Contractors' Questions: Any tax tips for my German IT contract?

Contractor’s Question: I’m a UK tax resident who’s about to start a contract with a German firm. I’ll actually be supplying IT services to a second German firm but I’ll be working remotely from the UK with only one or two day-visits to Berlin each month.

What’s the most tax-savvy solution to my scenario? HMRC couldn’t offer me any practical advice despite keeping me on the phone for two punishing hours, so any tips would be appreciated.

Expert’s Answer: The fact that you’re going to be physically working in the UK means that the most appropriate tax solution for your situation is to pay tax in the UK.

As your visits are limited to just one or two days per month, then this is also processed via HMRC and the UK tax system. This is because the time you are going to spend in Germany is seen as business trips and you’re therefore in the same position as anyone else who is paying UK tax, but occasionally working abroad. For example, if a boss sent his IT director to Germany for a day for a business meeting, the director wouldn’t pay tax in Germany; he’d pay it in the UK.

As far as the most tax-efficient way of operating in the UK, there are the regular options open to you, including utilising an umbrella solution or setting up your own UK limited company.

The expert was Charles Daw, a director of CXC Global EMEA.

Thursday 21st Apr 2016
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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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