EU->UK question(s)

[f_eriksen]

Dear all,

this is my first post, so please be gentle

I've been reading up as much as i can both here and at the pcg site. Needless to say, most, if not all, is geared towards UK based contractors (and the implications of using uk based llcs abroad).

Well, I am not uk based, and am currently strongly considering going into contracting (9 years in the IT business total, 33 years old, strong skillset, no kids etc). I have seen quite a few UK based contracts that look attractive (based on desired skillset, rates etc), and was wondering if anyone here have a view on the following questions:

Being a EU/EEC national, would it be advisable to use a company formation based on my current residense when fulfilling a contract in the UK

or

Would it be "better"/"required" to set up a UK based llc? ie, does UK clients have any misgivings about hiring contractors that are not UK based?

As I've understood so far, the CIT in UK is fairly ok, about 19% so its not a biggie, apart from the possible hassle of getting the company formed, banking etc.


I will go and have a talk to a lawyer about it, but just wanted to see if there were any direct ideas/misgivings about this tpye of scenario


Any innsight and comments are welcome

Thx

[malvolio]

As you say, get professional advice. It's the taxation laws between countires that might dictate where you set the company up. There won't be any problems if you end up with a non-UK one, provided you're happy to be paid in sterling rather than Euros (and even that can be sorted these days). There's certainly no problems getting work - all people will look for is the skills and the quality of your English (which doesn't look to be a problem!). And if you're serious, join the PCG anyway - there's a huge amount of extra information inside the members' areas.

[ASB]

"Would it be "better"/"required" to set up a UK based llc? ie, does UK clients have any misgivings about hiring contractors that are not UK based?"

Required - no. Better - probably. A lot of agencies will not deal with non UK registered companies. There is no real reason for this (indeed it may possibly contraven EC law). However in practical terms if they insist on a UK limited then you will need one.

As Malvolio says your local tax rules may well have some impact. If you feel the need for a company in your home country and your UK agents insist on a UK one then there is nothing to stop you interspersing that in the chain. But then you need to ascertain whether it is a branch etc.

Also the tax rules can get a bit complex. Your company has a residence in the same way as you do. It could gain residence here even if it is is foreign.

Also check your residency carefully. Assuming you are still spending a reasonable period of thime in your home country it is likely you will:-

1) Remain resident there for tax purposese
2) Also be resident here for tax purposes.

This income will be dealt with in accordance with the tax rules of the countries individually. Assuming you do not become domiciled in the UK then the UK will only seek to tax you on your generated income. Your home country will then seek to tax you on you worldwide income (as far as I know all EC states operate a mondiale tax system).

The result of this is that you pay twice.

Having paid twice the DTAs kick in. This generally means that your home country will grant you relief of the amlount of foreign tax paid - limited to the local tax due. The effect of this is that although taxed twice on certain parts of your income you will only actually pay the net higher rate.

You also have to check the provisions of the DTA's carefullly. They can cause problems. I've been having a problem with my ltd getting relief under the DTA for a Portuguese witholding tax that they should not have deducted.

It is possible (depending upon your exact circumstances) that incorporating in a non ec location might help. Rather depends on the rules of your home country.

[f_eriksen]

ok, i thank you both for replies.

I can see there might be some issues here, and will probably have to talk this over with a local lawyer, and a UK based firm to ensure i dont end up in a "bad" place when it comes to taxation (especially since I can get a very sweet deal for the first year where I am now, with regards to taxes).

I really dont want to go the off shore route, as it is afaik a red flag for any tax office in any country, and i dont want to break any laws or anything, i just dont want to pay more then i need to

well, anyway, thanks for your input, it was greatly appreciated.