Contracting overseas: need to set up a branch every time?

[yasockie]

According to many people here, whenever there is a contract to be had outside of UK, one should set up as a local business entity, or work through a local umbrella.
I think it's all FUD, but I'd like to be proven either way.
Currently not being a lawyer, I think that there are free trade agreements between EU countries that must allow EU businesses to exchange goods and services easily, I do not see why would that not extend to Contractor Ltds as well?
To get an example: I recently bought some software from an Austrian company , I paid them, but really it's more of a support and maintenance package as the software itself is open source, so really I am paying them for the service, consultancy so to speak.
Is that any different from a contractor, except usually, contractors go one step further by making themselves available on-site, but that's hardly a differentiator as support for software can also be on-site, likewise some contractors work remotely or part time.

In conclusion, I see no point in advising all the poor chaps to set themselves with intermediaries in those foreign countries, unless:
a) it's more attractive to them tax-wise
b) they are moving there for a long period of time
c) they really are not contractors but disguised permies

Am I right?

[SueEllen]

Nope because not everyone has said that. I've always maintained due to experience that it depends on the European you are working in and for how long.

[yasockie]

Thanks Sue, but do you have any legislation supporting your views, for example a Double-taxation treaty between UK and Germany stating it is illegal to work in Germany and pay taxes in UK etc?

[chef]

Thanks Sue, but do you have any legislation supporting your views, for example a Double-taxation treaty between UK and Germany stating it is illegal to work in Germany and pay taxes in UK etc?

There is legislation stating (to paraphrase) that if you are deemed to live in the country then you pay tax there.

See HMRC's Double taxation agreement between Germany and UK for clarity