Reply to: Working remotely from the UK for German company/agency. Where do I pay tax ?

[Fred Bloggs]

If you are not a UK tax resident, you will need to comply with the tax rules in the country you live in. However, you might have to learn a foreign language which might be expensive

The Isle of Man isn't very far. And as far as I know, there's no bar to a UK national living and working there.

[Chart Accountancy]

So starting a UK Ltd and then living and working from a home in a foreign country with a low cost of living and low tax rate, might lead to some very favourable profits?

If you are not a UK tax resident, you will need to comply with the tax rules in the country you live in. However, you might have to learn a foreign language which might be expensive

[BlasterBates]

I'm likely to be in this boat come January so what would be my options when working remote with occasional trips to Germany for business meetings?

Shouldn't be a problem you will be taxed in the UK.

[BillHicksRIP]

You will be paying tax in the country where you're working so you may as well set up a local company. In any case in January it will be illegal as you won't be able to run your business using a UK company whilst working remotely in a foreign country. Currently you can within the EU.

I'm likely to be in this boat come January so what would be my options when working remote with occasional trips to Germany for business meetings?

[Fred Bloggs]

Indeed, for 16 to 18 I was tax resident in three countries. From 18 to 21 that has reduced to two. When transitioning from/to the UK I apply split year treatment.

[BlasterBates]

The UK company is subject to tax in the country where the directors are based and control the business from. It is not relevant where the clients are based. Therefore, if the director is a tax resident in the UK and controls the company from the UK, both the LTD and the director will be subject to tax in the UK. If however the director lost his tax residency in the UK and as the sole director he moved to live in Germany, then the UK company will not be tax resident in the UK as it will be controlled by a non-UK tax resident director and then the company would become subject to tax in Germany. You can be a tax resident in one country for the tax year (unless you apply a split year treatment) so if you live in the UK and your family remains in the UK, you are a tax resident in the UK. The tax residency rules are lot more complex but this is just an overview.

Even if you are tax resident in the UK you will be liable for tax in the foreign country because working as a contractor you will be deemed to have a "permanent establishment". Non-tax residents are subject to tax, and a "permanent establishment" can be a very short time duration. It's a bit more complicated than simply having an office for more than 6 or 12 months. Traders crossing the border regularly for example in Germany were caught by this.

[BlasterBates]

So starting a UK Ltd and then living and working from a home in a foreign country with a low cost of living and low tax rate, might lead to some very favourable profits?

You will be paying tax in the country where you're working so you may as well set up a local company. In any case in January it will be illegal as you won't be able to run your business using a UK company whilst working remotely in a foreign country. Currently you can within the EU.

[man]

The UK company is subject to tax in the country where the directors are based and control the business from. It is not relevant where the clients are based. Therefore, if the director is a tax resident in the UK and controls the company from the UK, both the LTD and the director will be subject to tax in the UK. If however the director lost his tax residency in the UK and as the sole director he moved to live in Germany, then the UK company will not be tax resident in the UK as it will be controlled by a non-UK tax resident director and then the company would become subject to tax in Germany. You can be a tax resident in one country for the tax year (unless you apply a split year treatment) so if you live in the UK and your family remains in the UK, you are a tax resident in the UK. The tax residency rules are lot more complex but this is just an overview.

So starting a UK Ltd and then living and working from a home in a foreign country with a low cost of living and low tax rate, might lead to some very favourable profits?

[Chart Accountancy]

The UK company is subject to tax in the country where the directors are based and control the business from. It is not relevant where the clients are based. Therefore, if the director is a tax resident in the UK and controls the company from the UK, both the LTD and the director will be subject to tax in the UK. If however the director lost his tax residency in the UK and as the sole director he moved to live in Germany, then the UK company will not be tax resident in the UK as it will be controlled by a non-UK tax resident director and then the company would become subject to tax in Germany. You can be a tax resident in one country for the tax year (unless you apply a split year treatment) so if you live in the UK and your family remains in the UK, you are a tax resident in the UK. The tax residency rules are lot more complex but this is just an overview.

[FrankyFingers]

To give some closure on this. In my case as per the op I pay tax in the UK, this has been verified by my accountant and the hiring agency I've been doing this for the past 12 months.

[dsc]

This contract never came to fruition so I didn't have to do any research. As others, I'd suggest speaking to a German accountant (I think someone made some recommendations above).

[badimesr]

For sure I'd be talking to a German accountant before deciding what to do tax-wise (thanks for the recommendation BlasterBates).

The thing that is stuck in my head is that you pay tax where you earn money and this is from day one. If I was to decide on the gig I'd be staying in hotels and this creates the first problem, how do you do a tax return if you are not a resident? I always assumed you need to have a residential address for that...

Dear dsc, Will you be able to let me know what was your final decision on this topic. I am exactly in the same situation (working remotely from UK, travelling to Germany occasionally for meetings etc, BUt, no permanent address in Germany) and have similar queries. Appreciate if you could help me with any guidance or contacts (tax consultants) who can help clarifying these queries.

[m0n1k3r]

Hi,

I am an engineering contractor, British citizen and based in the UK. I currently contract in the UK using my own LTD company. As per the title; I have been offered a contract working for a German company through a German agency working remotely from my home office with occasional on site work in Germany.

So the million dollar question is where do I pay tax ? Before anybody says it - I would ask my accountant but he's on holidays for 2 weeks I have tried searching for an answer but can't find anything definitive to my situation but from what I can work out is, if i do have to pay tax in Germany there will be little point bothering.

Thanks for any help
Franky

You work in the UK, with occasional business travel for meetings in Germany.

You pay taxes (and NI) in the UK.

[Sue B]

My direct line is 0151 443 6830, and I'm in the office this morning!


KR

[dsc]

Thanks for your reply Sue, what's the best way to have a chat?

Personally I'd class these as business visits, as I'm sure it's just to have a conversation about what work's been done and pick up work for the next 3 weeks, but when it comes to tax I don't think it really matters what my opinion is...