Contracting abroad (Europe) - tax
Discussion
I have been offered the possibility of a contract in Iceland working for an Icelandic company and was wondering if anybody could offer some advice.
I will remain resident in the UK as I will be travelling home regularly (10 days on 4 days off). I also own a house in the UK and my family will remain here. I will be doing some wider international travel as part of the role (USA and continental Europe) amounting to perhaps 4-8 weeks a year as well as a little UK home working.
The company I would be working for is based solely in Iceland.
What happens from a tax perspective. My accountant has said I will be liable for full income tax and NI on my income as I will still be UK resident and my LTD company will also have to pay UK corporation tax etc on the profits.
My question is - will there be any additional tax implications i.e. will there be any additional taxes due in Iceland due to the fact that I will be spending so much time over there, likely to be around 150-200 days per year?
I will remain resident in the UK as I will be travelling home regularly (10 days on 4 days off). I also own a house in the UK and my family will remain here. I will be doing some wider international travel as part of the role (USA and continental Europe) amounting to perhaps 4-8 weeks a year as well as a little UK home working.
The company I would be working for is based solely in Iceland.
What happens from a tax perspective. My accountant has said I will be liable for full income tax and NI on my income as I will still be UK resident and my LTD company will also have to pay UK corporation tax etc on the profits.
My question is - will there be any additional tax implications i.e. will there be any additional taxes due in Iceland due to the fact that I will be spending so much time over there, likely to be around 150-200 days per year?
Moonhawk said:
I have been offered the possibility of a contract in Iceland working for an Icelandic company and was wondering if anybody could offer some advice.
I will remain resident in the UK as I will be travelling home regularly (10 days on 4 days off). I also own a house in the UK and my family will remain here. I will be doing some wider international travel as part of the role (USA and continental Europe) amounting to perhaps 4-8 weeks a year as well as a little UK home working.
The company I would be working for is based solely in Iceland.
What happens from a tax perspective. My accountant has said I will be liable for full income tax and NI on my income as I will still be UK resident and my LTD company will also have to pay UK corporation tax etc on the profits.
My question is - will there be any additional tax implications i.e. will there be any additional taxes due in Iceland due to the fact that I will be spending so much time over there, likely to be around 150-200 days per year?
You normal accountant will probably not be familiar with the niceties of foreign tax systems so it would be wise to get some advice from one that is as a starter. I will remain resident in the UK as I will be travelling home regularly (10 days on 4 days off). I also own a house in the UK and my family will remain here. I will be doing some wider international travel as part of the role (USA and continental Europe) amounting to perhaps 4-8 weeks a year as well as a little UK home working.
The company I would be working for is based solely in Iceland.
What happens from a tax perspective. My accountant has said I will be liable for full income tax and NI on my income as I will still be UK resident and my LTD company will also have to pay UK corporation tax etc on the profits.
My question is - will there be any additional tax implications i.e. will there be any additional taxes due in Iceland due to the fact that I will be spending so much time over there, likely to be around 150-200 days per year?
You will likley as not have an Icelandic personal tax liability. You will be able to offset your UK personal tax liability with any tax you pay in Iceland. If your Icelandic taxes are higher than you would pay in the UK then probably you will pay no UK tax.
You seem to indicate that it isn't "you" who has been hired by the Icelandic entity but a limited company through which you run a contracting business.
If that is indeed the case, you are essentially using a UK registered and based limited company to provide a service to an overseas customer.
Your personal tax residency situation is not an issue i.e. as a person you are and remain a UK tax resident and you will pay UK tax and NI on your personal income from your own company in the normal way. The company, being UK based and UK tax resident, will pay Corporation Tax on its profits in the normal way.
The Icelandic customer will just pay your company's invoice as and when you issue them.
The tricky area may be how you need to account for VAT on the invoices you issue to the Icelandic customer.
If that is indeed the case, you are essentially using a UK registered and based limited company to provide a service to an overseas customer.
Your personal tax residency situation is not an issue i.e. as a person you are and remain a UK tax resident and you will pay UK tax and NI on your personal income from your own company in the normal way. The company, being UK based and UK tax resident, will pay Corporation Tax on its profits in the normal way.
The Icelandic customer will just pay your company's invoice as and when you issue them.
The tricky area may be how you need to account for VAT on the invoices you issue to the Icelandic customer.
Eric Mc said:
You seem to indicate that it isn't "you" who has been hired by the Icelandic entity but a limited company through which you run a contracting business.
If that is indeed the case, you are essentially using a UK registered and based limited company to provide a service to an overseas customer.
Your personal tax residency situation is not an issue i.e. as a person you are and remain a UK tax resident and you will pay UK tax and NI on your personal income from your own company in the normal way. The company, being UK based and UK tax resident, will pay Corporation Tax on its profits in the normal way.
The Icelandic customer will just pay your company's invoice as and when you issue them.
The tricky area may be how you need to account for VAT on the invoices you issue to the Icelandic customer.
Yes that is correct. I am director of a UK registered limited company and the Icelandic company are contracting my company to do the work. All invoices will be sent from my limited company to this Icelandic company.If that is indeed the case, you are essentially using a UK registered and based limited company to provide a service to an overseas customer.
Your personal tax residency situation is not an issue i.e. as a person you are and remain a UK tax resident and you will pay UK tax and NI on your personal income from your own company in the normal way. The company, being UK based and UK tax resident, will pay Corporation Tax on its profits in the normal way.
The Icelandic customer will just pay your company's invoice as and when you issue them.
The tricky area may be how you need to account for VAT on the invoices you issue to the Icelandic customer.
I will actually be carrying out the work - so my limited company will pay me a monthly salary.
With regards to VAT - I have been advised by both the company and my accountant that the contract would be zero rated for VAT.
OK cool - thanks.
edit: hmmm...i'm not so sure. I have been doing a lot of searching and quite a few websites suggest it's not an issue for around 6 months - but if you go beyond that (this will be a 2 year assignment on a 6 month rolling contract) - it get's a little more complicated and I could end up with dual residency status.
http://www.contractoruk.com/overseas_guides/can_i_...
edit: hmmm...i'm not so sure. I have been doing a lot of searching and quite a few websites suggest it's not an issue for around 6 months - but if you go beyond that (this will be a 2 year assignment on a 6 month rolling contract) - it get's a little more complicated and I could end up with dual residency status.
http://www.contractoruk.com/overseas_guides/can_i_...
Edited by Moonhawk on Monday 15th June 21:52
Moonhawk said:
Yes that is correct. I am director of a UK registered limited company and the Icelandic company are contracting my company to do the work. All invoices will be sent from my limited company to this Icelandic company.
I will actually be carrying out the work - so my limited company will pay me a monthly salary.
With regards to VAT - I have been advised by both the company and my accountant that the contract would be zero rated for VAT.
I believe that is not quite correct - its a B2B supply outside of the EU so its actually "beyond the scope" of UK VAT which means the sales (and any direct expenses) are not entered on your VAT returns.I will actually be carrying out the work - so my limited company will pay me a monthly salary.
With regards to VAT - I have been advised by both the company and my accountant that the contract would be zero rated for VAT.
David
If Iceland is like the rest of Scandinavia they will have very simple and effective'substance overruling form laws' and can and do complexity ignore the contract with a small company and tax you as an employee, get local advice. Having done this sort of thing myself for 40 years and despite being a UK qualified accountant I still use one of the big companies who have offices world wide so you get both points of view for this sort of thing. I use PWC and their bill last year for tax advice and filling was 500 pound, OK it is higher the firs year you change country but it is peanuts compared to the potential problems.
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