Working remotely overseas through UK limited company for UK client

[NotAllThere]

Why are you so coy? Why not just tell us which country? That way you might get some answers from people with experience there. Different countries have different tax systems. Ergo, any answers here can only be couched in probablistic terms.

- Does the country I am residing affect in any way the situation of my UK company? I am assuming not.
Probably not.

- Does the salary and dividend I am paying myself count as UK income? I am pretty sure it does.
If you are not resident in the UK and not working in the UK, then any money you earn from a UK company is not subject to UK tax or NI .However, in your host country, you may have to account for the social contributions, and you will be taxed on your salary, which your company will pay you gross.

- Will I need to pay income and dividend tax that is UK income to the HMRC even if I am not UK tax resident? I believe so in this case.
No. "If you are not resident in the UK and not working in the UK, then any money you earn from a UK company is not subject to UK tax or NI "

- Will this offset my tax liability in my country of residence via the double taxation agreement? I sure hope so, because I wouldn't want to be paying even more tax than my UK tax bill..
If you have any UK liability, and there is a double taxation treaty, then you won't pay much more tax than in the UK. It might end up more, since things like expenses are treated differently according to taxation authority.

Unless you are physically working in the UK, you do not need a UK company. If you are, it gets more complicated. Depending on your host country, it might be better to set up a company there which receives fees from the UK company, from which you pay your salary (and which pays your social contributions).

Simplest: work for your UK clients remotely through a host country company. If you work in the UK, not just a few sales/business meetings, work through your UK company.

[contractor82]

Thanks for all the replies.

I am not keeping my UK company to be tax efficient. I am keeping it because I want to keep working with UK clients as much as possible (as what I do is very specialist and in high demand in the UK, with a well established contracting market and lots of clients that are used to working with contractors).

Working remotely overseas is already a bit of a stretch, so I want to keep things smoother as much as possible for UK clients - I don't want them to have to go through any extra hassle by having to deal with a non-UK company. From the perspective of my limited company and the client company, its one UK company offering services to another.

It's only me as a person who will be residing in a different country, so I expect this to matter only for my personal tax situation.


So the questions are:
- Does the country I am residing affect in any way the situation of my UK company? I am assuming not.

- Does the salary and dividend I am paying myself count as UK income? I am pretty sure it does.

- Will I need to pay income and dividend tax that is UK income to the HMRC even if I am not UK tax resident? I believe so in this case.

- Will this offset my tax liability in my country of residence via the double taxation agreement? I sure hope so, because I wouldn't want to be paying even more tax than my UK tax bill...

[WordIsBond]

No you need to register a company in Switzerland. According to Double Taxation treaty companies that operate cross border need to register in all the countries they operate in and pay corporation tax on the proportion of earnings within each country in that country.

I hadn't noticed that OP said he was in Switzerland.

[simes]

The hope was that - fueled on by their egos and desperate need to be validated on the internet - the members of this forum would do all the thinking for me, but sadly it didn't happen.

I did laugh...

[Robinho]

I do this. But i have a remained a UK tax resident via not staying in any country long enough.

I recently enquired to HMRC about whether i'd have to pay tax on my director's salary from my UK company if i gained tax residency elsewhere (in a country that didn't charge tax on foreign income) and they said i would. Though i feel they might be talking tulipe on that.

I have been looking to offshore my company to HK even going as far to start a thread on CUK about it. The hope was that - fueled on by their egos and desperate need to be validated on the internet - the members of this forum would do all the thinking for me, but sadly it didn't happen. Though Old Greg was the butt of an amusing joke so that was a silver lining.

AFAIA you'd have to pay UK VAT and possibly Corporation tax. However i was thinking maybe you could get round the corp tax things by never generating a profit and just paying yourself a big salary, which again wouldn't be taxed so it wouldn't matter.

I think i decided to reconsider the idea in a year's time.

[BlasterBates]

Wouldn't you have to pay UK corporation tax (if you keep a UK company), but NewCountry income tax on salaries and dividends? That seems unlikely to be tax efficient....

No you need to register a company in Switzerland. According to Double Taxation treaty companies that operate cross border need to register in all the countries they operate in and pay corporation tax on the proportion of earnings within each country in that country.

[NotAllThere]

Wouldn't you have to pay UK corporation tax (if you keep a UK company), but NewCountry income tax on salaries and dividends? That seems unlikely to be tax efficient....

That's my view. Some countries do not give tax credits on dividends, which might change things a little - but the UK seems to be heading that way!

[WordIsBond]

Wouldn't you have to pay UK corporation tax (if you keep a UK company), but NewCountry income tax on salaries and dividends? That seems unlikely to be tax efficient....

[NotAllThere]

If your company is resident in the UK, it is liable for taxes in the UK. Assuming you're not planning to return to the UK, you will only be tax resident in your new home country.

It will be far simpler administratively and tax-wise to set up a new company in your new country.

I'm Swiss resident, and I've worked for UK companies remotely from my Swiss company. There's certainly little to worry about falling foul of TAAR. You're not in the UK anymore, so you're not under HMRC at all.

There are wrinkles to the above, and it depends exactly how far you cut your ties with the UK, but keeping your UK company to my mind is a bad idea.

[contractor82]

I don't know the answer but have an interest in this sort of thing myself so I'm curious as to what you find out on this.

The only relevant thing I can tell you is that it's possible to be a tax resident in two countries at once, so you'll need to check the law of the country you're physically based in when doing the work, as well as the UK.

Yes, I know..
The country I will be living in has a double taxation agreement with the UK and lower overall tax rates, so I am hopeful that whatever tax I will have to pay will be, at a maximum, the same I would pay if I were to be living in the UK (whether or not I am tax resident in one country or both countries..)

[man]

I don't know the answer but have an interest in this sort of thing myself so I'm curious as to what you find out on this.

The only relevant thing I can tell you is that it's possible to be a tax resident in two countries at once, so you'll need to check the law of the country you're physically based in when doing the work, as well as the UK.

[contractor82]

Hi all

I am intending to relocate abroad for the foreseeable future, and my client is happy for me to continue contracting remotely.
I have a decent amount of retained earnings in the ltd company from previous years, and normally I'd take a chunk of it as dividends each tax year (paying dividend tax as normal).

Assuming I will not be UK tax resident during 2019-2020, would I still need to pay dividend tax in the UK, or in my country of residence?
This was my impression, given that the profit will be earned by a UK company working with a UK client.

I also have the option of closing down the limited company and opening a new one overseas, but I don't want to fall foul of Targeted Anti Avoidance Rules.
CTM36305 - Company Taxation Manual - HMRC internal manual - GOV.UK
I presume this would apply even if the new company is not registered in the UK.
Ideally I wouldn't want to go for this option, as it may complicate things for the current client, and more so for potential new UK clients.

Now the obvious answer is to ask for specialist tax advice (which I may end up doing anyway), but if everyone here agrees that there is really nothing to be done except pay dividend tax as if I were still UK resident, then I might save myself the time and expense of looking up alternative options.

Thanks in advance!