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Working remotely for a UK client from an EU country

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    #11
    And good luck with all of that.

    Good responses all, but these are dependent on a client and an agency that will have the time, energy and inclination to listen to an individual's circumstances.

    And if a client is not interested in IR35 and SDS, as we have seen, then coping with non-residency will be a non-starter.

    To add to the all round negativity, if the agency is not used to paying in Euros, being paid in Euros won't happen either. I have only recently gone through a situation with a UK agency that couldn't pay in £ due to the fact that it was being paid in Euros. Currency fluctuations being the reason. Such was the slide in favour of the client that the agency started losing money on every invoice so unless both client and agency are transacting in Euros, this will be a non-starter.

    All that said, believe me when I say I would love to be proved wrong.

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      #12
      Originally posted by skysies View Post
      I think I will pass the non-residency tests for tax purposes. My concern is that, even if I'm non-resident, I may be still be declared as inside IR35 by the client. Will that make any sense?
      They may do that. They may insist. But they must apply your tax code when making deemed payments and your tax code will be NT if you are non-resident. In other words, I think the outcome is the same. Personally, I think you’re concerned about the wrong thing. The statutory residence test is complicated, as FB notes above.

      Also bear in mind the 5 year rule on capital gains or dividends received overseas that were crystallised while UK resident. For example, if you take a large dividend overseas from profits accrued to your UK company while you were UK resident, that will be subject to UK tax in the year of return if you return within 5 years. In short, you should aim to make a clean break if you want to keep things simple.

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        #13
        Originally posted by simes View Post
        All that said, believe me when I say I would love to be proved wrong.
        Yeah, sure, I said the same thing. They may not listen. But how are they going to not apply an NT code to a deemed payment?

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          #14
          Originally posted by jamesbrown View Post
          They may do that. They may insist. But they must apply your tax code when making deemed payments and your tax code will be NT if you are non-resident.
          Ok, that sounds at least a bit encouraging. The agency is flexible. I think they will pay in EUR if I asked them to. The big unknown for me is what the client will say to all of this. They made a blanket determination this April and put all contractors inside IR35. But if my tax code changes to NT, probably they will agree to that?

          However, I don't have any idea how I would be able to reclaim all the taxes that I would have paid while being inside IR35? As I understand, there is a lag of at least a year before I can establish my non-residency status.

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            #15
            Originally posted by skysies View Post
            Ok, that sounds at least a bit encouraging. The agency is flexible. I think they will pay in EUR if I asked them to. The big unknown for me is what the client will say to all of this. They made a blanket determination this April and put all contractors inside IR35. But if my tax code changes to NT, probably they will agree to that?

            However, I don't have any idea how I would be able to reclaim all the taxes that I would have paid while being inside IR35? As I understand, there is a lag of at least a year before I can establish my non-residency status.
            See FB’s post. You will need to establish your actual residency status. I think that is the more complicated aspect of this, but split year treatment should be possible. Remember to complete a P85 when you leave. The trickiest part may be the first few payment cycles if the client has your old coding and insists on deemed payments.

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              #16
              Originally posted by skysies View Post
              Ok, that sounds at least a bit encouraging. The agency is flexible. I think they will pay in EUR if I asked them to. The big unknown for me is what the client will say to all of this. They made a blanket determination this April and put all contractors inside IR35. But if my tax code changes to NT, probably they will agree to that?

              However, I don't have any idea how I would be able to reclaim all the taxes that I would have paid while being inside IR35? As I understand, there is a lag of at least a year before I can establish my non-residency status.
              You need to talk to an accountant. The correct way to handle this is to deregister in the UK and set up a company or register self-employed in the country where you will be working and bill the client or agency. If you bill from a UK Ltd or you're directly employed then this is going to get complicated. It might not even be legal. The upshot is HMRC and the tax authorities in your country of residence may have difficulty with your tax status. There could be be lots of to-ing and fro-ing as they both try and clarify. They won't talk to each other they'll simply make their own decision. It will be down to you to claim tax back if you end up with tax bills in both countries. Once you deregister and work through a company in your country of residence your tax status will be clear.

              It might be necessary to run the contract through two companies, one in the UK and one in your country of residence. You then bill the UK Ltd from your foreign company.
              Last edited by BlasterBates; 28 June 2020, 11:40.
              I'm alright Jack

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                #17
                Originally posted by jamesbrown View Post
                Yeah, sure, I said the same thing. They may not listen. But how are they going to not apply an NT code to a deemed payment?
                Fair play. Good point.

                Hope to hear how all this turns out.

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                  #18
                  Just one point here, if you are working remotely in a foreign country, then the income is not UK sourced, it is income sourced in the country where you are working. If you treat it as UK sourced income HMRC will tax it and then you'll end up in a longwinded battle to get tax refunded.
                  I'm alright Jack

                  Comment


                    #19
                    Originally posted by BlasterBates View Post
                    Just one point here, if you are working remotely in a foreign country, then the income is not UK sourced, it is income sourced in the country where you are working. If you treat it as UK sourced income HMRC will tax it and then you'll end up in a longwinded battle to get tax refunded.
                    I think the question here is how the fee payer treats the payment from next April, based on the client’s status determination. The OP has limited control over this, beyond informing them that they have applied the law incorrectly. However, as a minimum, the fee payer must apply the proper tax code to a deemed payment. Ideally, they will be convinced that the contract is outside of the scope of IR35 and, thus, not make deemed payments at all. In that case, it will be properly taxed at source, outside the UK. If they don’t do that, there will be ErNI to fight over unless the client is paying more.

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                      #20
                      Originally posted by jamesbrown View Post
                      They may do that. They may insist. But they must apply your tax code when making deemed payments and your tax code will be NT if you are non-resident.
                      Excellent point. Still... they'd be deducting for NI.


                      Originally posted by simes View Post
                      To add to the all round negativity, if the agency is not used to paying in Euros, being paid in Euros won't happen either.
                      Why would you expect to? I've contracted remotely several times and have always been paid in the currency of client/agency's country of operation. I.e., I've born the currency risk.
                      Down with racism. Long live miscegenation!

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