Working In Europe - A Brief Guide

[cojak]

The working in Belgium thread can be found here: https://www.contractoruk.com/forums/...-security.html

[Old Greg]

Contracting in Ireland with a UK Ltd call Mee up fairly often. Rules are here:

Contracting in Ireland with a UK Limited Company – Guide to Irish Tax | Fenero personal tax services

God knows what Brexit will mean.

[m0n1k3r]

I can use my UK Personal Service Company when working overseas.

Whilst it is possible, in most European Countries it is inadvisable, as the use of a UK Personal Service Company does not offer the benefits that the company would enjoy for UK Assignments.

I'd like to add to this that the UK model of one-person limited companies is a bit of anomaly. EU legislation assumes that people working for themselves are self employed, and that if you are running a company there is a clear separation between the people managing the company and the employees doing the work. Companies are for more than one person and with a view to grow further.

In some countries there might be certain benefits for longer-term work first registering as self employed in the UK and then sending oneself to work abroad as a self-employed person instead of using a limited company or an umbrella, as many countries have certain tax incentives for self-employed persons. On the other hand that also requires the contractor to file foreign tax returns and to maintain foreign bookkeeping (under those standards) in addition to UK bookkeeping.

[northernladyuk]

I can use my UK Personal Service Company when working overseas.

Whilst it is possible, in most European Countries it is inadvisable, as the use of a UK Personal Service Company does not offer the benefits that the company would enjoy for UK Assignments.

There are many issues to consider, such as where the company is tax resident, whether expenses are tax free, where Income Tax and Social Security is due and on what. In most cases when the overall taxation, social security and compliance costs are detailed, an Employment Income only model tends to be the more attractive model.

I believe that I am exempt from local Taxation as my assignment will be less than 183 days in the country.

In most cases an individual on assignment will be liable to taxation on income arising in the country in which they are working from day 1. Some countries may ignore stays of a month or less. Generally, after 183 days the individual becomes tax resident in the country in which they work, as well as the country in which they live. This then means that the order in which income is taxed, and, in some cases the rate of tax withheld, is dictated by the relevant Double Taxation Treaty.

I only ever pay taxation in my home country, no matter where I have worked I have been paid gross.

Paying tax to the wrong tax authority does not preclude you from paying tax to the correct authority. The Authority to whom taxation was correctly due will seek to collect the full amount, plus interest and penalties. You would then be required to submit a repayment claim to the tax authority you have incorrectly paid.

I have paid taxation to the Tax Authority where I was working, this makes it tax free back home.

Generally, if you remain tax resident in your home country then you may be liable to additional taxation if the tax liability on the same income is higher in your home country. The tax paid already will be taken in to account and you will only have to pay the difference.

I am Non Resident in the UK for tax purposes on my foreign income.

If you go to work overseas in a country where the tax is significantly lower than the UK, then you will see a higher tax charge in the UK than you have already paid overseas, leading to further payments being due to HMRC.

Under a certain set of circumstances, you may consider declaring yourself non-resident in the UK for tax purposes. This is not a decision to be taken lightly. There is a lot to consider, and you will be restricted on how much time you can spend at home.

Advice should always been sought, taking into account all current personal and contract circumstances, when making a decision as to whether you would be considered non-resident in the UK for Tax purposes.

I am employed by a UK business, not based where I am working, surely I pay tax where my Employer is based?

If you are being hired by one organisation to another and they ultimately are paying for your services, it is the jurisdiction they are based in that is important. If they are based in the country in which you are working then they are classed as the Economic Employer and you would pay tax from the first day, unless exempt by the local Tax Authority.

I do not need to worry as I will be out of the European Country long before they know I am working there.

This is simply not true and each European Tax Authority has the right to ask another European Tax Authority to pursue a debt on their behalf. The Mutual Assistance Recovery Directive (MARD) has caught many Professional Contractors out and they are surprised when, for example, HMRC start chasing a debt owed to the foreign country.

I can choose where I pay my Social Security.

Social Security is due in the European Country you work, unless exempted by the issuance of a Certificate of Continuing Liability (A1/A2) by the Competent Authority of the country in which you habitually reside and your Employer is based.

All information given in this document is intended only as an introduction to international contracting requirements. It is not a comprehensive guide to legislation, and it does not constitute advice.

Sticky please!!

[Sue B]

I can use my UK Personal Service Company when working overseas.

Whilst it is possible, in most European Countries it is inadvisable, as the use of a UK Personal Service Company does not offer the benefits that the company would enjoy for UK Assignments.

There are many issues to consider, such as where the company is tax resident, whether expenses are tax free, where Income Tax and Social Security is due and on what. In most cases when the overall taxation, social security and compliance costs are detailed, an Employment Income only model tends to be the more attractive model.

I believe that I am exempt from local Taxation as my assignment will be less than 183 days in the country.

In most cases an individual on assignment will be liable to taxation on income arising in the country in which they are working from day 1. Some countries may ignore stays of a month or less. Generally, after 183 days the individual becomes tax resident in the country in which they work, as well as the country in which they live. This then means that the order in which income is taxed, and, in some cases the rate of tax withheld, is dictated by the relevant Double Taxation Treaty.

I only ever pay taxation in my home country, no matter where I have worked I have been paid gross.

Paying tax to the wrong tax authority does not preclude you from paying tax to the correct authority. The Authority to whom taxation was correctly due will seek to collect the full amount, plus interest and penalties. You would then be required to submit a repayment claim to the tax authority you have incorrectly paid.

I have paid taxation to the Tax Authority where I was working, this makes it tax free back home.

Generally, if you remain tax resident in your home country then you may be liable to additional taxation if the tax liability on the same income is higher in your home country. The tax paid already will be taken in to account and you will only have to pay the difference.

I am Non Resident in the UK for tax purposes on my foreign income.

If you go to work overseas in a country where the tax is significantly lower than the UK, then you will see a higher tax charge in the UK than you have already paid overseas, leading to further payments being due to HMRC.

Under a certain set of circumstances, you may consider declaring yourself non-resident in the UK for tax purposes. This is not a decision to be taken lightly. There is a lot to consider, and you will be restricted on how much time you can spend at home.

Advice should always been sought, taking into account all current personal and contract circumstances, when making a decision as to whether you would be considered non-resident in the UK for Tax purposes.

I am employed by a UK business, not based where I am working, surely I pay tax where my Employer is based?

If you are being hired by one organisation to another and they ultimately are paying for your services, it is the jurisdiction they are based in that is important. If they are based in the country in which you are working then they are classed as the Economic Employer and you would pay tax from the first day, unless exempt by the local Tax Authority.

I do not need to worry as I will be out of the European Country long before they know I am working there.

This is simply not true and each European Tax Authority has the right to ask another European Tax Authority to pursue a debt on their behalf. The Mutual Assistance Recovery Directive (MARD) has caught many Professional Contractors out and they are surprised when, for example, HMRC start chasing a debt owed to the foreign country.

I can choose where I pay my Social Security.

Social Security is due in the European Country you work, unless exempted by the issuance of a Certificate of Continuing Liability (A1/A2) by the Competent Authority of the country in which you habitually reside and your Employer is based.

All information given in this document is intended only as an introduction to international contracting requirements. It is not a comprehensive guide to legislation, and it does not constitute advice.