Tax and working abroad

Albermarle

DBdoobydoo said:

Sam_666 said:

Some good points above about double taxation.
You will be paid by German firm, on German payroll and German taxes/ social deductions deducted.
You will also need German bank account and German tax ID number. You CANOT be paid in Germany without tax ID number.

Why would you need solicitor or tax accountant when all info is available on web, in English.
Did you relise you will be paid in Euros? Did you think about how will you get those Euros in GB bank account?
Do you have EU passport? Without EU passport you need German work permit!

Almost every statement in this post is utterly wrong.

The OP is going to be sat in the UK working remotely in Germany. They will be tax resident in the UK on a UK payroll with UK taxes/ social deductions deducted. The OP does not need a German bank account and German tax ID number.

The OP will be paid in GBP. They do not require a German work permit. Why on earth would they? They will be working in the UK.

Although the above scenario is what you would expect to happen, it seems the employer is new to this scenario, as is the employee, so it is not that clear what will happen. Hence the original question from the OP.

NorwichMan

Albermarle said:

DBdoobydoo said:

Sam_666 said:

Some good points above about double taxation.
You will be paid by German firm, on German payroll and German taxes/ social deductions deducted.
You will also need German bank account and German tax ID number. You CANOT be paid in Germany without tax ID number.

Why would you need solicitor or tax accountant when all info is available on web, in English.
Did you relise you will be paid in Euros? Did you think about how will you get those Euros in GB bank account?
Do you have EU passport? Without EU passport you need German work permit!

Almost every statement in this post is utterly wrong.

The OP is going to be sat in the UK working remotely in Germany. They will be tax resident in the UK on a UK payroll with UK taxes/ social deductions deducted. The OP does not need a German bank account and German tax ID number.

The OP will be paid in GBP. They do not require a German work permit. Why on earth would they? They will be working in the UK.

Although the above scenario is what you would expect to happen, it seems the employer is new to this scenario, as is the employee, so it is not that clear what will happen. Hence the original question from the OP.

Thanks, this is right, the employer seems happy for me to remain living in the UK and work largely remotely, but they seem to be figuring out how that could work practically, and I am seeking independent and reliable tax advice so that I understand what is being proposed and why. I want to know things are being set up correctly. For example, someone who understands the double taxation agreement between the UK and Germany and can answer my questions on this in a way I can trust and rely on. I am talking to the employer but also want to check this with someone independent.

penners324

They need to pay you under PAYE scheme.

Are they set up? Or they can use an Employer of Record arrangement 

Albermarle

NorwichMan said:

Albermarle said:

DBdoobydoo said:

Sam_666 said:

Some good points above about double taxation.
You will be paid by German firm, on German payroll and German taxes/ social deductions deducted.
You will also need German bank account and German tax ID number. You CANOT be paid in Germany without tax ID number.

Why would you need solicitor or tax accountant when all info is available on web, in English.
Did you relise you will be paid in Euros? Did you think about how will you get those Euros in GB bank account?
Do you have EU passport? Without EU passport you need German work permit!

Almost every statement in this post is utterly wrong.

The OP is going to be sat in the UK working remotely in Germany. They will be tax resident in the UK on a UK payroll with UK taxes/ social deductions deducted. The OP does not need a German bank account and German tax ID number.

The OP will be paid in GBP. They do not require a German work permit. Why on earth would they? They will be working in the UK.

Although the above scenario is what you would expect to happen, it seems the employer is new to this scenario, as is the employee, so it is not that clear what will happen. Hence the original question from the OP.

Thanks, this is right, the employer seems happy for me to remain living in the UK and work largely remotely, but they seem to be figuring out how that could work practically, and I am seeking independent and reliable tax advice so that I understand what is being proposed and why. I want to know things are being set up correctly. For example, someone who understands the double taxation agreement between the UK and Germany and can answer my questions on this in a way I can trust and rely on. I am talking to the employer but also want to check this with someone independent.

I think you need to make the argument to your employer, that you have taken advice ( from this forum) and the normal scenario for a UK resident working for a foreign employer, is that you are paid in the UK in GBP and pay tax and NI in the UK under the PAYE system.( and they pay UK NI as well) Plus they and you contribute to a UK pension.
They need to make the arrangements ( with your help if necessary) so that can all happen. 

DullGreyGuy

Sam_666 said:

DullGreyGuy said:

You need to speak to the company firstly to find out what they're intending to do regards taxation 

Why? Taxation is personal issue and no employer will advise on that, not even UK employer.
Try asking your own employer about your own peronal taxation and let us know what they said.

Not suggesting for personal tax advice but what they intend doing, as I said... are they going to put you through the full payroll in which case German taxes will be deducted? Are they going to use a factoring company so from an "employer of record" you actually work for the UK based factor who just does the payroll aspect of life so are paid net of UK taxation and not German? Are they going to just pay gross as an off payroll employee? Are they open to suggestions of how it could work?

Try talking to your accountant about your personal tax @Sam_666 when you dont even know what taxes in what jurisdiction are going to be deducted and see how far you get. 

DullGreyGuy

Sam_666 said:

MacPingu1986 said:

Sam_666 said:

DullGreyGuy said:

You need to speak to the company firstly to find out what they're intending to do regards taxation 

Why? Taxation is personal issue and no employer will advise on that, not even UK employer.
Try asking your own employer about your own peronal taxation and let us know what they said.

Taxation of employment income in the UK is very much not just a personal issue. Even in a solely UK context employers are closely involved - eg: even for my relatively simple affairs they have my tax code and they deduct and pay income tax and national insurance on my behalf to HMRC.

When you add another country into the mix things can become much more complicated, as others have advised key questions as a starter that all involve the employer:

• Will the employer be setting up a UK payroll?
• Will the employer be deducting any German taxes? Is there any scope for the employer to apply for an exemption for these deductions?
• How will the employer handle pension contributions? If German pension contributions do not meet the criteria to be treated from a tax perspective as pension contributions in the UK, then how will the employer handle this?

Personal taxation is just thay, personal. No employer gives a damn how you arrange your taxes or how much or little you pay. 

Suggest you have a look at Criminal Finances Act 2017, its a corporate criminal offence if one of their associates (employee, contractor etc) are committing tax evasion and the business has done insufficient steps to detect/prevent/report it. 

There was a big whoohar about the CFA with the IR35 changes came about with a fear companies would be prosecuted for the CCO under the CFA if a contractor was previously outside IR35 and then when the company took on liability decided it was inside IR35... how had they got comfortable previously etc? Had they even asked? I know none of my clients did. 

DBdoobydoo

NorwichMan said:

Albermarle said:

DBdoobydoo said:

Sam_666 said:

Some good points above about double taxation.
You will be paid by German firm, on German payroll and German taxes/ social deductions deducted.
You will also need German bank account and German tax ID number. You CANOT be paid in Germany without tax ID number.

Why would you need solicitor or tax accountant when all info is available on web, in English.
Did you relise you will be paid in Euros? Did you think about how will you get those Euros in GB bank account?
Do you have EU passport? Without EU passport you need German work permit!

Almost every statement in this post is utterly wrong.

The OP is going to be sat in the UK working remotely in Germany. They will be tax resident in the UK on a UK payroll with UK taxes/ social deductions deducted. The OP does not need a German bank account and German tax ID number.

The OP will be paid in GBP. They do not require a German work permit. Why on earth would they? They will be working in the UK.

Although the above scenario is what you would expect to happen, it seems the employer is new to this scenario, as is the employee, so it is not that clear what will happen. Hence the original question from the OP.

Thanks, this is right, the employer seems happy for me to remain living in the UK and work largely remotely, but they seem to be figuring out how that could work practically, and I am seeking independent and reliable tax advice so that I understand what is being proposed and why. I want to know things are being set up correctly. For example, someone who understands the double taxation agreement between the UK and Germany and can answer my questions on this in a way I can trust and rely on. I am talking to the employer but also want to check this with someone independent.

The double taxation agreement is utterly irrelevant to your situation. Your situation should be no different to working for any other UK employer. You will be a UK employee paying UK tax.

DBdoobydoo

Albermarle said:

DBdoobydoo said:

Sam_666 said:

Some good points above about double taxation.
You will be paid by German firm, on German payroll and German taxes/ social deductions deducted.
You will also need German bank account and German tax ID number. You CANOT be paid in Germany without tax ID number.

Why would you need solicitor or tax accountant when all info is available on web, in English.
Did you relise you will be paid in Euros? Did you think about how will you get those Euros in GB bank account?
Do you have EU passport? Without EU passport you need German work permit!

Almost every statement in this post is utterly wrong.

The OP is going to be sat in the UK working remotely in Germany. They will be tax resident in the UK on a UK payroll with UK taxes/ social deductions deducted. The OP does not need a German bank account and German tax ID number.

The OP will be paid in GBP. They do not require a German work permit. Why on earth would they? They will be working in the UK.

Although the above scenario is what you would expect to happen, it seems the employer is new to this scenario, as is the employee, so it is not that clear what will happen. Hence the original question from the OP.

Either the employer needs to set up a UK subsidiary to employ the OP or more realistically they need to employ the OP through an umbrella company.

pecunianonolet

The company would need to setup a UK subsidiary to handle UK payroll or use a third party like Safeguard to handle HR matters for them on your behalf. Your employment would be with that third party directly e.g. Safeguard would be your main point of contact.  As your remain a UK tax resident you are bound to UK tax law and UK employment law is applicable for you. 

You could also set up your own Ltd and get set up as vendor at the German company. You raise a PO and your company get's paid and as a director of your own company you run payroll for yourself. You should end up with less tax, cheaper NI contributions and could claim expenses, etc. Just negotiate a long term contract with them e.g. 12 months rolling. Account for accountant and tax advisory cost in your PO value.

You could also decide you'd like to pursue a move and become a tax resident in Germany. Taxation is a lot higher compared to UK but wages are also higher to compensate. Employment law is much more in favour of the employee, compared to UK, so that gives you additional protection and access to the welfare system, which is much better than in UK. However, the UK tax system is super simple in comparison to German tax law, so keep that in mind. 

Not knowing the exact detail of your job and the reasoning of employing somebody in the UK (are they expanding into a different market, want somebody on the ground, etc.) makes it a little more difficult to establish the best options.

On a side note, Germany is in desperate need of qualified labour so the fact that they offered you a job knowing the challenges around employment of workers from third countries means you should have some sort of negotiating power as they could have offered the job to any EU citizen with much less hassle.

Grumpy_chap

Albermarle said:

the normal scenario for a UK resident working for a foreign employer, is that you are paid in the UK in GBP and pay tax and NI in the UK under the PAYE system.( and they pay UK NI as well) Plus they and you contribute to a UK pension.
They need to make the arrangements ( with your help if necessary) so that can all happen. 

pecunianonolet said:

the fact that they offered you a job knowing the challenges around employment of workers from third countries means you should have some sort of negotiating power as they could have offered the job to any EU citizen with much less hassle.

I wonder whether the OP is best to be a bit "head in the sand" with the employer until such time as they have started working. 
Questions in advance may draw the employer's attention to the complexity which the employer may not be fully aware.  Could that risk the opportunity?
A clear statement after joining that they understand the normal scenario to be as Albermale indicated might be less likely to risk the job opportunity.