UK Tax applied to Swiss earnings?

**bobhope** · 10 July 2007, 07:25

There is the possibility - although your agent won't tell you about it - to invoice via your ltd company if the contract is for a short time (I don't know if it's 3 or 6 months)

Under double taxation, you'll be liable for the extra UK tax

**Euro-commuter** · 10 July 2007, 08:09

Originally posted by bobhope

Under double taxation, you'll be liable for the extra UK tax

Liable for UK tax, then you get a credit from UK tax owed, of Swiss tax paid. Net effect: pay the amount of UK tax.

Worse, if something is deductible under Swiss tax but not under UK tax, it does no good to claim it from the Swiss, because you'll just end up having to pay it to the UK instead.

Example: accommodation in Switzerland, flights back to the UK. The Swiss may allow some relief on those, but the UK will not*. So you'll reduce the Swiss tax paid, and therefore the credit against UK tax, so you'll just have to pay exactly that amount more in UK tax. To HMRC, Switzerland is your place of employment so it's up to you to live close to it, and if you choose to fly to the UK for a weekend, that's a lifestyle choice, not business travel.

* except for 1 return flight, out there at start and back at end, I think. Ask them yourself.

**achates** · 10 July 2007, 09:55

Thanks for replies.

Situation is though that with earnings so far from '06-'07 plus the first three months of this contract (whcih takes me to the end of tax year '07) I would still fall under the higher rate tax threshold. And I would have paid more than 22% in Switzerland. Ergo had I made the money back in blighty I would have paid less overall tax.

**Jonmate** · 29 July 2007, 12:39

UK Tax applied to Swiss earnings - another question..

I am about to start a contract in Zurich, I have a UK registered limited company, and I will be commuting back and forth to Zurich every week (fly out monday, back thursday), which the company have agreed to pay in addition to my day rate.

The Swiss company will be paying me in CHF.

I have the following concerns:
1) I assume I will have to pay both local (Swiss) and UK taxes? - how would this work?

2) What are the implications of me having no residency in Zurich (high chance I will move from hotel to hotel every week).

3) Do I still have to work through a swiss management company despite remaining UK resident?

4) Are there any options open to me that would improve my tax position, and more importantly my take home?

Any advice would be greatly appreciated

**BlasterBates** · 30 July 2007, 11:16

There is a double taxation agreement between Switzerland and the UK, regarding direct income.

If you pay Swiss tax, you don't pay UK tax on those earnings.

However the earnings you have in Switzerland will be used to calculate the marginal rate of tax for additional earnings.

An example

1. If you earn £100, 000 in Switzerland, taxed in Switzerland over a six month period, then earn no more but remain in the UK. You declare it to the UK authorities but there is no additional tax to pay.

2. If you earn £100,000 in Switzerland, taxed in Switzerland, then earn £20,000 in the UK, then your earnings in the UK will be taxed at 40% instead of 20%, because the UK authorities will take into account your Swiss income in calculating the tax rate. I don't know exactly what this rate and how they calculate the threshold; for exact details you would need to see an accountant; but I would assume that since you are UK tax resident, they would slap on the higher rate.

Earnings on interest and savings are complicated, there, taxation is sometimes exempt under double taxation agreements, however it could be credited. It is possible that you pay tax on this sort of income in both countries, though one country would credit the tax payed in the other
country.

Perhaps I should add if your earnings are dividends as opposed to direct income then there may well be additional tax to pay as this is investment income.

If you are an employee of a Swiss company, as is usual, then it is as I described.

**BlasterBates** · 30 July 2007, 11:19

Originally posted by bobhope

There is the possibility - although your agent won't tell you about it - to invoice via your ltd company if the contract is for a short time (I don't know if it's 3 or 6 months)

Under double taxation, you'll be liable for the extra UK tax

You're only liable for additional tax on UK income earned in the same tax year as in Switzerland, as it will be taxed at a higher marginal rate.

If all your earnings are in Switzerland, but you remain UK tax resident, there will be no additional taxation to pay.

...whoops unless you do this using dividends

**Jonmate** · 30 July 2007, 21:22

Thanks for the replies.

From all the previous threads, it would appear there is no way around utilising a management company.
Anyone know any good ones? Tresag have come recommended - are they any good.

I was told that the Swiss regulation only allows 10% of (gross/net?) salary to be paid into a UK limited company.
I assume that once the remaining salary is net of Swiss taxes (of which I have learnt there are many) I cannot pay it into my UK limited company to avoid going over the 40% threshold? (e.g. pay 8K in, pay myself £2.3 not get hit by UK taxes as already paid in Switzerland)?

Final question (for the moment) can I (sensibly) request some of the Swiss taxes are paid by my employer outside my gross salary, or should I simply request a higher rate to recover the costs?

Never thought contracting in Switzerland would be so much fun.....

**ASB** · 31 July 2007, 07:46

But it won't be your companys money will it? If you pay it into you company it will simply be a loan or capital injection. It will still be income for you in the year it was earnt and taxed as such.

One thing you might want to check out is social security. You can continue to pay social security in your home country in EU countries and those with reciprocal arrangements. I don't know if Switzerland have signed up but it might be worth checking.

**BlasterBates** · 31 July 2007, 09:03

You are going to simplify everything vastly, if you are an employee of a managed company. Taxes and social security are very low in Switzerland. Due to the rules to enable the free flow of labour which apply in the EU and which Switzerland has signed up to, the UK won't touch your Swiss taxed salary, but as I've mentioned they use it to assess other earnings. Once you have your own company it becomes much more complicated, as investment income is taxed twice. Enshrined in EU law is that individuals living in one country and working in another are not disadvantaged with respect to those working in the same country. So a resident German working in Luxembourg will pay Luxembourg taxes, but the German authorities can't touch it. This I might add only applies to employment income.

If you go with a managed company you'll pay roughly 20% in Swiss taxes and social insurance and a further 10% into an obligatory Swiss pension. The rules were anything paid into the pension you get back provided you leave Switzerland within 5 years; this rule may however have changed. You need to check it. You will be entitled to generous unemployment benefit after a year or 18 months, and I think if you did become unemployed your resdent permit would be extended for a certain period, enabling you to claim it. Vut you need to check.

You could investigate being employed as an Expat, but how taxes and social security are distributed is something I don't know.

UK Tax applied to Swiss earnings?