Swiss agency and payroll costs

[NotAllThere]

Thanks for replies. Its a daily rate with no expenses...

Any expenses would come out of your daily rate anyway - it would just be a tax advantage. It might be worth going to the payroll company/agency again and rephrasing your question.

[The Spartan]

But remember only the tax you pay in CH will be taken into account not the Social Security, for example in Zurich the tax rate is say 9% whereas as UK basic tax is 20% on anything over your personal allowance up to £31865. Under dual taxation you'd have to pay an extra 11% of what you earned up to that point and even more beyond that, so do your research, because BB is right they introduced new rules relating to ties or things that tie you to the UK.

[BlasterBates]

Thanks, that was helpful.

"You’re automatically non-resident if either:

you work abroad full-time (averaging at least 35 hours a week) and spent less than 91 days in the UK, of which less than 31 days were spent working"

Based on this, if I started the contract in July I'd be classed as resident regardless and probably have to pay the difference between CH tax and UK tax, taking it up to 40%. I'd be paying more at 40% because I've already received salary and dividends in the UK.

Bear in mind that even if you are non-resident on working hours there are further tests based on your home and UK ties, which can put you inside the UK residency.

If you do intend to return regularly to the UK and live in hotels or temporary accomodation in Switzerland, you will probably remain UK resident, though this does give you some Swiss tax breaks and you should be able to avoid the compulsory Swiss health insurance.

The way to avoid UK residency, is to give up your home in the UK and live in Switzerland.

[ruasonid]

Thanks, that was helpful.

"You’re automatically non-resident if either:

you work abroad full-time (averaging at least 35 hours a week) and spent less than 91 days in the UK, of which less than 31 days were spent working"

Based on this, if I started the contract in July I'd be classed as resident regardless and probably have to pay the difference between CH tax and UK tax, taking it up to 40%. I'd be paying more at 40% because I've already received salary and dividends in the UK.

[BlasterBates]

Thanks for replies. Its a daily rate with no expenses. I could commute or be based in CH. I'm confused about split year tax and whether tax would be payable in UK on earnings from CH. As we are part way through tax year what would happen in terms of personal allowance and earnings to date in UK (I've paid myself salary and some div. from my Ltd.)? Would commuting, or moving there, mean I'd have to pay any more in UK beyond taxes paid in CH. Have been overseas before but always for long periods (several years) and not in CH. Thnis could be a 6-12 month contract. Thanks again.

HMRC has rules on split years. The real question is whether you are still tax resident in the UK.


https://www.gov.uk/tax-foreign-income/residence

If you are tax resident in Switzerland and you have no flat or house in the UK and you don't return regularly you won't get Swiss expenses allowances. You must have proof. Generally 1500 CHF or thereabouts monthly. If you are Swiss tax resident you will also pay wealth tax and there is compulsory medical insurance. If you can claim that you are an international commuter and have adequate cover (eg NHS) you can exempt yourself from that

If you have a house in the UK you return regularly to, you maybe UK tax resident, and might have to pay additional tax on your income. Swiss tax will be taken into account.

I wonder, given the two possibilities, whether it'll make a big difference whether you're Swiss or UK resident.

But do keep records of visits and whereabouts. Receipts are enough eg. plane tickets. A good way convincing way is to use the cash machine at the weekend or fixed line phone.

[The Spartan]

I'm not positive how it works now but when I worked out in CH my contract duration lasted over a full UK financial year so I didn't have to pay UK tax under the dual taxation treaty. Google statutory residence test and read through HMRC's documentation it's one of the few things they've managed to get right and the rules are very clear on dual taxation and split year treatment etc.

[ruasonid]

Thanks for replies. Its a daily rate with no expenses. I could commute or be based in CH. I'm confused about split year tax and whether tax would be payable in UK on earnings from CH. As we are part way through tax year what would happen in terms of personal allowance and earnings to date in UK (I've paid myself salary and some div. from my Ltd.)? Would commuting, or moving there, mean I'd have to pay any more in UK beyond taxes paid in CH. Have been overseas before but always for long periods (several years) and not in CH. Thnis could be a 6-12 month contract. Thanks again.

[The Spartan]

I found that the deduction came out of what I earned, much like the way you would use a UK Umbrella it is you who will pay for it.

[NotAllThere]

Before signing up, make sure of their expenses policy. Some barely deal with expenses at all - others are quite happy to handle them. Since Swiss law is rather more liberal towards expenses than UK law, it can make quite a difference.

[stek]

I have a potential opportunity for a contract role in Switzerland. Is it usual for the agent/payroll company to deduct a % from the daily rate? If so, what is typical? It seems the agency charges a markup on daily rate to the client and deduct payroll admin costs from the contractor? I've Googled this and found conflicting indications.

Bout 5% I think. It's a fee. You have to go payroll in CH, unless you want to faff around with Gmbh or whatever they're called there.

[ruasonid]

I have a potential opportunity for a contract role in Switzerland. Is it usual for the agent/payroll company to deduct a % from the daily rate? If so, what is typical? It seems the agency charges a markup on daily rate to the client and deduct payroll admin costs from the contractor? I've Googled this and found conflicting indications.