Sole Director of a UK ltd - moving to Germany or the UAE

[Mrfrank]

The German tax authorities expect corporation tax from any company controlled from Germany. Previous test cases have shown that being the sole director of a non-German company while living in Germany makes the company taxable as if it were based in Germany, regardless of its registered address or where it does business. This may have changed since I was there so it's worth getting advice from a German tax accountant.

[BlasterBates]

Normally dividends are taxed where the company is, so you need to clarify that.

I own shares in many different countries and always pay local taxes i.e. if I receive dividends from a Thai company tax is deducted in Thailand and then this is taken into account for German tax.

I don't see that corporation tax would be due in Germany, just the UK.

The principle is on taxation is that when you are not resident you're still liable for income that is sourced in that country, of course there are exceptions, which is why you need to clarify. Profit in the UK company is not personal income.

[franklin]

I am a permanent employee for a PLC company in London at the moment. In March, I will be moving to Germany for another permanent job. I am resigning from the London position and it ends at the end of Feb and my new job in Germany starts in March. I will become at the same time a permanent resident over there. I understand I can request to be a UK non-resident for the coming tax year (2014-2015), not sure if I must or should request it. This is about my Monday to Friday job.

Aside of that, I have a limited UK company. It is registered at my accountant's. I've been using it to bill a single client so far in London. I do the work from home on week-ends. It's all online work and software development that I do.

When I leave, I will put the business address to a friend's home (whom I could consider making a secretary if necessary). At the moment the business address and private director address are set to my London home which I rent and will lose at the end of the month.

I have never paid and won't be paying myself a salary through the limited company, but will probably pay myself dividends. I won't come back to the UK other than for visiting client(s) once a year for a couple of days. Will be viewed as tourism I suppose.

I understand I WILL NEED TO DECLARE UK DIVIDENDS IN GERMANY AND PAY INCOME TAX on those. If it can avoid hassles, I am ok to not pay myself dividends and leave the money in the company for a while until I move to a "better" country to draw the money from, or come back to the UK (not part of my plans at the moment).

Questions:
1. Do I need to ALSO "declare" the company and pay corporation tax on it in Germany ? In the UK only as I've always done ? In both ? Please, if you mention double-taxation treaties, could you be very clear if you are talking about the company being taxed or myself ? I spoke to my acccountant about this, he says don't pay yourself anything while you are anywhere abroad, and the company is only liable for tax in the UK. He does reckon that obviously I am tax on personal income wherever I live. Not sure if I can trust him on the corporation tax/company profit tax question. His argument is that my clients are London based, pay my UK company, the business would have a UK address and bank accounts. Only my private address would be abroad.

2. My client sends me purchase orders quoting the work to do, which I sign and send back to accept the work. I know you'll probably say it's up to my client to decide, but is it generally legally accepted that a secretary can sign on behalf of a director ? Otherwise I suppose I could have someone forward it abroad and back to the UK, unless signing outside of the UK makes my signing not legally binding ?

3. Should I or must I ask HMRC to become non-UK tax resident ?