UK resident, contracting in Denmark

[Andrewd]

Hi,

First post, here goes. Forgive me if all this has been covered in a previous thread - I wanted to lay down my particular set of circumstances. I am also far from an expert in tax, and I've been visiting various sites and phoning helplines for about a week now and my brain is slightly frazzled

I’m planning a move to Denmark in September, where I will continue working remotely for my current employer (a uk based website who have no presence in Denmark). I will also be flying back to work in the UK offices for about 1 week in every month. In total, for the 2014/2015 UK tax year I will be spending at least 190 days (at midnight) in the UK. Whilst in Denmark, I will be living rent free with my girlfriend's parents, and my salary will be paid into my UK account.

Now I had all this fairly clear clear cut in my mind until about a week ago, when my employer told me that he would now prefer me to become a contractor and go down the umbrella company route.

I've spoken to one umbrella, and they've told me that they can't take me on because as soon as I arrive I'll be paying Danish tax at local rates. *from your handy guide on the right I've read about the 183 day rule not actually applying for local tax for contractors

So, couple of questions:

1. Wouldn't a double taxation agreement prevent me from paying tax in Denmark?
2. As I'll be staying rent free I won't have to pay local tax anyway will I?

I realise that my circumstance will certainly change in the following UK tax year, but I'll cross that bridge when I come to it. The contract I'll be signing with the umbrella now will end before April 5th.

[ASB]

1. Wouldn't a double taxation agreement prevent me from paying tax in Denmark?
2. As I'll be staying rent free I won't have to pay local tax anyway will I?

1. Not necessarily. You are - it would appear - remaining UK tax resident, at least this year. This will not prevent you from ALSO becoming Danish tax resident (if you fit their residency rules). The terms of the DTA will dictate what the overall effect of this is and where tax is paid and how much. The worst case should be that the higher rate is paid.

You may have found this: http://www.hmrc.gov.uk/taxtreaties/i...ark-uk-dta.pdf. Heavy going and your exact circumstances determine what at where.

2. Whether you are paying rent or not is very unlikely to make any difference as to your residency state in Denmark.

HMRC ex pat office should be helpful, but you will also need to speak to the danish authorities. The consulate would be a good start, explain the situation and they should be able to point you in the direction of the relevant offices etc.

[LisaContractorUmbrella]

I am not an expert on Danish taxation but as far as I am aware you can work there for up to 183 days without having to pay taxes locally unless you are an 'habitual resident' - as you are intending to relocate on a permanent basis I am not sure whether the 183 day rule or the 'habitual residence' rule would take precedence. Taxes in Denmark are extremely high so it would be worth speaking to a local expert just to get confirmation.

[Andrewd]

OK, thanks very much for the replies.

Guess I'll try the consulate first, then seek some professional advice.

[sal]

Can't you just register a ltd in England and Wales and contract through it. The ClientCo is in UK, YourCo is in UK, the only people that know that you will be actually in Denmark are these 2 companies and your friends and relatives. Of course you have to check how legal this will be, but i don't see a problem if this will be for less than 183 days.

[Andrewd]

Yep, I have thought of that - I am hoping to move to Denmark on a permanent basis though, so I just don't want to do anything which may come back to bite me in the future.

[sal]

If you plan to move there on a permanent basis you will have to familiarize yourself with the local laws and seek advice of a local accountant / forum.

[sumes]

Hi,

Just wondering how you got on? I'm looking at a contract in Denmark, did you manage to find a decent umbrella company?

Cheers

Hi,

First post, here goes. Forgive me if all this has been covered in a previous thread - I wanted to lay down my particular set of circumstances. I am also far from an expert in tax, and I've been visiting various sites and phoning helplines for about a week now and my brain is slightly frazzled

I’m planning a move to Denmark in September, where I will continue working remotely for my current employer (a uk based website who have no presence in Denmark). I will also be flying back to work in the UK offices for about 1 week in every month. In total, for the 2014/2015 UK tax year I will be spending at least 190 days (at midnight) in the UK. Whilst in Denmark, I will be living rent free with my girlfriend's parents, and my salary will be paid into my UK account.

Now I had all this fairly clear clear cut in my mind until about a week ago, when my employer told me that he would now prefer me to become a contractor and go down the umbrella company route.

I've spoken to one umbrella, and they've told me that they can't take me on because as soon as I arrive I'll be paying Danish tax at local rates. *from your handy guide on the right I've read about the 183 day rule not actually applying for local tax for contractors

So, couple of questions:

1. Wouldn't a double taxation agreement prevent me from paying tax in Denmark?
2. As I'll be staying rent free I won't have to pay local tax anyway will I?

I realise that my circumstance will certainly change in the following UK tax year, but I'll cross that bridge when I come to it. The contract I'll be signing with the umbrella now will end before April 5th.