Contracting in Ireland under new rules

[knoxorino]

Hi,

I'm currently working in Dublin but based in the UK and have just become aware that new rules were put into place for people like myself.

From this website:
"As of January 2006, the remittance basis of taxation has been abolished for use on employment income during assignments in Ireland. Whereas in the past, expatriate contractors employed by a foreign company were only required to declare income brought into Ireland, new legislation now closes this door. Instead, all contractors are required to run under a local payroll and pay full Irish taxes on the entirety of their employment income"

I'm basically looking for people who are also contracting in Ireland and what solution they have set up.

From the above, it seems that I have to have an Irish company, but I am still tax resident in the UK and was looking to setup my own Limited Company.

Anyone have any ideas ...
thanks in advance

[knoxorino]

Anyone ?

[MrsGoof]

I Guess not

Have you tried PCG?

[Bradley]

Employment Income

Hi,

I'm currently working in Dublin but based in the UK and have just become aware that new rules were put into place for people like myself.

From this website:
"As of January 2006, the remittance basis of taxation has been abolished for use on employment income during assignments in Ireland. Whereas in the past, expatriate contractors employed by a foreign company were only required to declare income brought into Ireland, new legislation now closes this door. Instead, all contractors are required to run under a local payroll and pay full Irish taxes on the entirety of their employment income"

I'm basically looking for people who are also contracting in Ireland and what solution they have set up.

From the above, it seems that I have to have an Irish company, but I am still tax resident in the UK and was looking to setup my own Limited Company.

Anyone have any ideas ...
thanks in advance

I don't have any practical experience of working with these rules but it occurs to me that if you run your own UK company you surely decide the level of employment income. If you declare a minimum salary doesn't that minimise the problem?

[c0ralsoft]

Irish remittance laws.

I'm basically looking for people who are also contracting in Ireland and what solution they have set up.

From the above, it seems that I have to have an Irish company, but I am still tax resident in the UK and was looking to setup my own Limited Company.

It's yet another crazy situation, thanks to confusing laws.
Here are the pertinant details:
1. It used to be the case that contractors moving to Ireland on a contract could be paid offshore and only taxed on the money brought into Ireland: a remittance basis.
2. This loophole was 'closed' in the 2006 Finance Act effective Jan 2006, such that all payments relating to employment in Ireland would be taxed in Ireland.

I had a load of BS from the agency about this, as they were trying to persuade me to go through an umbrella company, so I went looking around the revenue website and also made 2 separate contacts on the issue of personal taxation, corporate taxation and VAT, since I operate through a Spanish Ltd company. My basic premise was "why would a foreign EU company win some work then let its employee leave to do the work for another company to make a profit?"

Check out the Dual Taxation Treaty for your tax residence and Ireland. The Spanish one has it that you as an individual only become liable for taxes once you've been there 183 days or something. I remain paying personal taxes in Spain until that point, if I stay that long. The remittance bit won't have an effect until that point either. If you use a UK or other EU ltd, it's quite likely that it will only be subject to IE corp taxes if it sets up an establishment, ie somewhere in Ireland where it can be contacted. Having an employee over there does not consitute an establishment in itself.

You may also be told there's a VAT liability for foreign corporations. Usually, yes, but the sorts of services provided by contractors may come under the Fourth Schedule (Whatever that is), and are exempt for the foreign corporation, even if they must be accounted for by the Irish recipient. It took the Irish authorities a 2nd look to find that one out, but both my sources concurred.

So, you can become an employee of an Irish umbrella/composite solution or an offshore umbrella/composite solution; set up an Irish corporation with all the usual costs and hassles; or continue to use an EU corporation of your own under the above principles, if you think it's worthwhile.

Once it looks like you're going to be there long enough to be tax resident, then obviously you're going to comply and pay up the taxes on your employment income paid abroad. Remember 2 things: the rate your company receives for the work you do is not your income - only what yourco pays you; and the remittance law only covers employment income, not dividends or investment. So I'd guess (and had this heavily hinted to me by the brolly operator I spoke to) that a small salary and divvies should get you around the remittance loophole and I'd even wonder if maybe you'd be even better off, since divident money remitted to Ireland might no longer be taxable.

It is certainly not definitely the case that the remittance laws prevent you being paid offshore, that you must pay corp tax or VAT and that you must register for tax straight away. Just the usual misinformed, couldn't be arsed finding out guff from agencies and their advisors.

Drop me a mail via the forums if you want to discuss further or get in touch if you make it to Dublin.

cheers,
coralsoft

[ASB]

If you use a UK or other EU ltd, it's quite likely that it will only be subject to IE corp taxes if it sets up an establishment, ie somewhere in Ireland where it can be contacted. Having an employee over there does not consitute an establishment in itself.

One of the real problems is what constitues being established. In the UK for example a view is that control = establishment. Authorites will sometimes take the view that in the case of a "one man company" it is established where the director (or persons with the poewer thereof) is working. [The UK authorities often take this view, IME a number of other European authorities have not but I have been at risk].