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Non-UK based resident

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    Non-UK based resident

    I have been out of the contracting game for 3 years.
    I am non-UK resident and have an EU LTD company(dormant)

    If i was to consider a contract in the UK for 3-6 months and commute home each week, where I would still be considered resident, what are the implications for?

    1. Would you suggest using a UK umbrella
    2. If using my own LTD do I need to charge VAT (on essentially exports)
    3. I would be paying income tax in EU country due to double-taxation agreement. Am I outside of IR35 using Umbrella Vs my own LTd

    I would appreciate any replies, I haven't contacted an accountant as I am at a very early stage in considering a return to contracting

    #2
    I didn't post this! but it's like my case. I have 1 ir 1-1/2 of the answers:

    2. If you bill from one EU country to another, you do not normally collect VAT for services. You have to mention VAT 0 on your invoices, and probably have to cite the legal text that justifies this.
    However if you do this for long, with no other business in the other country (where your company is based) then you risk it being assessed as really a British company (and then of course you would have to collect VAT).

    3. What do you really mean to ask, when you mention IR35? If you go through an umbrella company, IR35 is irrelevant. If you use your own company, then you are or are not caught depending on your relation with the client. Being non-resident has nothing to do with it, either way.

    Incidentally, however you structure it you will be liable for UK income tax on the income earned in the UK. If you are non-resident, then you will only be liable for this (and not for worldwide earnings). What happens in your country of residence depends on that country, but (in general) you will be liable there for income tax on all earnings worldwide, with a credit for tax paid in other countries with which your country has a double-taxation avoidance agreement.

    Comment


      #3
      Thanks for the response maybe my terminology is wrong

      I had a LTD company in Europe and no Tax status in UK, as I have never worked there

      My previous contracts were based in Germany
      I worked in EU, billed a UK agency and never paid VAT as advised it was exports

      I paid income tax in my resident country but none in Germany, as I was classed really as an employee posted abroad.
      I got some income tax exemptions as I was out of the country for more than a certain number of days.

      If my European business posts somebody to the UK on assignment for 3 months surely they are not income-taxed in the UK, nor can a European company pay corp tax in UK either.

      I understand that there is very little tax harmonisation across EU at present and that every country differs
      Regards

      Comment


        #4
        "If my European business posts somebody to the UK on assignment for 3 months surely they are not income-taxed in the UK"

        Nope, they are liable to UK tax for the UK earned income for the three months. There is an exception for duties performed in the UK which are 'incidental' to the normal job (so you don't get taxed in the UK just for attending meetings or a training course) but a fixed term of three months is never going to pass this test. Note, that the country of physical presence has first bite so you don't get to avoid the UK tax aggro just because you home country tax bill would be higher.

        No idea what the Corp tax considerations are.

        tim

        Comment


          #5
          If my European business posts somebody to the UK on assignment for 3 months surely they are not income-taxed in the UK, nor can a European company pay corp tax in UK either.
          IANAL and IANAA but as I understand it you are quite wrong on both counts (especially the first).

          If a person works in the UK then that person is liable to pay UK tax on the income earned there, if they stay in the UK less than 183 days in the tax year (and less than an average of 91 days in a 5-year period). If they stay more than that, they are taxable in the UK on all income from anywhere in the world.

          This may be counterbalanced by double-taxation relief agreements between countries, but will not alter the liability in the UK for tax on income in the UK. And there is a provision for not paying tax for periods of less that 60 days (see www.inlandrevenue.gov.uk/bulletins/tb68.htm#c )

          And if your European company has its centre of interests (i.e. you) in the UK, it may be assessed as being a UK company.

          Comment


            #6
            Re:VAT

            2. If using my own LTD do I need to charge VAT (on essentially exports)
            Yes. Under the VAT rules IT consultants need to charge VAT where the work is physically carried out.

            Comment


              #7
              VAT

              Under the VAT rules IT consultants need to charge VAT where the work is physically carried out.
              Rubbish! If a company in one country invoices a client in another for services, it should not collect VAT.

              Comment


                #8
                Re:VAT

                16.5 The VAT Act 1994 – Schedule 5

                Services supplied where received.

                1. Transfers and assignments of copyright, patents, licences, trademarks and similar rights.
                2. Advertising services.
                3. Services of consultants, engineers, consultancy bureaux, lawyers, accountants and other similar services; data processing and provision of information (but excluding from this head any services relating to
                land).
                4...

                Comment


                  #9
                  Re:Schedule 5

                  Before you say it, English VAT rules are based on European VAT rules so what Schedule 5 says holds good for the whole of the EU

                  Comment


                    #10
                    intracommunity VAT

                    But that's exactly the point, the services are provided in one country by a supplier based in another. Therefore it is an intracommunity billing and VAT is due from the customer and not from the supplier.

                    E.g. France, Code Générale des Impôts Art 259:

                    2.2.4. Les prestations de services à caractère intellectuel

                    Les prestations de services, telles que cessions et concessions de droits d'auteurs, de brevets, de droits de licences, prestations des conseillers, ingénieurs, bureaux d'études, expertise comptable, location de biens meubles corporels autres que moyens de transport, fournies par un prestataire établi hors de France sont réputées se situer en France lorsque le preneur est assujetti à la TVA en France et y a le siège de son activité économique.

                    Dans cette hypothèse, la TVA est due par le preneur.

                    Comment

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