German and UK tax regulations

[mwinck]

First of all: Thank you both a lot for the recommendations, it already helped me quite a bit. While usually I was always working myself through all accounting processes, I already assumed that it might be necessary to hire a professional from now on –*and I'm going to do that in the upcoming weeks.

Nevertheless I often assumed that the tax regulations between european countries would be less complicated, since most of them are tied quite close together. I usually work internationally, so for me coming to the UK mainly meant I will base myself there but still work for clients in the rest of Europe. Therefore I guess I have to find a way how to pay the right tax to the right country, which especially in the case of Germany might involve clearing out some sort of suspicions.

Thanks again – Much appreciated!

[BlasterBates]

I would agree with Sue, if you do work in Frankfurt you will need to be declaring that in Germany, simply because you were resident in Germany and that is a sign you have ties there. If they were to come across your invoice and you hadn't declared it they would feel "ignored", and as they say "no hell hath fury than a taxman scorned".

It isn't wise to ignore the taxman, also you might end up doing more work with the client in the future.

I would advise assuming you're taxable in both the UK and Germany. If that is the only work you do in Germany it will any case probably be under the threshold and so you may well pay no tax, but the point is, you are being above board and honest, and so they will more easily accept any arguments that your worldwide income is non-taxable.

I think it is actually a good idea to discuss it with them, you haven't decided whether you are going to do this contract, so now would be the time to find out what the tax implications are in Germany. If it is above board in their view then follow up with a letter, so it is effectively declared.

To make your life much easier it might actually be worth turning the work down, simply to save yourself the bureacratic hassle.

In the end there is little difference between UK and German tax rates and so it isn't worth avoiding.

If you had not been a German resident I think there would be no problem billing a few days work via a UK Ltd but not as a German resident who has only just left the country, it would raise suspicions that you're conning them, even if that isn't the case it would mean a lot of stress that you could do without.

I think with regards to your English income in the German tax year, always declare, not declaring is potentially tax evasion. If you pay yourself as a salary, my experience is that, it is not taxed again in Germany, I think dividends would be taxed as the difference between UK and German rates, but since dividends are taxed at 25% in Germany I wouldn't expect anything other than a negligble effect on your German tax bill.

I would say it would be worth a EUR 100 consultation with a reputable accountant in German to clarify your last years tax return, and well worth continuing with the German tax advisor if you plan to work occasionally in Germany.

IT sounds like you won't be paying tax in Germany but you just want to make sure the German tax man doesn't find your invoice and come to the wrong conclusion. Better to declare and claim exemption than get on the wrong side of the tax man.

When I was in Switzerland but mainly resident in Germany I declared my worldwide income but then appended a letter quoting the appropriate paragraphs as to why they shouldn't tax it. I think that is a good approach. Particularly as there is always doubt with regard to international taxation. On international taxation accountants always give answers which include lots of words like "might", "should" and "possibly", so you definitely want to be on the safe side.

My experience is that if you are simply honestly trying to find out what tax you have to pay, the taxman in the UK and in Germany will be helpful. They're simply there to do that, establish what tax you're expected to pay.

[SueEllen]

Few issues:
1. You have left Germany to live in the UK but now have gone back to work the following tax year. So to anyone, not just the tax authorities, it doesn't look like you have broken your links with Germany. So the German tax authorities can easily argue that you should pay tax in Germany on your German sourced income this year.

2. Working freelance in both countries is different. In Germany you can be a proper freelancer but in the UK you generally have to work under some structure i.e. umbrella company, limited company, especially if you have agencies involved due to the tax laws about who is liable for tax if the contractor doesn't pay up.

3. The tax years don't align.

I would have a talk with a German accountant about your German situation.

And if you aren't using an umbrella company, a talk with a British one over your British situation. (There are British ones on this board who can help you i.e. Clare from inTouch)

There are dual tax agreements in place so you shouldn't be stung for tax paid in the other country.

[mwinck]

Hello everybody,

glad to have found this forum and I hope some of the experts here can enlighten me on some issues I'm dealing with. I'm german and recently relocated to London. I have been working as a freelancer in Germany in the last years and I am still working as a freelancer in the UK as well. There are a few things that I'm unsure about.

I got an offer from a german company to work at their studio on site in Frankfurt for a few days and I'm wondering if I can just write them a normal invoice with my London address and pay my tax for this job in the UK. Or if there is any details I need to make sure to take care of? I'm not charging VAT at the moment, since my yearly income won't excess the 70k£. And I'm doing my tax via self-assessment.

Concerning the VAT: I have been charging Mwst in Germany till November last year (I moved to the UK end of last year) and I was wondering if there are any obligations for me to charge VAT, because I charged Mwst before?

And last but not least the german tax authorities told me I would still have to declare any income I had in the UK in the end of last year in my german tax declaration for 2013, although I wasn't living in Germany anymore. If this is the case, do I as well have to declare my german income in my UK declaration for the months of the last tax year that I wasn't in the UK yet?

I'm already looking for an accountant in London to help me out on things, but I'd appreciate if somebody is so kind to share some knowledge beforehand.

Best
Matthias