Another complicated working abroad and at home query

[Eirikur]

This is somehow the same as the recent post about working in Germany and in the Uk but slightly different.
My Ltd company has signed a consultancy framework agreement with a Netherlands based company.
When they have work for me they will issue me with a SOW.
This work is likely to be done by myself and will take place in The Netherlands 30%
Other Eu countries but mainly Belgium 30%
and 40% from home in the UK where I'm (tax) resident and my ltd company is registered.
My ltd company would invoice the NL based company directly

First of all VAT I don't believe I have to add VAT to my bills as the Netherlands based company should take care of that themselves, correct?

Secondly the big personal taxation question. My accountant thinks that in this situation, I'm only personal tax due in the UK , however reading the German
too many variables thread I'm starting to doubt that, who can shed a definite light on this, I would stay below the 180 days threshold for every country (if there is such a threshold)

PS I do not qualify for the Dutch 30% flat tax rule

[Sue B]

Hi Eirikur,

This is a slightly more complicated situation that has previously been discussed, although one i am familiar with. Please note however that the following really is generic advice and i would need to know a lot more about the client, type of work, days in country, contractual requirements etc to give a more definitive answer.

The easiest way to look at where your income will be taxed is to parcel each part up and look at it in isolation.

Option 1
Work is carried out in the NL for a Dutch client. Taxable in The Netherlands country from day 1.

Option 2

Work is carried in Belgium, for a Dutch client. Providing a) the client does not have a permanent Establishment in Belgium and b) you do not exceed 183 days in Belgium you would not be taxable there. However, as the work there would be on behalf of a Dutch client, ergo an extension of your work in NL, where the client is based, then this income would more than like be taxable in NL.

Option 3
Work is carried from home in the UK on behalf of Dutch client. Taxable in the UK.

The above relates to tax only. From a social security point of view this is due where you work, regardless of where the client is based. There is the Reciprocal agreement (A1 or A2) which would provide an exemption from the Dutch social (unlikely that any Belgian social would fall due providing they were only business trips) and you would need to be able to get one of these from your limited company. This can be a challenge as it does require there to be a significant trading presence in the UK.

I hope this is useful.

KR

[Eirikur]

Thanks Sue for your answer.
Would it make any difference if the contract was with the UK based subsidiary of the same company? The rest, amount of work performed in NL, BE and UK would stay the same

[Sue B]

You're welcome.

I don't think it will make any difference, no. The double taxation agreement in force, article 5, defines "permanent establishment" as follows

"ARTICLE 5
Permanent Establishment
(1) For the purposes of this Convention, the term “permanent establishment” means a fixed
place of business through which the business of an enterprise is wholly or partly carried on.
(2) The term “permanent establishment” includes especially:
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop; and
(f) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources.
(3) A building site or construction or installation project constitutes a permanent establishment
only if it lasts more than twelve months.
(4) Notwithstanding the preceding provisions of this Article, the term “permanent
establishment” shall be deemed not to include:
(a) the use of facilities solely for the purpose of storage, display or delivery of goods or
merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for
the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for
the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or
merchandise, or of collecting information, for the enterprise;
(e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the
enterprise, any other activity of a preparatory or auxiliary character;
(f) the maintenance of a fixed place of business solely for any combination of activities
mentioned in sub-paragraphs (a) to (e) of this paragraph, provided that the overall activity
of the fixed place of business resulting from this combination is of a preparatory or
auxiliary character. "

In bold at the top is the reason, as having any kind of branch, or subsidiary, in NL would mean the there is a permanent establishment of the company in the country where the work is performed. Even just having one guy in a portakabin is deemed to be a place of management.