Overseas Tax Advice
Discussion
I am an employee of my own Limited company which is based in the UK and accounts for all taxation due in the uk.
At present I am working as a consulting for a company based in the UK and have been posted overseas to a project
in Japan.
My stay here will be for more than 12 months and the tax authority in Japan has been in touch with me to file
my tax return here.
The company that I am consulting for have said that there is a double taxation relief arrangement with Japan and
and that tax is recoverable in the UK.
It concerns me how the Inland Revenue will look upon this, if I am running a company based in the UK and paying tax
how can I recover tax paid in Japan?
Thanks in advance for any advice.
At present I am working as a consulting for a company based in the UK and have been posted overseas to a project
in Japan.
My stay here will be for more than 12 months and the tax authority in Japan has been in touch with me to file
my tax return here.
The company that I am consulting for have said that there is a double taxation relief arrangement with Japan and
and that tax is recoverable in the UK.
It concerns me how the Inland Revenue will look upon this, if I am running a company based in the UK and paying tax
how can I recover tax paid in Japan?
Thanks in advance for any advice.
You will need to get in touch with a foreign tax specialist regarding what you need to do. There are two aspects to this - taxation on company profits arising from its activities in Japan and your extraction of personal income from the company.
As the company is UK based and you, as an individual UK tax resident, will be subject to UK Income Tax on moneys extracted from the company by you personally.
Are the Japanes autrhorities asking you as an individual to register for Japanese Income Tax or are they asking the company to register for Japanes Corporation tax?
As the company is UK based and you, as an individual UK tax resident, will be subject to UK Income Tax on moneys extracted from the company by you personally.
Are the Japanes autrhorities asking you as an individual to register for Japanese Income Tax or are they asking the company to register for Japanes Corporation tax?
Answers to questions
Yes I do have an accountant.
The Japanese Tax authority are treating me as resident and taxing me as an individual.
So far they have not mentioned 'Corporation Tax'
As I see it, I will be treated as dual resident and liable for tax in the UK and Japan.
What I wish to know is, when I complete the contract and give up residency in Japan
and return to the UK will I be able to claim back any tax paid in Japan?
Yes I do have an accountant.
The Japanese Tax authority are treating me as resident and taxing me as an individual.
So far they have not mentioned 'Corporation Tax'
As I see it, I will be treated as dual resident and liable for tax in the UK and Japan.
What I wish to know is, when I complete the contract and give up residency in Japan
and return to the UK will I be able to claim back any tax paid in Japan?
My accountants concerns are -
He can't see how we can recover the tax paid in Japan, if we complete my tax return as normal with UK salary and dividend income.
The alternative would be to treat myself as non resident in the UK for the tax years in question whilst in Japan.
The issue here is that my company would then have no management and control in the UK, potentially giving rise
to problems and also exposing myself to potential Issues both corporate and personal.
I was rather hoping that someone on PH had been in a similar situation and may have been able to give me some further advice.
He can't see how we can recover the tax paid in Japan, if we complete my tax return as normal with UK salary and dividend income.
The alternative would be to treat myself as non resident in the UK for the tax years in question whilst in Japan.
The issue here is that my company would then have no management and control in the UK, potentially giving rise
to problems and also exposing myself to potential Issues both corporate and personal.
I was rather hoping that someone on PH had been in a similar situation and may have been able to give me some further advice.
ISTR that you declare the tax you have paid in Japan on your tax return in the UK and HMRC take account of it in determining how much tax you owe them.
It is a shame that the contract is only for 12 months and that you won't be able to go fully non-resident as it does make things significantly easier.
It may also make a difference in how you recieve the money: does your J client pay your company and then you pay yourself? Or does he pay you directly?
I really do suggest getting an accountant that specialises in international tax but be aware that they won't be cheap.
It is a shame that the contract is only for 12 months and that you won't be able to go fully non-resident as it does make things significantly easier.
It may also make a difference in how you recieve the money: does your J client pay your company and then you pay yourself? Or does he pay you directly?
I really do suggest getting an accountant that specialises in international tax but be aware that they won't be cheap.
Edited by GlenMH on Thursday 11th March 01:49
I am sure that there is a Double Taxation Agreement between the UK and Japan. DTAs are in place to ensure that you do not pay tax twice on the same income. Why hasn't your accountant looked up the nature of the DTA between the UK and Japan?
If you do not personally withdraw any money from the company whilst you are in Japan, you would have no personal income in Japan and therefore nothing for the Japanese to tax.
If you do not personally withdraw any money from the company whilst you are in Japan, you would have no personal income in Japan and therefore nothing for the Japanese to tax.
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