Can I setup a UK Limited company while living in Greece?

[nodric]

I just want to point out that tax officials in any country will tax you on work done in that country if the employee is effectively tax resident. i.e. if you setup a co in the UK even if you do most of your work there and then you go to say Germany for a 7 month contract, the German authorities will then go ahead and tax your co for that 7 months work. This is a key determinant of being desugnated as having a permanent presence (even if it's 7 months).

So it isn't cut and dried, you co can be based in more than one country at any one time.

I suggest reading the DTA (double taxation treaty) where it clearly states that for a foreign co. if a proportion of work is done in the country, then that proportion is taxable.

This is reciprocal in all EU DTA's.

I agree it's far from simple. This following are extracts from the Belgian/UK treaty. As good as any, and as that's my area of interest I used this as an example.

ARTICLE 4
Residence

(a) he shall be deemed to be a resident of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closer (centre of vital interests);
(b) if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident of the State in which he has an habitual abode;
(c) if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident of the State of which he is a national;
(d) if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.

ARTICLE 5
Permanent establishment

(6) An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business.

(8) The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.

ARTICLE 7
Business profits

(1) 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. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.

--end extract

Clearly this all hinges on making sure your company is permanently established where you want it to be taxed, and ensure it is not so where you don’t want to be taxed.

From a personal perspective, you need to make sure you do not become resident. If this cannot be avoided, then you only pay local dues and demands on your salary, and not that of the company, provided you have not moved its permanent establishment! Difficult as I’ve said often, if you’re a one man band.

I started a thread to discuss the idea of a Contractor Owned and Managed Services Company to provide this type of solution. It will be hard and challenging, but not impossible I’m sure. There are plenty of international IT house out there operating in just this same way. Why can’t we?

[BlasterBates]

I just want to point out that tax officials in any country will tax you on work done in that country if the employee is effectively tax resident. i.e. if you setup a co in the UK even if you do most of your work there and then you go to say Germany for a 7 month contract, the German authorities will then go ahead and tax your co for that 7 months work. This is a key determinant of being desugnated as having a permanent presence (even if it's 7 months).

So it isn't cut and dried, you co can be based in more than one country at any one time.

I suggest reading the DTA (double taxation treaty) where it clearly states that for a foreign co. if a proportion of work is done in the country, then that proportion is taxable.

This is reciprocal in all EU DTA's.

[nodric]

Hi - I am working as an IT contractor out of Greece, and I recently started working with a few clients out of Netherlands. Invoicing and book-keeping tends to be time consuming and problematic with Greek accountants, and the tax system is not great as well.

I was wondering if I could setup a Limited UK company through which I could invoice customers in the UK and Netherlands, and then pay company tax in the UK?

Thank you

This all comes down the ‘Centre of Economic Interest’ of the Company. If it has a bona fide operating base in the UK (or wherever), then you will be able to pay corporation tax in that jurisdiction, regardless of where its clients are.

If you have no office, no staff, no local clients, then this will be almost impossible to demonstrate. The jurisdiction in which the majority of business is conducted, and the main residence of the directors and staff [YOU], will also be used to determine the Company’s ‘Centre of Economic Interest’.

Your salary would also have to be paid in the local country where you were working on behalf on your company, and local taxes and SS would be due, subject to the usual 183 day rule in most EU countries. This gets messy and complex, trust me I know!

This is why managed companies exists. i.e. Nominee Directors, and shared offices with phone answering etc.

You can set up a UK LTD and appoint nominee directors, and even mask your involvement, but all this costs cash. Will the tax savings be sufficient to provide a value add in doing this? Probably not

I once looked at Ireland for this. Cost was 25K Euros a year, plus time and materials for any extra work, like answering the phone in your name and sending on details.

The only way this will work is by forming a cooperative of contractors to fund such a structure. A contractor owned and managed ManCo using a Limited Liability Partnership, now there’s an idea

.

[BlasterBates]

Hi - I am working as an IT contractor out of Greece, and I recently started working with a few clients out of Netherlands. Invoicing and book-keeping tends to be time consuming and problematic with Greek accountants, and the tax system is not great as well.

I was wondering if I could setup a Limited UK company through which I could invoice customers in the UK and Netherlands, and then pay company tax in the UK?

Thank you

You can't just tax your business where you want, you tax it where you are based ie where your employees are, either Greece or the Netherlands, if you actually work in Greece and pop up to the Netherlands from time to time, looks like you tax in Greece, if you spend a lot of time in the Netherlands, then probably there. If you work 50/50 bad luck you may well have to divide the business up, i.e. have a Dutch co. and a Greek co.

Now the EU rules allow you to use any form of co to operate, but if you use a UK Ltd, which you can if you want, you still pay the tax where the work is done. For example many German businessmen set up UK Ltd co, because it is less bureacratic...but they pay German corporation tax, and register a branch of their ltd in Germany. So in the UK an accountant will handle the Ltd for you and declare no income to HMRC because the co hasn't made any money there. This is all in the Double Taxation Treaties.

[Paddy]

Hi - I am working as an IT contractor out of Greece, and I recently started working with a few clients out of Netherlands. Invoicing and book-keeping tends to be time consuming and problematic with Greek accountants, and the tax system is not great as well.

I was wondering if I could setup a Limited UK company through which I could invoice customers in the UK and Netherlands, and then pay company tax in the UK?

Thank you

Lithuanian Company Formation may be better for you.

15% CT, minimum share capital is €2,896.

[norrahe]

If you are carrying out work with Dutch clients then you may be required to set up a Dutch limited, if I recall rightly.

Talk to an accountant as Dutch tax laws are quite complex and in some cases where business transpires with Dutch entities they do require the company to be domiciled in the Netherlands.

[questiontime]

Hi - I am working as an IT contractor out of Greece, and I recently started working with a few clients out of Netherlands. Invoicing and book-keeping tends to be time consuming and problematic with Greek accountants, and the tax system is not great as well.

I was wondering if I could setup a Limited UK company through which I could invoice customers in the UK and Netherlands, and then pay company tax in the UK?

Thank you

i don't see a problem with you setting up a uk company and invoicing your dutch client .. uk govt will be happy with the extra tax .

i assume you are doing work from greece and not in the netherlands (an occassional visit is fine).. if you are doing work in netherlands, then the situation is different...

the problem is with the greek authorities ... as the management (ie you) is in greece, they will argue that the company is tax resident in greece.

if your client will pay to a non-eu contry, a delaware LLC is a good choice. you do not have to pay any tax in the usa (assuming you do not trade in usa). in any case, your tax liability in greece will not go away.

All these offshore companies etc setup will only benefit the super rich. Professional advise will cost you more than what you gain.

[SueEllen]

UK based tax dodgers tend to set up their companies in the Channel Islands or Isle of Man but they need to travel regularly to those locations to hold board meetings to maintain the charade that their companies are based there.

They also tend to have more than one employee and director if most of the work they do is based in another European country.

[Gonzo]

Hi - I am working as an IT contractor out of Greece, and I recently started working with a few clients out of Netherlands. Invoicing and book-keeping tends to be time consuming and problematic with Greek accountants, and the tax system is not great as well.

I was wondering if I could setup a Limited UK company through which I could invoice customers in the UK and Netherlands, and then pay company tax in the UK?

Thank you

Somebody wanting to pay tax in the UK.

The answer is that you can set up the company in the UK no problem but, and I don't know the answer, I suspect that it is not so easy to dodge the Greek taxes although I did read a piece a while ago that said tax dodging was the national sport over there.

EDIT: I also don't know how easy it is to escape taxation in Holland either but that is something else that must be considered.

UK based tax dodgers tend to set up their companies in the Channel Islands or Isle of Man but they need to travel regularly to those locations to hold board meetings to maintain the charade that their companies are based there.

[darkbluegr]

Hi - I am working as an IT contractor out of Greece, and I recently started working with a few clients out of Netherlands. Invoicing and book-keeping tends to be time consuming and problematic with Greek accountants, and the tax system is not great as well.

I was wondering if I could setup a Limited UK company through which I could invoice customers in the UK and Netherlands, and then pay company tax in the UK?

Thank you