Ok my new job is getting harder by the minute? Here are the facts.
I live in Essex
My job involves me training staff in practices all over Europe
I get paid a fixed salary
A car allowance
Reimbursement of all expenses, meals, travel, hotel, everything
Original idea was to be paid as an employee then put in an expense claim each month, the problem is the way the Germany company wanted to pay me was as a German employee not living in Germany which proved to be really hard to understand and meant me paying a high tax rate. So I'm looking at setting up a ltd company then invoicing them as a consultant. They have agreed this will be the best way forward but I have a few questions regarding expenses. I've been told if I invoice them all my expenses and a consultancy fee then I am effectively an employee.
So what do I do? Anyone have any experience of this sort of thing?
I've got a limited company and I am employed by the company as a director,my company pays me a wage,so it would be your company invoicing them,so I think you'd be ok, but your best letting an accountant sort it out as I do cos it can get complicated .
Had a similar experience for a while, a couple of things agree how fast they will pay invoices or agree you submit fees up front and expenses after. It was taking me 90 days to get paid standard DT procedure but 90 days is a long time to wait for your first pay, plus holidays and not the right people around can delay further.
The company invoicing another company is the best way, but get an accountant and one who is used to this type of arrangement and factor in their fees.
I had a bad experience being paid in Euros from Germany for a few months, them taxing me in Germany and trying me needing to pay tax ect here. Make sure they get good advice too as the rules in Germany on tax ect is complicated too and mixed with ours can be confusing. Also if you are travelling and working there a lot there is a trigger point where your tax will need to be paid there not here think it is 50% or more of your work is in an EU country that is where you pay tax( this could be wrong)
Best speak to an accountant.
The term the revenue use is disguised employee there are accountants that can explain it much better that me but in essence the revenue maintain that if you work solely for one company and have little say in how / where / when you work then your in essence an employee. Have a look for IR35 that will give you more info.
That said I don't know if / how this would change if you are invoicing a non uk company. If they have no uk arm then this might also reduce your risk.
If you have been working as a permie for a company then flip to a contractor (even if the role changes) you have next to no chance of being outside of IR35 ... Im not sure that the company your contracted to is based in Germany would make much difference unless whilst permie you were wholly outside the UK tax system.Originally Posted by Captain Morgan
BTW if you contract to only one company you can still be outsidenof IR35 but you would need to be very careful about wording and clauses in the contract.
I'd be very careful also as I think you would struggle to demonstrate to fall outside IR35 for various reasons:
- you only work for one client and are treated as if you were that companies employee, I.e. you may appear in org charts etc
- you would need to be able to demonstrate that you are also attracting other clients, e.g through website marketing etc.
- your contracts would ideally need to have specific clauses built in to demonstrate that you are more independent than a regular employee
- you should ideally be using your own work equipment rather than the company's
I have looked into setting up a ltd company as an independent accountant working on 3-12 months assignments but found that whilst there may have been short term tax savings, the long term risk of having a tax assessment and being considered to be within the scope of IR35 and having to pay lots of tax arrears was too high.
Not to put you off entirely but do plenty of research and be wary of advisors who charge you a fee to set up your own ltd company. At the end it is YOU who is responsible to pay the correct taxes and there are lots of umbrella companies etc out there presenting one sided advice to earn more fees.
Last edited by Watchdude; 19th October 2014 at 10:20.
Basically, if you're really independent, you're all right. If your contractor status is merely a tax dodge and you're actually a de facto employee, you won't get away with it - HMRC has 60,000 people whose whole job is to catch that sort of thing. IR35 is strict, clear, and largely fair. A good accountant can advise you how to comply with it.
I'm starting to see a pattern, I agree with most that will look like a tax dodge so is thee another way of doing it, I really don't mind paying UK tax and Iim not trying to avoid that. What I am trying to avoid is paying German tax as if I was a German citizen, I live in the UK, my family are in the UK, my work will be done anywhere around Europe but because the company is in Germany they seem to want to employ me as if I was a German.
Any help? Please?
As a matter of interest, what is the jurisdiction of your employment contract? Does the German company have any UK premises at all?
The UK and Germany have a double taxation agreement so you shouldn't have to pay tax twice. As far as I am aware you should be able to reduce your UK tax liability by however much tax you pay in Germany.
I would definitely speak to both accountants and employment law specialists as it could be a mind field, but hopefully you'll find a relatively painless way through.
Got an appointment with an accountant today so hope to find out more then, the company only operates in Germany so no chance of a UK office. Tried speaking to tax office but got nowhere with them.
Good luck - you should be looking for a UK accountant who has an understanding of how the German system works or vice versa. I have no direct experience of them but I am aware of a couple in Germany (they are called Steuerberater - tax advisers) who get a good press on the Expat forums and might be worth contacting if you're not satisfied with the advice you get in the UK.
It strikes me that your German employer (or rather their HR department) doesn't want the hassle of doing anything out of the ordinary that might be to your benefit and you'll have to do most of the legwork. It's much easier for them if they pay you as a German employee. I'd always understood that you are supposed to pay tax where you reside rather than where your employer is but I daresay it's more complex than that.
Again I have no direct experience of how contracting/consulting works in Germany but I think some principles are vaguely comparable; I know of people who wanted to go freelance but, as they were only working for a single company, there was no real benefit in the end.
At the end of the day this is all just internet talk and you need professional help so that you know exactly where you stand.
Does anyone know of any pan-european brokering companies who handles stuff like this? I have been doing consulting for 4-5 years now and i'm sick and tired of the red tape - i just want a salary slip and have someone else mess with the details. Preferrably a non-local company - so theres no auditing crap. Just have client pay them - they pay me - done.
Cheers
Morgan
Just a quick answer. If you're already employed by the company and are now expecting to go ltd with the same company then the revenue will take a dim view of this. Your working situation has not changed so you will effectively be a disguised employee. Are you currently paying uk paye taxes?
I've 14 years ltd comp working experience.
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