply to corporate entities.
HTH

So in my case my Ltd has a personal establishment in the UK and I am providing services under article 14 (Independent Personal Services) and any visits I need to make will therefore be covered by the 183 day rule - correct?

[Sue B]

Jamesbrown and Stek are correct.

The rules around 'posted workers' don't generally apply to PSC's because your Limited company is deemed to have a permanent establishment wherever you work (Article 5 of the Double Taxation Agreement, Permanent Establishment).

Once your PSC has a permanent establishment its profits, (at the minimum those attributed to work there), is taxable locally, the 183 day rule does not apply to corporate entities.

You, as an employee, are not longer posted by a company in the UK, You are on an assignment, delivering your services to a foreign end client and working for a company with a PE locally. The 183 day rule is failed and you are taxable from day 1.

To give you an idea of who the 183 day rule is meant to work for, its for people like me. I work for a UK based business. I do sometimes have to travel overseas to a client site, however, when I do, I am still delivering my services to I-PAYE and I-PAYE pay my salary.

They do not re-bill my time to someone else nor am I delivering my services to anyone else. My economic employer is I-PAYE. My income is not derived from my work overseas. Therefore, genuine business trips (not assignments or contracts), generally lasting less than 30 days at a time and for less than 183 days in total, made by a UK based employee on behalf of its UK Based employer would be covered under the 183 day rule.

Whilst some these rules may change slightly from country to country, generally speaking, the rules relevant in this case are pretty standard.

That said, if you do have more information on your possible locations then I would be happy to provide more tailored information.

HTH

[grabri]

Nice answer Stek.

It has got me wondering about my own situation, I'm pretty new to this contracting/consultancy lark. I have a contract with one client in the UK that takes up the bulk of my time, however I also have a couple of other ad-hoc consultancy gigs with clients outside the UK where I invoice them up-front for a number of consultancy hours which are then worked as and when required. When the allocated time is used up they have the option of buying more, after 6-months the purchased hours expire.

I have one client in DK currently and have agreed with them that should I be required to do an onsite visit that they will pay my flight and accommodation and a per diem to cover other expenses, although the expectation is that onsite work should not be required.

My assumption was that all of this can be done through myCo in UK, I don't charge VAT on my services as this is covered through intra-EU tax rules. Have I assumed correctly? Are there any gotchas I should be looking out for?

[stek]

Thanks.

How do I find that out? My UK accountant had no clue about working abroad.

How can I work out cost and take home pay in a location abroad before accepting a contract?

Is there some accountant who can manage international contract but aren't that expensive? I'm not making as much as money contractor here

EU Freedom of Movement is a wonderful thing, but a few things to remember;

1. It doesn't extend to companies etc.

2. Tax is due where the work is done.

3. There is no tax harmonisation in the EU.

WRT to working out costs you do what I've done and others do, price up flights, accommodation, general costs to eat etc, check for local tax incentives (30% rule in DK for example). You can either do this yourself or pay someone, or tell us which EU state and one of us might have some insight. Every EU state is different.

Subject to the above, the safest and easiest route is to go local payroll, mostly you have to, you can use your limited if you insist but that's a huge can of worms as others have alluded to. Doable, but not worth the effort.

Expect to pay around 500 Euro a month for the payroll (they will sort your tax too).

Another think to consider is in most EU states (well, all except UK and IRL) there is a legal requirement to register your presence locally, EU law says within three months (when you cease to be a visitor) but best to do it ASAP within 30 days so your local tax and entitlements align etc.

Factor in another £150 a day on the rate to pay for all this.

[jamesbrown]

Thanks.

How do I find that out? My UK accountant had no clue about working abroad.

How can I work out cost and take home pay in a location abroad before accepting a contract?

Is there some accountant who can manage international contract but aren't that expensive? I'm not making as much as money contractor here

There are certainly quite a few international tax specialists around, but they tend to be expensive (the ones I've used in the past charged similar fees to a good lawyer). Once you have a precise country/location, it will be easier to ask directed questions, and someone here may be able to suggest an accountant in that country. While I have no personal experience, I've also seen a few people here recommend Sue at IPAYE. You could try to shoot her a PM, but I think you'll need more info first (a country/location as a minimum).

[cwah]

Thanks.

How do I find that out? My UK accountant had no clue about working abroad.

How can I work out cost and take home pay in a location abroad before accepting a contract?

Is there some accountant who can manage international contract but aren't that expensive? I'm not making as much as money contractor here

[jamesbrown]

Drip feeding information over multiple posts isn't going to help. If you're working primarily from the UK, for multiple clients, and you occasionally visit another EU country to service one of those contracts, and you're staying in a hotel, then you certainly won't become tax resident, personally, and your company is not likely to create a permanent establishment. That doesn't mean you shouldnt declare any personal income to the local authorities. If, on the other hand, you have a single contract and are delivering that contract onsite in another EU country, it's quite likely that you will create a permanent establishment, because you will be managing your company from that country. You cannot exempt yourself from local rules on taxation just because you prefer simplicity. Seek local advice, declare the income, and use any double taxation treaties appropriately.

As I said, there are some general rules, but also some specific rules, depending on the country and the facts of what you're doing. You will need local advice on that. There's also a ton of information here if you care to search. For example:

http://www.contractoruk.com/limited_...ng_abroad.html

However, you will need to want the correct answer. You seem to want validation. It's much easier to create a permanent establishment as a contractor and a local tax liability from day one than you think.

[cwah]

But I won't be relocating in the other country.

I'd really be temporary. It could be barely few weeks contract and I won't even have a fix address.

I may stay to hotel or airbnb.

My main residence would still be in uk. The company and the director wouldn't have a residence in france for example..

Also, the contract wouldn't be between me and the employer, but between my LTD and the employer.

So if tax has to be paid, it would be corporation tax and not income tax as I, as a person, do not earn any money in france.

So how can my LTD creates a permanent establishment if it has no address in france? And why would I pay tax if the money earned belong to my LTD?

[jamesbrown]

No, that is not correct. The PWD is not applicable. It applies where the company has substantial activities in one member state and sends an employee, temporarily, to another member state (i.e. does not apply to contractors). When you move as a sole director (I assume), your company effectively moves with you (i.e. creates a permanent establishment). Ultimately, both you and your company fall within the jurisdiction of the host country, as well as having responsibilities in the UK. The general rule is that you're taxed from day one on money earned in the host country, and taxed on your worldwide income subject to residency (with double taxation treaties generally being available, so that you don't usually pay more than the greater of the two). In practice, it makes no sense to work overseas through a UK company. If you move to France, Germany, or Belgium, you will pay local taxes on money earned there from day one (forget about the "183 day rule"). If you don't, prepare the lube. Also, in the unlikely event that boo sees this thread, you should note that boo is well known to talk complete and utter crap on this topic, so please ignore.

[cwah]

Hello,

I'm a bit confused about the rules to work abroad and always heard it's better to register locally.

However, for all contractor with a LTD company, we are basically an employee.

Our company can send us to other countries as posted worker:
https://www.gov.uk/working-abroad/posted-workers

Apparently it's an EU treaty allowing to go abroad and pay tax in the UK if we are living there temporaly.

So, my company can 'post me' in france, germany or belgium and the money earnt would go to my company. Which then would pay me and as a uk resident I'm only liable for uk taxes?

Is that correct?