Where to?

[namban]

I'll be obviously seeking specialist advice on this but I just wanted your opinion on something I'm looking into...

Backgrounder : Portuguese national living in the UK for the last 5.5 years. Now running my own UK-registered Ltd Co and its sole shareholder. I'm the MD and accountant operates as secretary. I'm working from home (rented).

The business is working out quite well. In the next 6 months I'll be buying an apartment and in the 18 months after that I'm planning to buy another property in France. Once that happens, the idea is to spend x months in the UK, y months in France and z months in Portugal.

I don't expect to be living more than 6 months in any of the residences - 4 months in each, for example, and intend to keep the properties as long-term residences.

Now, where would I be paying tax? All, none, some? What difference would it make if the company bought the properties instead?

To complicate things further I've just received a proposal to move the company to Ireland!! Something to consider...

Comments, please!

Namban

[antell]

There are advisers in international tax planning who can advise you how to arrange your affairs and decide on the countries you live and work in so as to minimise the total tax liability taking into account the tax laws of each country you will be working in and your residency status and domicile. However such advice is very expensive and needs to be taken regularly as the laws of each country and your own activities change. There is also the risk of the “tail wagging the dog” in that you may end up making business decisions for tax rather than other commercial reasons and that may affect profitability.

If, on the other hand, you are making your decisions for commercial or personal reasons, you intend to remain based in the UK and you simply want to know what the tax (and NIC) consequences of each job of work in the various countries will be then the problem becomes more manageable in that you can go to an expert in UK tax law, double taxation treaties, and EU law relating Social Security contribution liability who will be able to advise on UK law and confirm that it applies to your situation (as it usually will for short-term work abroad) and point out in what circumstances under the relevant double taxation treaty the other country’s law would apply (such as if the job of work lasts for more than a certain period of time or if a permanent establishment is set up in the other country) so that you can avoid coming within the other country’s system or, alternatively, if that is not practical, you at least know when you need to take advice locally.

I would not want to give any advice about your own particular situation on this board and without know knowing all the circumstances but as a general principle, working for short periods in countries outside the UK whilst remaining ordinarily resident in the UK does not often result in tax advantages: the main areas where savings are possible is in Social Security contributions as the UK generally has lower rates than in most other EU countries and the NI component at least of IR35 can sometimes be avoided.

John Antell

www.john.antell.name