Tax liability. Germany. Less than 183 days.

[Alter_ego]

I'm in a quandary. (Not using my regular account.)

Taxation question.

I've been out of UK for 6 years (aside from visits) but I still have bank accounts there. Worked in Germany from 04-07 using freelance status. Then totally de-registered and left never intending to return. Went backpacking in Africa.

Landed a 5 month contract with a German EB in Germany. Been here for last 3 months. Really need to invoice now but not sure where from. Former German accountant hasn't looked closely at my case but is suggesting tax would be lower if I set up a UK Ltd and invoice from there.

Experienced British contractors on the same site are are suggesting I am not liable for tax as it appears that I'm not tax resident in UK or Germany (183 days). They are saying that I should just invoice the basic value to the EB and they pay into my German bank account - they are happy to do that as taxation is my responsibility - and then just take it out and say nothing. I want that to be true but . . . surely it can't be.

Not sure whether to add VAT (German or UK) as I would then need to pay that into the system and become highly visible. ** But if I don't charge VAT and then later become liable for tax..... would I be expected to pay out VAT when I never even received it ???

My post still goes to a UK address but is forwarded (in case that is an indicator of residence)

Also I've been told to use someone like Pearl Systems to help me with the invoicing.



Anyone been in this situation ?


All advice is welcome.



AE

[YHB]

http://www.hmrc.gov.uk/pdfs/ir20.pdf

have a read of that as straight form the horses mouth

[expat]

http://www.hmrc.gov.uk/pdfs/ir20.pdf

have a read of that as straight form the horses mouth

The purpose of IR20 is to answer the question "Are you liable to tax in the UK?". Since that is not really the Original Poster's question, IR20 will not be much good to him. Apart from that, it is quite a well-written and informative guide, albeit to something completely different.

I am sorry to be rather negative (well, actually I'm not, it becomes me); if I could answer the OP's questions better then I would. But at least I think I understand the question(s) a little.

In general, staying in the UK system completely would be more profitable than being in the German system, probably. This would be especially so if you were outside IR35 and intended to make use of that fact to avoid NICs. OTOH if you actually spent your time in Germany, there would be some advantages to being in their system, such as being eligible for full German medical and dental treatment, not to mention not worrying about the knock on the door.

If I understand it, you, the OP (unlike most who pose such questions) are not necessarily resident in the UK to start with? So it is not self-evident that you would want to deal with it in the same way as a UK Ltd contractor doing a short one in Germany.

You have to pay tax somewhere. Most if not all arrangements that legitimately allow you not to pay tax in one place depend on your paying it in another place. It was once possible to avoid it completely, but not any more in Europe. Yes, it is legal to be a fiscal nomad: that only means that there is no one place claiming tax on your worldwide income, not that any income escapes all tax.

[NotAllThere]

You have to be resident somewhere. Where you are actually resident depends on your location over the next few years. It's only established in law once you've done it, until you've reach the various days and limitations, it's impossible to say where you should be taxed.

And it is entirely possible to be resident in more than one jurisdiction.

[expat]

You have to be resident somewhere. Where you are actually resident depends on your location over the next few years. It's only established in law once you've done it, until you've reach the various days and limitations, it's impossible to say where you should be taxed.

And it is entirely possible to be resident in more than one jurisdiction.

WHS!

[Alter_ego]

Residency

Thanks. I appreciate the replies.

So it seems residency can only be truly established retrospectively. That makes sense (plus an accountant friend confirmed). I need to invoice now, not at the end of the tax year. I will spend 5 months in Germany this year and not more.
I don't have tax residency in UK (spent long time away from there) and I believe not in Germany either (less than 6 months stay). I intend (if I'm lucky ) to move to Australia soon. So I would eventually become tax resident in 'Stralya but I've no idea if they would lit me invoice from there. I need to invoice now.



It appears that I have a choice of territories to invoice from. All things being equal where would you rather invoice from : UK or Germany or Other ?