Reply to: IR35 and a contract abroad in Europe.

[threaded]

AIUI as you will be physically in Sverige for over 183 days a year you will be liable for Swedish Tax. I was reading a horror story on a Swedish forum regarding a UK contractor who got stiffed by the Swedish Tax people for £90k, they took his flat!

Sweden's a great place tho, I'd love to contract there, despite the low salaries (dunno what rates are tho) and high tax...

I'll try and find the link to the Swedish Forum I mentioned....

In Scandi a good rule of thumb is, if you're going to play silly beggars with the tax authorities, not to own anything. There are retrospective treaties so they can chase you back to the UK too.

Salaries are generally higher than the UK (except the City of course)

Contractor rates though are generally lower, as most temporary BOS are University Students and people with medical problems (who have a significant amount of their salary paid by the state so they can stay in employment or get back into employment).

Really quite common. Some go to extremes: one place I worked I was the only person who wasn't being partly paid for by the state, that included the MD .

[www.landed.at]

The Swedish house mafia

Stek - I wonder what that link is. I cant see how they could have taken his flat, but it does make for fearful reading, reminder to self to start dating barristers and lawyers and hopefully getting one up the duff and into marriage.

Contractor - c
Agency Hiring Contractor - ahc
End Swedish Client -esc

esc pays ahc for the hiring of c (would ahc charge esc vat ? as its not in sweden)

c charges vat and rate to ahc (as normal) the question of c's taxes to sweden is I am told that they are able to claim the ltd's corporation and income tax as the HMRC would do here.

If the above is wrong please correct me.



Online Tours and Travel

[gooddayall]

.

Thanks a bunch for the advice, I will surely be seeking a Swedish accountant if it they grant me the contract !

[BlasterBates]

Your Ltd needs to be registered in Sweden, ortherwise you'll probably get into trouble with the Swedish authorites, i.e. you have an employee registered and paying tax in Sweden.

If your Ltd does business in the UK you need to set up a seperate branch and register it in Sweden. It will have a seperate accounts and corporation tax will only be paid to the Sweidsh authorities. The DTA means you pay no corp tax in the UK, for your Swedish branch.

It would be easier to setup a different co, could be Swedish or UK Ltd, doesn't matter. EU rules allow you to set up a branch wherever you like. For example many Germany co's are UK Ltd, simply because the costs of setting up a GmbH in Germany are higher. They are completely German, they don't pay UK tax because they don't have a UK operation, they're just registered there.

Your dividends however, if you pay divis will be taxable in the UK and Sweden, taking into account tax already paid in one country, if you maintain your UK residency. If you pay yourself a salary in Sweden and assign yourself to the Swedish branch, your salary will be fully exempt from UK tax, and will not be subject to IR35.

Don't fall into the trap of thinking a UK ltd is just UK and is only subject to the UK system. It isn't. All European companies are equal under the law of all EU states, well more or less, and have to register themselves whereever they set up business with a permanent presence i.e. employ at least one tax resident.

If you pay divis normally the UK will tax first, and then the Swedes will tax after deductions. Paying most of your earnings as dividends seems like a complicated thing to do an needs to be checked with a UK and a Swedish tax advisor.

The cleanest alternative is to operate as a contractor in Sweden, and then declare that income in the UK after the Swedes have taxed it.

Simply working through a UK co, won't exempt you from Swedish national insurance. The Swedes won't see it that way.

Think "I'm Swedish" and you won't go wrong.

[Churchill]

I see , anyway I am waiting for an YES and I will be getting deep into all the details.

Oi Sas, you've failed.

[gooddayall]

The entire point of using your UK Ltd is to stay out of their equivalent of National Insurance.

In most other European countries the equivalent of NI is really high so if you can work out how to stay in the UK system at a minimum rate then you are quids in.

I see , anyway I am waiting for an YES and I will be getting deep into all the details.

[stek]

I asked another question in the OP and here it is:

Q2. In Sweden I will be paying something like 40 % to the local authorities ( because I am physically in Sweden) . Is there point at all to have this contract signed with my UK limited company ? I mean , if I am taxed 40 % already then whatever tax break the HMRC gives me is pointless and I am better off skipping the UK LTD entirely ?

AIUI as you will be physically in Sverige for over 183 days a year you will be liable for Swedish Tax. I was reading a horror story on a Swedish forum regarding a UK contractor who got stiffed by the Swedish Tax people for £90k, they took his flat!

Sweden's a great place tho, I'd love to contract there, despite the low salaries (dunno what rates are tho) and high tax...

I'll try and find the link to the Swedish Forum I mentioned....

[SueEllen]

I asked another question in the OP and here it is:

Q2. In Sweden I will be paying something like 40 % to the local authorities ( because I am physically in Sweden) . Is there point at all to have this contract signed with my UK limited company ? I mean , if I am taxed 40 % already then whatever tax break the HMRC gives me is pointless and I am better off skipping the UK LTD entirely ?

The entire point of using your UK Ltd is to stay out of their equivalent of National Insurance.

In most other European countries the equivalent of NI is really high so if you can work out how to stay in the UK system at a minimum rate then you are quids in.

[gooddayall]

In fact self-employment is expressly forbidden if working via an agency, something to do with the Agencies Act and missing tax money in the dim and distant past....

The Border's agency self employed includes setting up your own LTD and is different than the HMRC's distinction you are referring to.

[gooddayall]

I asked another question in the OP and here it is:

Q2. In Sweden I will be paying something like 40 % to the local authorities ( because I am physically in Sweden) . Is there point at all to have this contract signed with my UK limited company ? I mean , if I am taxed 40 % already then whatever tax break the HMRC gives me is pointless and I am better off skipping the UK LTD entirely ?

[stek]

No, they aren't.

They are employed either by an umbrella or by a company (that they may or may not own). They are not self-employed.

In fact self-employment is expressly forbidden if working via an agency, something to do with the Agencies Act and missing tax money in the dim and distant past....

[The Wikir Man]

And that is what contractors are.

No, they aren't.

They are employed either by an umbrella or by a company (that they may or may not own). They are not self-employed.

[gooddayall]

AIUI A2 countries citizens are only allowed to be self employed?

And that is what contractors are.

[stek]

We don't need permits for LTDs, only for being on someone else's PAYE.

I have been in the UK for 3 years , but my nationality is Bulgarian.

AIUI A2 countries citizens are only allowed to be self employed?

[chef]

If you are paying your tax in the UK, it's wise to consider IR35 - no matter where your contract is.

You need to make sure you're following the golden rules, which may or may not be hard to prove depending on where you are...

i.e you should consider IR35 as your paying tax in the Uk and so the way you handle your business,the contracts you have with clients etc. should all be IR35 friendly wherever possible..

However, as you are contracting in Sweden, unless you give a very good reason I personally believe it is unlikely that HMRC would send anyone to a Swedish company to discuss your working practices as part of an investigation, although having aid that given the desperate levels HMRC seem to be going to for extra tax then it is not outside the realms of possibility. If it were me I'd ensure my contract was IR35 friendly and not worry too much about onsite working practices.. however, the above is my own opinion and not based on facts or precidents.

Chef