UK tax liability as freelancer working abroad

DUS

Hi,

I hope this is the right place/forum to ask the following question. I am curious to see if somebody can provide some insight info on it. Ok, here we go:

- I am a German citizen but UK resident.
- Have been a UK taxpayer for the last 10 years.
- I plan to become self-employed over the summer of 2016 and permanently move to Asia (presumably Thailand).
- I currently have no intention to establish a local legal entity such as a Hongkok Ltd etc.
- I don´t plan to spend more than 50 days per year in either Germany or the UK.

My freelance IT job will keep me invoicing a UK based company. My plan is to invoice them using my private address in Thailand and to have them pay the amount into my existing private current account here in the UK. I would then want to transfer money to Asia whenever I need additional funds.

So, that´s my "idea" so far. The big question I have is: Would that "setup" be ok in the sense that neither HMRC nor the German tax authorities start claiming tax on my income earned from Asia/Thailand?

Also, I understand that I can get a visa for Cambodia that would allow me to actually work in the country and pay my taxes there. However, when it comes to Thailand, the visa available to me strictly forbid any work in that country. So, at least with regards to Thailand, I wouldn´t even be able to formally declare my income there as I would be in breach of the visa rules. But then again, where do I pay my taxes in the setup described above? :huh:

I just want to avoid running into major tax disputes with HMRC if and when I come back in a few years time. Any ideas?

Thank you!
DUS

sheramber

https://www.gov.uk/tax-uk-income-live-abroad

https://www.gov.uk/tax-right-retire-abroad-return-to-uk

DUS

Thank you sheramber!

I had read the info behind the 2 links you posted before and was under the (potentially wrong) impression that the info provided by HMRC related to those living abroad but who are employed in the UK.

If you are self-employed and work from a country in Asia, would the revenues generated by doing business for a UK based company mean that you, the self-employed, have UK income that is taxable in the UK? I would have thought the answer to this question is "No" but I might be completely wrong.

Oh dear......

booksurr

presumably you are aware of tax treaties?
https://www.gov.uk/government/publications/double-taxation-treaties-territory-residents-with-uk-income

they will determine who gets first slice of the UK income and how much, if any, is then taxed by your place of residence

there is no treaty with cambodia so over to someone else to help you on that one http://www.hmrc.gov.uk/manuals/dtmanual/dt4501.htm

there is with Thailand and UK income gets taxed in UK, https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/412193/uk-thailand-dtc180281.pdf

DUS

Thank you booksurr!

The resulting question for me is: What is the definition of "UK income"?

If a "non UK business or entity" charges a UK based company a fee for whatever services this non-UK business might have provided, then I´d be surprised if this non-UK business would thereby have generated "UK income" that is taxable by HMRC.

Also, from the double taxation agreement between Thailand and the UK, it says re business profits:

(1) The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.

(2) Where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.

In my individual case, I wouldn´t have a "permanent establishment" situated in the UK (as defined in the taxation agreement).

Oh well, I guess there is no way around paying for a tax consultant before relocating to Asia. :-)

booksurr

I cannot give you the advice you seek. There are one or two posters on here who sometimes tackle non dom questions, but I do rather think you will need professional advice given the "cloudy" nature of your visa and therefore in which country you will be tax resident

also bear in mind given your UK resident status for 10 years prior to leaving, if you return to the UK within 5 years of leaving you will need to do a whole host of extra reading!
https://www.gov.uk/tax-return-uk

jimmo

DUS wrote: »

If a "non UK business or entity" charges a UK based company a fee for whatever services this non-UK business might have provided, then I´d be surprised if this non-UK business would thereby have generated "UK income" that is taxable by HMRC.

You are quite right and the real question is "Where is the work carried out?" It is important to know what income, if any, is potentially liable to UK tax before considering whether a particular Double Taxation Treaty overrides UK standard procedures.
Also domicile doesn’t come into your situation.
As you will see from the table in the link below as long as you are not resident in the UK then any business carried on wholly outside the UK will not be liable to UK income tax so you won’t need to consider the Double Taxation Treaty.
It’s a little more complicated if you work in the UK on your visits here but even then only profits from the work done in the UK are potentially taxable in the UK. So if you can avoid visiting your clients whilst in the UK that may be wise.
https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm10435