Reply to: IT Contract in Germany, work based mostly out of home in UK

[Brussels Slumdog]

International Tax Agreements verses EU Rules

I am not too sure as stated by BOO that EU rules override individual double taxation agreements.
Individuals pay Income tax where it is earned. In the case of Belgium you also need to prove that you were physically present in the other country in order to claim taxation relief. In the past Belgians were paying tax in Luxembourg and offsetting it against their Belgian tax without actually working in Luxembourg.
Companies pay tax where they are controlled so its a grey area. My stategy would be to bill the agency with your Ltd company and ask a German accountant whether you should declare your German days as german taxable income. You most likely wont earn more than the basic personal allowance.

[doodab]

Although the 183 day rule will apply to an employee of a ltd there is no guarantee that the ltd itself will not be liable for local taxes e.g. corporation and trade tax etc. This is very much a grey area at the mercy of individual tax treaties and depends on a lot of factors such as whether you have a 'permanent establishment' and so on.

Something to bear in mind is that after 183 days an employee will be liable for taxes, if you have been invoicing through the ltd that means you may have to run a foreign payroll system and at that point your company will almost certainly be deemed tax resident for everything else. This can get complex and expensive as most places don't have a 1 man ltd culture with an ecosystem of cheap specialised service providers, so if you expect, or even if there is a chance, of going over you are better off going native from day 1.

OTOH I have done short (matter of weeks) contracts with some on site work through the ltd in france and denmark with no issues. For that sort of thing it's fine.

[Boo]

BTW, when you "contracted" in Belgium, were you contracting as a local accountant?

Actually, James, I think I asked first ? But since you are curious to know, no, I have never contracted as anything other than a Software Engineer, and in fact that is all I have done for the last 10 years.

But you did not answer my question : do you work in recruitment, for an umbrella or management company or the like ? Or do you actually write software for a living, via a one-man-band Ltd Company, like us PBI ?

Your reticence does not inspire confidence, to say the least...

Boo

[jamesbrown]

My recommendation here has always been that people here should solicit the advice of a local accountant

Great, so I'm sure your advice will extend to soliciting input from a local, cross-border, tax expert. You know, since, as many accountants will freely admit, they are not experts in international taxation. Glad we've cleared that up.

BTW, when you "contracted" in Belgium, were you contracting as a local accountant?

[Boo]

It's revealing that you place so much trust in the advice of your Belgian accountant when there's a number of us here that can evidence completely contradictory advice solicited under exactly the same circumstances! Bottom line, you know you're right, end of story. Something doesn't compute with your posts, given that the central argument others are making is to solicit qualified advice from someone experienced in international taxation (and you are basing your opinions on the same advice, only from a local accountant).

I haven't seen such contradictory advice. And I would think a Belgian accountant would know the law that pertains to working in Belgium, no ? He was very quick to say that a Belgian Ltd Co (equivalent) needed at least 2 directors, which knocked it out of court for me.

And I base my beliefs on an actual reading of the actuial law that pertains in Belgium, which I posted myself on these forums a while back, not just on the professional advice I received.

My recommendation here has always been that people here should solicit the advice of a local accountant, what possible advantage could there be for me in saying to other people that they can work under the 183 day rule ?

It is yours, and others, continual posting of incorrect "facts" that arouse suspicions : there are very many posters here who make their living selling services to genuine contractors. Some of them are harmless or even useful, like accountants etc but others are agents, umbrellas, or worse, management companies. The corrupt practices of such firms are well documented on these forums and it is a rational supposition that someone who posts in support of those positions may in some way be influenced by them.

So tell us James, do you work in recruitment, for an umbrella or management company or the like ? Or do you actually write software for a living, via a one-man-band Ltd Company, like us PBI ?

Boo

[jamesbrown]

For the record (yet again), I have repeatedly stated on these forums that when I worked abroad I found a local accountant who was able to advise me.

It's revealing that you place so much trust in the advice of your Belgian accountant when there's a number of us here that can evidence completely contradictory advice solicited under exactly the same circumstances! Bottom line, you know you're right, end of story. Something doesn't compute with your posts, given that the central argument others are making is to solicit qualified advice from someone experienced in international taxation (and you are basing your opinions on the same advice, only from a local accountant).

[Boo]

That wasn't my attack on you which is that your argument that you don't need tax expertise to work abroad as the EU law will protect you.

I have never made such an argument. For the record (yet again), I have repeatedly stated on these forums that when I worked abroad I found a local accountant who was able to advise me. The advice he gave was that it is permissable for a one man band UK Ltd Co to send myself, as an employee, to Belgium for up to 183 days to work without that employee (myself) becoming liable for tax under Belgian law.

The same is true in every other EU country, and there is no reason to go to the tax authorities of another EU country to ask them. They are bound by treaty obligations which override national law anyway.

My statement above is that while you may be correct (and personally I don't think you are) it would be totally and utterly stupid to do work abroad without expert advise from someone who knows what they are doing. And only someone as masochistic or stupid as you, Suity or BP would do so......

Did you put up this straw man because you can't admit you're wrong ?

Boo

[eek]

What you say is true. But you ignore what seems to me to be the salient point, which I have already made :

You cannot read into that story that it is illegal for a one man band Ltd Co to operate the 183 day rule in Germany any more than you can read from the hundreds of IR35 investigations that it is illegal to do so here. Tax Authorities take strange stances sometimes and need to be fought.

The EU treaty oblications regarding the 183 day rule makes no distinction in terms of company size. That's a simple matter of fact.

Boo

That wasn't my attack on you which is that your argument that you don't need tax expertise to work abroad as the EU law will protect you.

My statement above is that while you may be correct (and personally I don't think you are) it would be totally and utterly stupid to do work abroad without expert advise from someone who knows what they are doing. And only someone as masochistic or stupid as you, Suity or BP would do so......

[Boo]

You don't need the full story as the facts themselves are quite simple:

He worked in Germany for less than 183 days
The German tax man thinks he owes money
He doesn't have the expert to hand or expertise to resolve the problem.

Regardless of what eu law says, if a foreign tax man decides that you owe him money, until you prove otherwise you owe him money. And hmrc will happily collect it for the foreign tax man in return for similar favours later.

What you say is true. But you ignore what seems to me to be the salient point, which I have already made :

You cannot read into that story that it is illegal for a one man band Ltd Co to operate the 183 day rule in Germany any more than you can read from the hundreds of IR35 investigations that it is illegal to do so here. Tax Authorities take strange stances sometimes and need to be fought.

The EU treaty oblications regarding the 183 day rule makes no distinction in terms of company size. That's a simple matter of fact.

Boo

[eek]

That post means nothing without the full background and the thread does not give the outcome either. You could as well show post from UK contractors complaining that HMRC has stitched them for IR35 when it does not apply as evidence that it is illegal to run a one man band Ltd Co in the UK without paying tax as employees. We all know that tax authorities misrepresent the rules in their own favour and need to deal with it by arguing positions that are already plain. Nothing new in your linked thread and post at all.

I repeat for everyone's benefit that the kings of Denmark and of Belgium have been had up for behaviour that breaches the EU guaranteed freedom of travel to employment in EU countries and the 183 day rule is no different.

It applies to any company that is well formed in its home state. Them's the rules, but people like BB have had the relevant legislation provided to them and quoted in these forums but choose to ignore it. They must suffer the consequences that other people are going to doubt their integrity as a result...

Boo

You don't need the full story as the facts themselves are quite simple:

He worked in Germany for less than 183 days
The German tax man thinks he owes money
He doesn't have the expert to hand or expertise to resolve the problem.

Regardless of what eu law says, if a foreign tax man decides that you owe him money, until you prove otherwise you owe him money. And hmrc will happily collect it for the foreign tax man in return for similar favours later.

[Boo]

This post speaks for itself:



http://forums.contractoruk.com/accou...an-prison.html

That post means nothing without the full background and the thread does not give the outcome either. You could as well show post from UK contractors complaining that HMRC has stitched them for IR35 when it does not apply as evidence that it is illegal to run a one man band Ltd Co in the UK without paying tax as employees. We all know that tax authorities misrepresent the rules in their own favour and need to deal with it by arguing positions that are already plain. Nothing new in your linked thread and post at all.

I repeat for everyone's benefit that the kings of Denmark and of Belgium have been had up for behaviour that breaches the EU guaranteed freedom of travel to employment in EU countries and the 183 day rule is no different.

It applies to any company that is well formed in its home state. Them's the rules, but people like BB have had the relevant legislation provided to them and quoted in these forums but choose to ignore it. They must suffer the consequences that other people are going to doubt their integrity as a result...

Boo

[Boo]

1. The 183 day is right and proper if you are a seconded employee from one EU state to another.

Yes. And this is as true for one man bands as for any other company.

2. If you are a one-man company, your sphere of interest/business shifts from home state to new state from day one, therefore 1. above does apply to us as Contractors, since we are effectively one and the same.

Complete nonsense. Your sphere of interest depends upon many things, including your accountant's address, your car registration, your address abroad and all of the myriad details of your life.

Show me where in the EU legislation it states where your "sphere of interest" lies ? Or even where that phrase is used ?

Options are to stay under the radar by never registering locally, staying in hotels not apartments, but watch the flight records, who knows what the immigration computers are recording. Risky, probably will work in Ireland since we have the CTA which means more or less a walk in walk out state, but for in and out of Schengen, too risky.

There is essentially no risk in working in any EU country for less than 183 days, agents James Brown and Blaster Bates notwithstanding. You are within your rights not to declare income commplying with the 183 day rule in the state in which it is earned. But be very careful not to stay longer...

So Blaster et al are correct, Boo, is adhering to the freedom of movement directive etc correctly but doesn't grasp that's for seconded employees of essentially large corporates, not effectively moving our small businesses from A to B as we are doing.

Show me, Stek, where the EU legislation makes a distinction between corporations based upon their size ?

Again, your post is nonsense and does nothing but play into the hands of companies like ITECS who steal from contractors based on the FUD promulgated by agents in this thread and others.

Boo

[BlasterBates]

This post speaks for itself:

Just got home to find a letter from the German Tax people saying they had "initiated criminal proceedings involving a fiscal offence, summons for being questioned as an accused."

WTF !

They mention the year 2007. I did a short term contract in Munich - just under 5 months. I stayed at hotels during the week and flew home at the weekend. I had a UK Ltd company and paid money into that than therefore paid tax to the UK Government. I was advised at the time - by my agency :-( - that as my stay was less than 6 months, this was all ok.

http://forums.contractoruk.com/accou...an-prison.html

[jamesbrown]

Boo: OK, I think the OP has two very different opinions to consider and, along with anyone else, can make their own judgment I see little value in arguing the point further.

[stek]

Having read through pages and pages on this subject, read the directives and listed to everyone and been in it myself a bit, this is what I think, FWIW...

1. The 183 day is right and proper if you are a seconded employee from one EU state to another.

2. If you are a one-man company, your sphere of interest/business shifts from home state to new state from day one, therefore 1. above does apply to us as Contractors, since we are effectively one and the same.

3. That's it.

Options are to stay under the radar by never registering locally, staying in hotels not apartments, but watch the flight records, who knows what the immigration computers are recording. Risky, probably will work in Ireland since we have the CTA which means more or less a walk in walk out state, but for in and out of Schengen, too risky.

So Blaster et al are correct, Boo, is adhering to the freedom of movement directive etc correctly but doesn't grasp that's for seconded employees of essentially large corporates, not effectively moving our small businesses from A to B as we are doing.

Simples!