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Previously on "EU contractor in UK - taxes, legal, etc."

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  • dlv
    replied
    Originally posted by yosheeck View Post
    After 183 you'll become tax resident. Also there are other "positive tests" for becoming UK tax resident - as HMRC document specifically says...

    But at that moment you become a "dual resident" and the agreement between countries you are resident classified says what to do then. Don't know how that works for Ireland - someone need to read that treaty for UK/IRL to know...

    For POL/UK agreement look for article #4 titled "residence", then for article #7 "Business profits".
    Crucial is:
    "The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein"
    and according to "Permanent establishment" definition - simply doing services is not "Permanent establishment".

    Hope this clarifies residency/183 days etc.
    Just one thing here. Article 5, point 5 says:

    "Notwithstanding the provisions of paragraphs (1) and (2) of this Article,
    where a person – other than an agent of an independent status to whom paragraph (6)
    of this Article applies – is acting on behalf of an enterprise and has, and habitually
    exercises, in a Contracting State an authority to conclude contracts on behalf of the
    enterprise, that enterprise shall be deemed to have a permanent establishment in that
    State in respect of any activities which that person undertakes for the enterprise,
    unless the activities of such person are limited to those mentioned in paragraph (4) of
    this Article which, if exercised through a fixed place of business, would not make this
    fixed place of business a permanent establishment under the provisions of that
    paragraph"

    which basically would mean that you're deemed to have a permanent establishment even if you don't explicitly set it up here.

    Leave a comment:


  • Brussels Slumdog
    replied
    Who will you be invoicing

    Originally posted by yosheeck View Post
    if you are polish native and you have polish company already established in Poland, the best way to do business is register NOTHING in UK, and do a "service export" to UK. You just issue usual VAT invoice - nothing else is needed. You may be a self-employed or ltd-like company in PL - it really doesn't matter, as long as you properly work in VAT (import from UE), you are dual resident or just not-yet-resident in UK

    Hope this will help someone
    This depends on who you are invoicing

    If your Polish company is invoicing the end client or you need to invoice an employment agency

    Invoicing a client or an agency is not the same thing

    If you need to invoice the agency you will most likely need either a UK LTD company or an umbrella company as they need proof that you are paying UK tax as you will be working for the end client of the agency

    Leave a comment:


  • yosheeck
    replied
    Originally posted by BlasterBates View Post
    Just need to be careful as the definition is rather woolly, i.e. it is possible to have a Permanent Establishment that is of short duration.

    Just pointing that out as you are always at the discretion of the tax authority.

    Best to get advice from a local accountant and get it agreed with HMRC, rather than keep quiet about it and hope you read it correctly.

    I would advise generally against interpreting tax law based on opinions from non-experts in a forum.
    Yes, you are definitely right. No one should use that without detailed analysis. And also - I'm non-expert.

    I just confirmed this info with 2 accountants - but you can never be sure if they know what they are doing, or just telling me what I want to hear. So anyone using this info should be careful and double-check everything.

    I simply want to confirm that everything is OK with this approach...
    So my question to you (or anyone else able to answer):

    How to ask question directly to HMRC ?
    What way of doing that you people prefer ?
    Should I mail them ? Ask with official document ? Or just ask directly in the local office ?

    Thanks for ideas...

    Leave a comment:


  • BlasterBates
    replied
    Originally posted by yosheeck View Post
    After 183 you'll become tax resident. Also there are other "positive tests" for becoming UK tax resident - as HMRC document specifically says...

    But at that moment you become a "dual resident" and the agreement between countries you are resident classified says what to do then. Don't know how that works for Ireland - someone need to read that treaty for UK/IRL to know...

    For POL/UK agreement look for article #4 titled "residence", then for article #7 "Business profits".
    Crucial is:
    "The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein"
    and according to "Permanent establishment" definition - simply doing services is not "Permanent establishment".

    Hope this clarifies residency/183 days etc.
    Just need to be careful as the definition is rather woolly, i.e. it is possible to have a Permanent Establishment that is of short duration.

    Just pointing that out as you are always at the discretion of the tax authority.

    Best to get advice from a local accountant and get it agreed with HMRC, rather than keep quiet about it and hope you read it correctly.

    I would advise generally against interpreting tax law based on opinions from non-experts in a forum.

    Leave a comment:


  • yosheeck
    replied
    After 183 you'll become tax resident. Also there are other "positive tests" for becoming UK tax resident - as HMRC document specifically says...

    But at that moment you become a "dual resident" and the agreement between countries you are resident classified says what to do then. Don't know how that works for Ireland - someone need to read that treaty for UK/IRL to know...

    For POL/UK agreement look for article #4 titled "residence", then for article #7 "Business profits".
    Crucial is:
    "The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein"
    and according to "Permanent establishment" definition - simply doing services is not "Permanent establishment".

    Hope this clarifies residency/183 days etc.

    Leave a comment:


  • stek
    replied
    I'd imagine that after 183 days in UK you'd be tax resident and liable for UK tax, just like I will be for Irish tax in a few weeks....

    Leave a comment:


  • yosheeck
    replied
    Googled more, have read a lot, asked few accountants and then even HRMC guys. Seems like "UK- Polish double taxation agreement" is crucial to understand the topic...

    So, for anyone looking for this in future, short info:
    - read a lot about Dual residence
    - check if your country is listed on Tax treaties in force. Usually the content of a treaty for given country is published in english on HMRC site, and translation in given language on native government pages.

    Now specific to Poland (starting in 2007):
    - the tax treaty document in English link - full title is "UK/POLAND DOUBLE TAXATION CONVENTION"
    - the same tax treaty document in Polish - full title is "Konwencja między Rzecząpospolitą Polską a Zjednoczonym Królestwem Wielkiej Brytanii i Irlandii Północnej w sprawie unikania podwójnego opodatkowania"
    - simply saying, if you are polish native and you have polish company already established in Poland, the best way to do business is register NOTHING in UK, and do a "service export" to UK. You just issue usual VAT invoice - nothing else is needed. You may be a self-employed or ltd-like company in PL - it really doesn't matter, as long as you properly work in VAT (import from UE), you are dual resident or just not-yet-resident in UK

    Of course, there may be problems with agency/company you want to work for. They may be not informed enough and simply afraid of doing business with off-shores. But yet, you can always show them links, and ask them to consult HMRC directly or good accountant.

    Also the tax-treaty is working both ways, so also DOES work for UK companies contracting in Poland. But it also means, this is NOT a backdoor for off-shoring taxes (if someone tries to do that) because of country specific "dual residency" rules.

    Hope this will help someone

    Leave a comment:


  • SueEllen
    replied
    Services are treated differently from goods.

    Plus in the UK (and a few other European countries) business people prudently save money out of earned income to ensure their limited companies can pay their taxes when demanded by the authorities. If you run a limited company you are actually breaking laws if you don't do this.

    Leave a comment:


  • northernladuk
    replied
    When you say UK company wants you to do work? To come over here and work or provide your services from Poland? I can't see an OS IN01 working for you as it clearly states

    Who must register
    You must register if you set up a place of business in the UK or if you usually carry out business from somewhere in the UK.

    Leave a comment:


  • yosheeck
    replied
    Thanks again !

    Short explanation:
    I don't really want to do anything "dodgy". I just run a company in Poland - and I have income, expenses and taxes to pay out there. So this is real business - pretty legal, without hiding anything.
    Now, a UK company wants me to do a work for them, so I want to charge them by invoice. I googl-ed and found a lot info about invoicing for imported goods, but yet can't confirm that it works same for services.

    Additional question:
    What about "registering of an overseas company opening a UK estabilishment" form ? (OS IN01)
    Maybe this is what I'm looking for ?

    Sorry for asking so much questions - just trying to understand the system...

    Leave a comment:


  • SueEllen
    replied
    Originally posted by yosheeck View Post
    Ok, thank you all for answers ! Explained me a lot !

    What do you say about different approach:
    Can I register company in UK (limited or self-employed) and then put invoices from my Polish company as expenses for UK company ? So then, most of the taxes will be paid in Poland ?
    Firstly no agency will deal with you as a self-employed person and few direct clients will. This is because if you do anything dodgy they are liable for your tax. This means you either have to use a limited company or an umbrella company.

    Secondly if you do anything dodgy HMRC will come after you personally. What you are trying to do falls under the dodgy side and as you are one person company you are easy to come after. HMRC and other countries tax departments have become more friendly with each other over the years.

    In short open a English or Scottish limited company, get a UK accountant and while the corp tax rate is a couple of percent higher if you do things correctly with a bit of planning you won't be out of pocket.

    Leave a comment:


  • yosheeck
    replied
    Ok, thank you all for answers ! Explained me a lot !

    What do you say about different approach:
    Can I register company in UK (limited or self-employed) and then put invoices from my Polish company as expenses for UK company ? So then, most of the taxes will be paid in Poland ?

    Leave a comment:


  • Brussels Slumdog
    replied
    Working abroad rules

    Originally posted by yosheeck View Post
    Polish...
    Shouldn't matter I guess - EU is EU ?

    And the thing is, for a kind of company I'm currently running, I pay only 19% of income tax, a VAT, and ~100 GBP insurance... That's simply incomparable to any kind of employment in UK.
    Your country where you are tax resident is important

    1 You should read the UK- Polish double taxation agreement as there is no UK- EU double taxation agreement

    2 The length of your contract
    Whether Greater than or less than 183 days as this determins whether you are taxed only on your local income or worldwide income. How the country where you are going to work counts resident days

    3 Social Security payments - Employer contributions and employee contributions
    Some countries have low tax rates but high social security rates like Belgium and France
    4 legally you as an idividual pay tax in the country where you work pay tax from day one but there are exceptions
    5 Legally a company pays tax where it is controlled so for one man LTD companies the company moves with you
    6 Risk and common sense - The risk of the country where you are going to work finding out that you have been working.
    If you are going to work in a country where you will not earn more taxable income than the tax free amount ie UK about £8000 then registering is most likely not worth the hassle
    7 Whether the agency or end client accepts your local LTD

    Leave a comment:


  • dmini
    replied
    And read some of the threads ... about Germany and other countries. You may be lucky, but a lot of them want you to pay lots of tax in their country - and register there as well for good measure. If you didn't...... read the thread about prison and Germany!

    Leave a comment:


  • SueEllen
    replied
    If the work is through an agency with a registered office in the UK, then you have to work through a UK based limited company or umbrella.

    If it's direct with the client it depends on the client.

    Leave a comment:

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