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DTMark

Tax Arrangements When Living Abroad

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We're hoping to move to Amsterdam early next year.

I work as a self employed IT consultant.

All my clients are currently in the UK.

They pay me in sterling.

I want to continue to provide services to these clients.

Up until the point where the pound begins to become toilet paper, I'm going to have to honour the customer's right to pay in sterling. It is not reasonable to expect UK customers to pay me in EUR.

Not yet, anyway. If the pound becomes worthless then I would have to insist on EUR payment, or, the client finds an alternate UK provider. This is a risk, so I'm going to press ahead with my Dutch and attempt to gain clients there.

Am I right in thinking that, for UK customers, the money was "earned" in Holland, and therefore subject to their taxes? In other words I would not pay any UK tax, my liability for that ends when I move.

I'll need bank accounts both in sterling and EUR, presumably, domiciled in Holland, so I'll look at those options.

Any tips/corrections?

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Holland has some complex tax laws regarding workng over there which only an accountant au fait with the rules can help you with.

I have worked in Holland before but my contract has been with UK arms of US tech companies - so my taxes were all paid to the UK. However, I have had Dutch based companies want me to go and work there and, frankly, the tax arrangments then changed considerably as I would have to pay taxes in Holland.

However, there is something - which only an account can help you with - where you can go as a UK EU citizen and work in Holland for a limited time without having to pay your income tax there. You would, of course, have to pay local taxes.

Your best bet is to go ask your questions over on http://forums.contractoruk.com/

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The UK tax rules basically have three criteria:

-Resident

-Ordinarily resident

-Domicile

HMRC website can help you on these matters. There are special rules on place of service for services depending on industry. Basically, you'd be well advised to use an accountant because you might be taxed in both countries (ie. have to file both a UK and Dutch tax return) and have to reclaim the tax under a double taxation treaty between the two countries.

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Get a tax advisor - but one recommended by word of mouth and one that won't drag you into any funny schemes. Tax is too important to mess up, and conversely you can end up paying thousands more than you should with a bad advisor. One cost me 5,000 dollars a few years ago - by not knowing about a time-limited legal scheme.

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So you will be a UK company - providing services for other UK companies - and being paid in UK pounds to a UK business bank account ?

It sounds like where you actually sit when doing this work should mean sweet FA - which probably means its actually mega complicated !!

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So you will be a UK company - providing services for other UK companies - and being paid in UK pounds to a UK business bank account ?

It sounds like where you actually sit when doing this work should mean sweet FA - which probably means its actually mega complicated !!

No it matters.

Google HMRC residency test, which will help you decide where you will be resident for tax purposes.

Recently the rules were changed to make it quite clear cut where you are resident, so the number of nights spent in uk combined with factors (property in UK, uk work, new leaver, etc) deem whether or not you are resident.

Beyond that, you'll need an accountant. possibly 2, 1 in each country.

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Ultimately, I think I would be (not sure how this works over there) registered self-employed in Holland, so in effect a company providing services from Holland to international clients including the UK, billing international clients in their own domestic currency and taking the hit on the exchange rate myself.

The move is intended to be permanent, of course, it may not work out, and we might move elsewhere in time, though we've spent enough time in Holland to know it's the place for us provided the reality isn't a million miles from what we're expecting.

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Ultimately, I think I would be (not sure how this works over there) registered self-employed in Holland, so in effect a company providing services from Holland to international clients including the UK, billing international clients in their own domestic currency and taking the hit on the exchange rate myself.

The move is intended to be permanent, of course, it may not work out, and we might move elsewhere in time, though we've spent enough time in Holland to know it's the place for us provided the reality isn't a million miles from what we're expecting.

Company is very different to self employed (if a company would you register it in Uk or Holland - again different rules for tax residency - presumably "board decisions" would be made in Holland.

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I've done similar in a European country. In three years working and contacting tax and social security offices in both countries I have never really established my position clearly. It's a very tricky field.

Before spending any money on a tax advisor (I was quoted about £1000 by most of them to draw up reccommendations on my status, which were just their opinion) I would try to speak to someone in the Dutch tax department. They should be able to advise you free of charge and you will know (if you get it in writing) that it is official advice. Also speak to HMRC about your residency status (there's a test you can do online).

Social security is another very complex area, eg I believe you can only pay compulsorily into one country's system in the EU. If you change to the Dutch system you may wish to continue to pay voluntary (class 4 I think) contributions towards your state pension.

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