Working abroad and my UK LTD company

[IT_BOY]

Novice here first time i am working abroad but not sure about something.

Hi I am starting on some new work abroad in the EU. I am registered LTD company from the UK who is also VAT registered and charge vat on top of my sales for the UK. When working abroad how does my sales invoice from abroad come in to my UK ltd company and how is the vat is sorted ?. Is it the case i have to open an company/account abroad where i am working and pay tax according to that EU country and leave the money there in that country ?
As anyone worked abroad and how do i get vat paid, expenses booked through my company . How do these management companies work that way . What will be the best option for me .
I am happy to pay my corporation tax , paye and vat for the UK which i have been doing.

I will have expensis like hotels,air tickets and others.

Thanks

[Wanderer]

When working abroad how does my sales invoice from abroad come in to my UK ltd company and how is the vat is sorted ?

Does this help?

Is it the case i have to open an company/account abroad where i am working and pay tax according to that EU country and leave the money there in that country ?

I would open a new bank account in the UK but denominated in the currency of the country you are working in. This will help you hedge against exchange rate variations. Banks like Cater Allen do a Euro denominated account, for example. Also watch that you are not getting ripped off for currency conversions.

Where you have to pay tax will depend on how long you work in another country. Without knowing the name of the country or duration of the work to be done we can't really help much more than that.

Even if we did know, the question is complex and I recommend you have to get specialist advice.

[sheer consulting]

more details needed

I agree with Wanderer and am concerned with how long and where you are working as these factors will affect not just where you pay tax but could open you up to the requirement of registering your Ltd co overseas. Having to register a local entity could expose you to further legislation such as labour leasing.

Management companies escape this requirement since they do not conduct all of their business in one overseas country, whereas most Ltd company contractors work with 1 client at a time. This will result in 100% of your invoices being raised to 1 overseas client.

If you can provide more details of your project then I can provide more opinions.

[BlasterBates]

If you work abroad always make sure whatever income is sourced there is declared. You may be able to claim tax exemption, but do make sure it is declared,

Many contractors who worked in Germany are now facing criminal investigations. They thought they could work there for up to 6 months without having to declare it.

Just because you are not resident in a country doesn´t mean you are exempt from tax. You are liable for tax on all income earned in that country. It is possible to work via a foreign company and not pay tax, but basically as a one man company most countries would see you as self-employed and hence expect you to pay tax. If you want to avoid tax, actively seek exemption, i.e. make sure all invoices are covered by a tax declaration in that country, and then claim tax relief.

It´s very unpleasant when a bunch of "heavies" raid you, which is what is happening with many contractors.

It is a lot lot easier to argue your point to an inocuous tax official in a tax office than the the "flying squad" down the local "Nic".


In fact if you are in a country for less than 6 months, you will not be tax resident, but if tax is paid it won´t be the full rate, HMRC credit the tax paid overseas. So generally you don´t save tax by not declaring it, you probably will pay about the same amount of tax once HMRC has added their bit. All you achieve by not declaring it is, is the risk of facing a criminal investigation.

If you work in the Uk but deliver to EU clients i.e. you don´t do the work in the foreign country then you can handle this through a UK accountant, and your income is taxed only in the UK.

[SueEllen]

If you work abroad always make sure whatever income is sourced there is declared. You may be able to claim tax exemption, but do make sure it is declared,

Many contractors who worked in Germany are now facing criminal investigations. They thought they could work there for up to 6 months without having to declare it.

Not this again -

There are more countries in the EU than Germany and some of them will happily ignore your presence for exactly 183 days from the start of your contract.

However go one day over and you are in the tulip.

[BlasterBates]

Yes that might be true, but which ones?

You won´t know untl the flying squad kick your door down, because it was accepted wisdom that in Germany they didn´t want to know about you if you were there less than 183 days until the flying squads in Germany started kicking people´s doors down, and I know I got caught in a big argument on the Belgian thread with Boo, but anyone following this forum for a long time knows in Belgiun a whole load of contractors got into a whole load of deep trouble in Belgium, contactors complaining about their lives being ruined, and that included ones running through their Ltd.

...and the thing is by not declaring you save jack all tax, it´s just half a day fillimg out your tax return. When you´re not tax resident filling out a tax return is very very very simple indeed.

You know even the tax advisors aren´t sure what the situation is´because the difference between tax evasion and not having to fill out a tax declarationis down to woolly phrases.

I´ll never forget the words of the Swiss tax man about where I was to tax some income. "We decide Mr Bates, it´s not up to you!!!"


...oh yes and my swiss tax advisor didn´t really have a clue.

I´ve been working in several countries, the situation is opaque no-one really knows and it´s better to be safe than sorry, and one contractor friend of mine did spend two weeks in a high security jail, so ths isn´t just scare mongering, although that was more indirect because he ended up with a massive tax bill (because he failed´to do a tax declaration!!) ended bankrupt, failed to pay a fine (for something else) and was shipped off to jail.


In fact I believe that in all cases if you simply send a letter to the relevant tax authority detailing your income I think that would be enough to save you a lot of grief. I would recommend that as a minimum. That would be what 15 minutes work and a postage stamp, bingo you can be sure that tax evasion won´t be a problem.

[BlasterBates]

Just to illustrate that it isn´t easy to determine whether you pay tax. I was told by the German tax office that I didn´t need to pay tax and they were wrong, I pointed out to them that they were wrong and why and then the were down on me like a ton of bricks. If I had simply accepted what they wrote and some point several years later they then spotted the mistake I would have been in very serious trouble.

It really is a nightmare.

[ormenlange]

UK LTD Company in the EU.
The tax liability is determined by the EU or EEA country you are working in but there are tax treaties so that the tax you pay in that country simply offsets your liability in the UK.

Some of them are 180 days in one year or 270 average over 3 years. Also you should be aware that the tax authority in the country concerned may have an independent law that lets it decide how you should be taxed based on residency and also on status.

For example, Norway has a law that lets it decide what per centage of your sales is deemed as directors salary. For the past 20 years LTDs have been advise to declare that 70 - 75 % of their net sales (ie. invoices less costs of doing buisness or commuting) is regarded as salary. This has been challenged in court now so things are changing but the rules are still murky.

If you have already worked in the UK make sure that you apply for an E101 so that will exempt you from NI and Employers NI in the country in question. Theses taxes are generally similar to the UK but if you are forced to declare a deemed salary they could end up being very high compared to the NI and Emp NI you would be paying on a small UK salary.

Best advice is to get an accountant in the UK who is familiar with the overseas tax or get one in the country you work in so that you know that they understand your liabilities.

[CppAnddotNET]

Novice here first time i am working abroad but not sure about something.

Hi I am starting on some new work abroad in the EU. I am registered LTD company from the UK who is also VAT registered and charge vat on top of my sales for the UK. When working abroad how does my sales invoice from abroad come in to my UK ltd company and how is the vat is sorted ?. Is it the case i have to open an company/account abroad where i am working and pay tax according to that EU country and leave the money there in that country ?
As anyone worked abroad and how do i get vat paid, expenses booked through my company . How do these management companies work that way . What will be the best option for me .
I am happy to pay my corporation tax , paye and vat for the UK which i have been doing.

I will have expensis like hotels,air tickets and others.

Thanks

Services are invoiced without VAT, no problem.

[IanWells]

Working abroad and my UK Ltd Company

So i have the same kind of problem. I am a UK registered company and am working with multiple businesses with the UK.

I have now been contacted by a company in the Turks & Caicos Islands about potentially doing some work for them. Most of it can be done here but some will require me to fly out and deal with it.

Firstly, if i am only registered as a UK company, do i have to make any contact with HMRC to inform them that i am working for an overseas firm. And if i travel out to do the work, can it simply be billed the same just to the UK company.

I'm keen to do it right but at the moment, i am being bumped from pillar to post trying to seek the correct information.