I've just been offered a contract in Italy for 1 year. It's a great opportunity and one I don't want to miss out on and so what I need to know is can I use an umbrella company in the UK for this gig and if so would I have to pay Italian tax in addition to UK tax and if so does anyone know how much Italian tax is and when it becomes applicable, ie does the umbrella company deduct for it or would I have to complete some form of self-assessment either here or in Italy and then pay the extra tax due at a later date?
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HELP, new contract in Italy
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Originally posted by bangface View PostI've just been offered a contract in Italy for 1 year. It's a great opportunity and one I don't want to miss out on and so what I need to know is can I use an umbrella company in the UK for this gig and if so would I have to pay Italian tax in addition to UK tax and if so does anyone know how much Italian tax is and when it becomes applicable, ie does the umbrella company deduct for it or would I have to complete some form of self-assessment either here or in Italy and then pay the extra tax due at a later date?
Unfortunately you wouldn't be able to use a UK brolly as the contract will extend beyond 183 days. Ultimately you won't have to pay Italian AND UK tax as there is a dual taxation agreement in place between the 2 countries so what is paid in one will be offset against what may be payable in the other -
Originally posted by LisaContractorUmbrella View PostHi Bangface
Unfortunately you wouldn't be able to use a UK brolly as the contract will extend beyond 183 days. Ultimately you won't have to pay Italian AND UK tax as there is a dual taxation agreement in place between the 2 countries so what is paid in one will be offset against what may be payable in the otherComment
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Originally posted by bangface View PostThanks for the reply Lisa, but why does the length of contract present an issue to the brolly?
Are you going through an Agent for it? If so you may be able to get them to bill the client in Eruo and you bill them through a UK Ltd but I'm not an accounatnt or an international tax expert so I may well be wrong."Being nice costs nothing and sometimes gets you extra bacon" - Pondlife.Comment
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Originally posted by DaveB View PostIf you are out of the country for more that 183 days in any twelve month period then you count as being non-resident for UK tax and tax is due in the coutry in which your are resident ( in this case Italy). The brolly has no way of dealing with your Italian tax liabilities.
Are you going through an Agent for it? If so you may be able to get them to bill the client in Eruo and you bill them through a UK Ltd but I'm not an accounatnt or an international tax expert so I may well be wrong.
Lisa can you elaborate more as to why you say that I cannot use an umbrella for this contract? Is it because of a risk to me (which I would be grateful to learn more?) or as an umbrella provider yourself is there a risk to you that your particular company will not take onboard which is why you have said that?Comment
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Originally posted by bangface View PostThanks Dave, its through an agency and the pimp want to pay in sterling and suggested Umbrella (but surprisingly didn't try to force one on me!! Makes a refreshing change) I spoke with HMRC and they say that I will only be treated as non resident if I am out of the UK for 183 days within any given tax year, they said that I could apply for a NT (no tax) code if I was still working in Italy after April 2013 therefore effectively only paying tax in Italy if the NT code is granted, although I would be subject to tax on the worldwide income in the meantime. The brolly I spoke to said that I would still pay UK tax as an employee of their company, but I would have to register for self assesment in Italy meaning that I would have to pay the Italian tax due as part of that process (I understand this can be in the region of 43% and up depending on the region) and then I claim the tax credit back from HMRC in the UK meaning that I am only out of pocket by the difference. This I can live with, but I am concerned now that Lisa has said that a UK brolly cannot help me, when the UK brolly I have spoken to have said they can, so long as I am aware that I will be liable for both countries taxes, albeit with ones countries taxes being offset against the other as part of the double tax treaty at a later date, which I believe will come out of my pocket before I receive the tax credit, which could potentially amount to a fair few quid should the contract work out well :s
Lisa can you elaborate more as to why you say that I cannot use an umbrella for this contract? Is it because of a risk to me (which I would be grateful to learn more?) or as an umbrella provider yourself is there a risk to you that your particular company will not take onboard which is why you have said that?"Being nice costs nothing and sometimes gets you extra bacon" - Pondlife.Comment
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Originally posted by DaveB View PostIn which case I'd say get yourself a ltd set up pronto and do it that way. Any decent accountant should be able to sort the tax issues out for you and you cut out the brolly middle man and their cut. I may be wrong but if you are working overseas then there is to need to account for IR35 either, one less reason to use a brolly.Comment
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Originally posted by LisaContractorUmbrella View PostHi Bangface
Unfortunately you wouldn't be able to use a UK brolly as the contract will extend beyond 183 days. Ultimately you won't have to pay Italian AND UK tax as there is a dual taxation agreement in place between the 2 countries so what is paid in one will be offset against what may be payable in the other
Any chance you can elaborate on your statement above as to why one could not use a UK brolly if the contract is to run in excess of 183 days? With having received conflicting information on this, it would be helpful if you would acknowledge the reasons behind why it is not viable in your opinion?
TIAComment
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Originally posted by bangface View PostHi Lisa
Any chance you can elaborate on your statement above as to why one could not use a UK brolly if the contract is to run in excess of 183 days? With having received conflicting information on this, it would be helpful if you would acknowledge the reasons behind why it is not viable in your opinion?
TIA
From HMR&C website:
Q2. When I go to live or work abroad, will I continue to pay UK tax?
A2. If you remain treated as resident in the UK for UK tax purposes, normally you will be taxable on your income arising in the UK and overseas. If you are treated as resident and pay tax outside the UK HMRC can give appropriate credit for any tax paid abroad.
If you become treated as non-resident, you will normally only be taxable on your income arising in the UK.
Q3. In what circumstances would I become non-resident?
A3. Normally if you leave the UK to work abroad full-time, you will become not resident and not ordinarily resident in the UK if:
your absence and employment from the UK covers a complete tax year (that is 6 April to 5 April)
you spend less than 183 days in the UK during the tax year
your visits to the UK do not average 91 days or more a tax year over a maximum of four years
From 6 April 2008, days when you are in the UK at the end of the day, that is midnight, are normally counted as days spent in the UK.
Q4. Can I choose to pay tax in the UK rather than in my country of residence?
A4. No. If a double taxation treaty is involved, the country in which you pay tax will be determined as a matter of fact and not choice. More information on Double Taxation Treaties.
Q5. Will I have to pay tax in the country to which I go to live or work?
A5 The country to which you go to live or work may tax you on your world-wide income. This will depend on its own laws. You may need to ask the tax authority there for advice. More information on Double Taxation Treaties.
183 days is basically 6 months so, by default, if you spend less than that in the UK, you will have spent more than 183 days overseas.
HTHComment
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Liberty Bishop provide an Italian payroll solution. Please feel free to contact us if you'd like to speak in more detail.
Italy - Liberty Bishop Contractor Services Ltd
Stuart Marquis
Business Development at Liberty Bishop.Comment
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