UK Tax and German Tax - Domicile Status - Filing Self Assessment

[michkah]

Hi all,

I am currently in this situation which involves all of the above:

The Situation:

Up to April 20th 2010, I have been running my own UK limited Company as a Freelancer. Not it is in a Dormant state for the below reasons:

Since then, I have been working now in Germany as a German Freelancer (having exceeded the 183 Day Rule).
This has been on a 6 monthly rolling contract (which is currently due to end this April 2012). So for nearly 2 years (April 23, 2010 to Present)

I have filed UK Personal and Corporation taxes up to the last Tax Year 2009/2010 and similarly for the German Tax as a Freelancer here (Jan 2010 to Dec2010). So there is an overlap.

Now, for the UK Tax Year 2010/2011, I am being asked to file.

Although I have a UK Company Accountant, they are not able to assist and have therefore suggested that I contact a Tax specialist (International)

Are you able to refer such a Specialist? Tax Liability to the UK versus that of The German? To reclaim any double taxing, as well as to advise on how to proceed?

I rang HMRC, I had a mixture of comments.. Now totally confused:

1st - I MUST determine my domicile Status... (1 of 3) None I which was made clear..
2nd - I MUST file the Self Assessment regardless
3rd - I MUST buy one of the 3rd Party Applications on the HMRC site to file my returns..
4th - Deadline is 31st Jan.

Any comments, suggestions, recommendations?

Thanks in Advance

[BlasterBates]

Find another UK based accountant who can do it for you.

Normally you shouldn't be paying tax on German taxed income. It is unlikely that there would be a top-up tax, as this only applies only in exceptional circumstances, you should be paying no UK tax at all on your German income.

You have to establish domicile which has a bearing on how income from interest or dividends is taxed, that is not to do with your UK or German businesses.

Just one more point you mentioned you taxed in Germany because you stayed longer than 183 days. In the future you should be taxing yourself for German contracts not after 183 days but from day 1. The 183 day rule only means you are exempt from tax on non German woldwide income, you pay German tax from day 1. After 183 days the German authorities then expect you to declare other worldwide income as well.

Obviously if you work mainly in the UK and visit Germany ocasionally that wouldn't be taxed, but basically doing say a 3 month contract working on a daily basis in Germany should be taxed there. We have had some posters on here who've asked advice after they have faced criminal charges for tax evasion for contracts of less than 6 month duration. They thought that they were covered by the 183 day rule.

[Clare@InTouch]

Hi all,

I am currently in this situation which involves all of the above:

The Situation:

Up to April 20th 2010, I have been running my own UK limited Company as a Freelancer. Not it is in a Dormant state for the below reasons:

Since then, I have been working now in Germany as a German Freelancer (having exceeded the 183 Day Rule).
This has been on a 6 monthly rolling contract (which is currently due to end this April 2012). So for nearly 2 years (April 23, 2010 to Present)

I have filed UK Personal and Corporation taxes up to the last Tax Year 2009/2010 and similarly for the German Tax as a Freelancer here (Jan 2010 to Dec2010). So there is an overlap.

Now, for the UK Tax Year 2010/2011, I am being asked to file.

Although I have a UK Company Accountant, they are not able to assist and have therefore suggested that I contact a Tax specialist (International)

Are you able to refer such a Specialist? Tax Liability to the UK versus that of The German? To reclaim any double taxing, as well as to advise on how to proceed?

I rang HMRC, I had a mixture of comments.. Now totally confused:

1st - I MUST determine my domicile Status... (1 of 3) None I which was made clear..
2nd - I MUST file the Self Assessment regardless
3rd - I MUST buy one of the 3rd Party Applications on the HMRC site to file my returns..
4th - Deadline is 31st Jan.

Any comments, suggestions, recommendations?

Thanks in Advance

It's not so much your domicile status you need to determine, it's your tax residency status. In general terms, if you're non-resident then BlasterBates above is correct in that you don't declare your German income here, but you must still declare any UK income (dividends, bank interest etc) on which you'll pay UK tax. When you complete your return in Germany, assuming the system is the same as the UK, you declare your worldwide income and any tax suffered abroad. You then get credit for that tax against the German tax according to the Double Tax Treaty, so you end up paying the higher prevailing rate in either country.

Have a read through here: http://www.hmrc.gov.uk/cnr/hmrc6.pdf

Your UK accountant should be able to handle your UK tax affairs. I'd suggest you then find a local accountant in Germany who can advice on the German tax side of things (cheaper than going to find an international tax specialist from the start, although not ruling out the fact you may need one if you're a complicated fellow). Ask other contractors/agents you know there to recommend someone.

[chef]

Give Thomas Zitzelsberger of ExpatTax in Munich a call. He speaks excellent English, well Irish but it's close enough, knows the German tax system inside out and came highly recommended to me by several on ToytownGermany forum.