Reply to: Working in Ireland

[ShandyDrinker]

I've written a few posts about contracting in Ireland; use the search facility to find them.

In short, I wouldn't go down the umbrella route unless your rate is stellar as you are unable to claim expenses for hotels after a period of time, for example and the retention is quite frankly horrendous - this can be particularly restrictive if you want to fly back to the UK every weekend too as you wouldn't be able to claim flights as expenses.

You can go via your UK Ltd but make sure you register with the Irish tax authorities if you do and gain an exemption. Others have posted links on here to osk.ie, I would use them.

With regard to the IR35 question, as far as I am aware it could actually apply so make sure to follow the same due diligence process you would for any UK based contract.

[BlasterBates]

Thanks for responding..Advice so far (or impression ) I received on this forum is that I am not liable for taxes in Ireland if I contract through my UK limited company and receive money directly here...

People are talking about expenses, those expenses they must be putting into their own limited company and profits would be taxed...When, where and how much tax they are paying in Ireland?

Please can more light be thrown upon it?

Check out the link from Old Greg.

You are taxable on all income sourced in Ireland even if you are not tax resident. So you need to be careful.

In my view it would be very unlikely that the Irish tax authorities would view an Irish contract to be part of your UK income even if the agency were UK based. This is equivalent to routing a UK contract via the Isle of Man.

If you still want to do this I would advise actually claiming exemption from the Irish authorties, i.e. declare what you are doing and argue your case. Staying below the radar will probably be viewed by the Irish tax authorities as tax evasion.

[Old Greg]

Thanks for responding..Advice so far (or impression ) I received on this forum is that I am not liable for taxes in Ireland if I contract through my UK limited company and receive money directly here...

People are talking about expenses, those expenses they must be putting into their own limited company and profits would be taxed...When, where and how much tax they are paying in Ireland?

Please can more light be thrown upon it?

Before you dismiss liability in Ireland, look at

http://www.osk.ie/assets/files/Contr...rch%202012.pdf

[tigerinopen]

If you work in Ireland and tax yourself in the UK you run a risk. IF they find out about you they will more than likely chase you, just experience of tax authorities anywhere.

The risk free way is to inform the authorties and make your case as to why you're exempt. If they find out you've been hiding from them they'll come down on your like a ton of bricks, that's how tax authorities do things.

Many contractors have come a cropper on overseas contracts, but as long as you're aware of the risks.

In my view it is worth notifying the tax authorities and paying tax, simply because for a short tern contract 6 months or less a) you generally won't be subject to social security b) you will only be taxed on Irish earnings and the marginal tax rate will probably low because you're only there a few months.

Getting a nasty letter two years after you left would not be nice, as seems to happen to quite a few contractors in various countries,

In my experience it is not a big deal making sure your tax affairs are in order and can save you fortune if you get caught.

Just bear in mind that the trend is to clamp down, so what might have been a low risk perhaps a few years ago won't stay that way. A lot of UK contractors now work in Ireland so they probably are on the radar.

Thanks for responding..Advice so far (or impression ) I received on this forum is that I am not liable for taxes in Ireland if I contract through my UK limited company and receive money directly here...

People are talking about expenses, those expenses they must be putting into their own limited company and profits would be taxed...When, where and how much tax they are paying in Ireland?

Please can more light be thrown upon it?

[BlasterBates]

If you work in Ireland and tax yourself in the UK you run a risk. IF they find out about you they will more than likely chase you, just experience of tax authorities anywhere.

The risk free way is to inform the authorties and make your case as to why you're exempt. If they find out you've been hiding from them they'll come down on your like a ton of bricks, that's how tax authorities do things.

Many contractors have come a cropper on overseas contracts, but as long as you're aware of the risks.

In my view it is worth notifying the tax authorities and paying tax, simply because for a short tern contract 6 months or less a) you generally won't be subject to social security b) you will only be taxed on Irish earnings and the marginal tax rate will probably low because you're only there a few months.

Getting a nasty letter two years after you left would not be nice, as seems to happen to quite a few contractors in various countries,

In my experience it is not a big deal making sure your tax affairs are in order and can save you fortune if you get caught.

Just bear in mind that the trend is to clamp down, so what might have been a low risk perhaps a few years ago won't stay that way. A lot of UK contractors now work in Ireland so they probably are on the radar.

[pjclarke]

HMRC therefore agreed in January 2008 that employers may use benchmark rates published on the HMRC website when paying accommodation and subsistence expenses to employees whose duties require them to travel abroad, without the need for the employees to produce expenses receipts. HMRC will endeavour to update the published rates in October/November each year.

Source Employment income: scale rate expenses payments: accommodation and subsistence payments to employees travelling outside the UK

Rates are here: http://www.hmrc.gov.uk/employers/wwsr-bench-2013.pdf

Dublin is €99 per day (24hr) for subsistence, €148 room rate, so I am charging €247 a day. I come back to the UK for weekends so it makes sense to get a managed apartment and StayCity did me a deal at €60/night for a one-bed.

But ditto what people say about expensive, €4 for a sandwich or wrap, beer normally around €4.80, rising to €6 plus in the human zoo that is Temple Bar.

[stek]

Please also suggest about expenses querying have

You can claim the Benchmark figures published by HMRC which are generous for Dublin (not not for Ireland), but still come out of your pocket.

Costs are high, a room is a house/flat is 800 Euro, food is dear, drink is dear and unless you live in the City Centre, Dublin can be quite boring. Sandyford was for me!

I found my war chest built up much more slowly when I worked there, it's not a cheap place, you really need to be on 600 Euro a day and not many pay that there.

[stek]

Thanks for writing, I am told I won't be paid vat as my company would be registered in UK. Why agents vat number on invoice and conversion rate is fluctuating. I am still wondering whether to open a euro or pound business account? Any suggestions ?

You'll have to convert the cash at some point - just take the hit the suits you.

You won't charge or be paid VAT, but need to account for it. HRMC need to recover it from somewhere - it isn't just forgotten about. Have you thought about the fun and games when your next VAT return is nil and HRMC notice (and they will) and ask you to account for that VAT or pay it?

A chat with your accountant seems to be in order.

[tigerinopen]

Please also suggest about expenses querying have

[tigerinopen]

Don't forget to register on the EC Sales List and include the agents Vat number on your invoice with a sterling conversion.

Also account for converting euros to sterling.

Thanks for writing, I am told I won't be paid vat as my company would be registered in UK. Why agents vat number on invoice and conversion rate is fluctuating. I am still wondering whether to open a euro or pound business account? Any suggestions ?

[stek]

Don't forget to register on the EC Sales List and include the agents Vat number on your invoice with a sterling conversion.

Also account for converting euros to sterling.

[tigerinopen]

And I believe that would be true if I go via my own limited company option I.e 183 day rule.

Also can someone shed light on : whether taxes are applied after or before expense claims if contract falls in IR35?

I am now keen on limited company option based in UK , pay my taxes here. Hopefully claim expenses on air travel and living costs there. Contract is only for 6 months.

Thanks to all for the help.

[stek]

Would that mean I don't pay any taxes in Ireland?

After 183 days in Ireland you should and possibly before, it the tax authorities deem you to have a management presence in Ireland.

My advise is to stay under the radar, stay in hotels and move around - make sure you've no trace of Irish presence, not because Irish tax is so high, it's not so bad, just it's more accounting...

And make sure you have deep pockets, Dublin can be more expensive than Zurich...

[tigerinopen]

Can I choose to go with a UK based umbrella company,

Would that mean I don't pay any taxes in Ireland?

[Old Greg]

Hi, please can you/someone suggest, shall I go via a limited company or umbrella considering we will be looking for a mortgage in few months from now.


I will have to open my limited company and do not have prior company account history.

I approached Icon Accounting recently when I was looking at a contract. They were helpful and their introductory email said:

Hi OG,

Many thanks for your enquiry.

In relation to the differences with the UK, the Dividend system does not work out the same as in the UK. In Ireland Dividends are taxed the same as Income after Corporation tax has been taken. Therefore it is inefficient to take out a dividend through Irish Limited company. The main three ways of extracting funds are taxed salary, business expenses and pension contributions.

I have attached our brochure of services which outlines the different options available to consultants for the management of invoicing/payroll:

1) Setting up your Own Personal Limited Company
2) Director Member of an Umbrella Company
3) PAYE Member of an Umbrella Company

The first option of setting up your Own Personal Limited Company is suited to long term contractors, 12+ months. We will assist in you with the incorporation of your company and registration of VAT with the Revenue Commissioners. A separate bank account must also be set up for the Personal Limited Company. Please note VAT Registration can take up to 2 weeks depending on the Revenue District.

Under the Director Member Option, the above process does not apply where we can set you up straight away without any delay. As a director, we will assign you to one of our Umbrella Companies. This structure is very similar to having your own Personal Limited Company, with contractors paying Class S PRSI and having the ability to claim for the same range of expenses as in a PLC.

This option is suited for high rate consultants and/or who will incur a lot of expenses, or those relocating.

Given that you are treated like a self-employed person, you will require to complete an income tax return next year. This is not required under the PAYE Umbrella Solution.

The PAYE Member Option is most suited to consultants that have basic expenses and who wish to maintain their Class A PRSI contributions to Job Seekers/Illness Benefit. As a PAYE Member of the Umbrella Company, there is an obligation on the company to remit employers PRSI of up to 10.75%. This amount is taken as a deduction from the contractors gross pay. However contractors receive the PAYE tax credit of €1650, which helps off set this.

Our management fee for the PAYE Option is €25 per week and €95 per month and €40 per week and €140 per month for the Director Member Option .

This is a pay as you use service with no sign up or leaving charges.

If you wish to advise on the following information I will happily send sample payslips under our different structures:

· Hourly rate of pay
· Will you have many business expenses?
· Single/Married person tax credits
Contractors of the Umbrella Company/PLC also have the benefit of claiming tax relief on any business expenses that are wholly and necessarily required for the contract.
Examples of such expenses include;

· Mobile Phone - You may claim tax relief on the full cost of your mobile phone cost if required for calls for the purposes of the contract. Receipts may be in the form of a bill or top up vouchers.

· Home Phone - You may claim tax relief on up to 50% of home phone for calls required for the purposes of the contract.

· Internet - Tax Relief may be applied to 100% of internet costs which are required for the contract.

· Business Travel - Tax Relief may be applied to 100% of business travel costs. Please note travelling to and from your normal place of work is not permitted as a business expense as per Revenue Guidelines. If however you are using public transport (excluding taxis) travelling to/from the contract you may receive tax relief on the full costs of your bus/train costs.

· Professional Subscriptions & Seminar – Tax Relief may be claimed on professional subscriptions & seminars required for the contract.

· Educational Courses Books & Journals - Tax Relief may be claimed on Educational Courses Books & Journals. Please note tax relief cannot be applied in advance of the completion of courses. All courses must be necessary required for the contract and completed within the duration of the contract.

· Relocation Expenses– If required to relocate accommodation for a contract, contractors may tax relief on the full accommodation costs for the first three months of the contract. This business expenses is permitted under the Director Umbrella Company Option/Personal Limited Company Option.

· Postage & Stationary Tax Relief may be applied to the full costs of items required for the contract.

For larger stationary items and equipment – i.e. Phone / Laptop / Printers, the receipt of the equipment must be made out in the name of the Umbrella Company or Personal Limited Company. For contractors operating under the Director Umbrella Company, tax relief will be processed over a period of 6 months.
Please note business equipment is not permitted as an allowable expenses under the PAYE Umbrella Option.

If you wish to advise on the approximate costs of your business expenses, I will include this in the sample payslip.