Double Taxation Relief Advice

[Deleted User]

This is a fairly complicated situation, but perhaps someone has some advice. In brief:

1. I'm a UK citizen and I work for a British company (permanent position, been employed for 10 years).

2. I do all my work remotely from home. Although my company is a very large one and I have an office, nobody cares if I work there or from home so I don't go in. This isn't that strange if you understand how this company is run (it's a kind of Google, flexible working, no real boss, if the work gets done we couldn't care less how you live your life type environment).

3. My wife is Japanese and for family reasons we're relocating to Japan. I practically live there already but not formally yet and I'm still going back and forward to the UK at the moment. I'm still going to work for my company in the UK but from Japan instead. I will stress here that there is absolutely no problem with my employer in this regard, but it's also not something I've formally "cleared" with them either and I don't expect any support from them. They basically don't care but if I make some kind of annoying issue out of it then they might start to care so I don't want to do this.

4. The one problem I have is the tax situation. By the strict letter of the law, if I become a resident in Japan then I will in principle have to pay tax in Japan even if I'm earning this money in the UK. Obviously this is a complete disaster as I'll be paying tax in both the UK and Japan, making the entire idea of living permanently in Japan more or less impossible financially (and it will take several years to improve my Japanese well enough to work there for a Japanese company). In short, this tax issue is a pretty big deal for my family - basically make or break on my career, where we live, my children, my marriage, etc.

5. There is a treaty that provides Double Taxation Relief between the UK and Japan. It basically exists to cover for this sort of situation and in theory I would be able to claim back all the tax I pay in the UK if I notify the government that I'm living in Japan. I've been trying to research this but it's complicated and all the advice seems to be written for completely different situations (e.g. you work for a British company but get sent to work abroad for some period). None of it is written for remote workers who have just voluntarily relocated for lifestyle/family reasons so I wondered if anyone had experience/advice on how this works, if it's doable, and so on.

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TLDR: I'm a UK citizen living in Japan but working for a UK company. I can't afford to pay tax in both countries so I want to claim Double Taxation Relief in the UK but I have no idea how this really works or even if it applies to my situation and if anyone has done this before or knows how it works I'd love some advice!

EdSwippet

gordon_harris wrote: »

4. The one problem I have is the tax situation. By the strict letter of the law, if I become a resident in Japan then I will in principle have to pay tax in Japan even if I'm earning this money in the UK. Obviously this is a complete disaster as I'll be paying tax in both the UK and Japan ...

It looks to me like Article 14 paragraph 1 of the UK/Japan DTA contains the phrase you seek. Here it is, parsed out:

1. Subject to the provisions of Articles 15, 17 and 18 of this Convention, salaries, wages and other similar remuneration derived by a resident of a Contracting State {Japan} in respect of an employment shall be taxable only in that Contracting State {Japan} unless the employment is exercised in the other Contracting State {UK}. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other Contracting State.

In other words, if you live in Japan and do the work in Japan then only Japan may tax the salary paid for the work. It doesn't matter where your employer is based, or where your salary is paid.

[Deleted User]

Many thanks, it looks like I should be covered in this situation but I'll investigate it further!

Cook_County

Your employer will nonetheless care about their own Japanese corporate tax issues, social security payments, employment law obligations and any Japanese withholding tax requirements.