Contracting abroad

The European Union tax harmonisation initiative is still in its very early stages, with the result that each member state still has differing tax regimes, tax years, and varying levels of concession for “guest” workers from other EU states.

For all contracts it is advisable to work through “Managing Accountants” who, for a fee, will handle all tax, social security & payroll aspects of the contract, and will also provide assistance with local registration and other formalities. Managing Accountants generally charge a fee based on the gross amount invoiced, and apply a variety of tax efficient schemes to ensure the highest net to gross ratio for “take home” pay.

How much €?

The actual amount received will vary according to contract duration and individual circumstances, but the Managing Accountant will ensure that your arrangements are fully compliant with local tax legislation, and that you do not have any hassles or nasty surprises during or after the contract.

Liability

Late payment of any tax or (heaven forbid!) any attempt to avoid tax will attract punitive fines which, again, can be applied to anybody in the employment chain.Most EU states do not recognize personal Limited Companies as such.  Whereas, in the UK, a Limited Company is classed as a “body corporate” – a separate legal entity which falls outside income tax and personal NI legislation – most EU states will look through the veil of corporate status to determine whether an “employment relationship” exists. 

Where such a relationship is found to exist, tax is assessed on the gross invoicing of the Limited Company as if it were the personal income of the contractor.  (Roughly speaking, this is the model on which our own Inland Revenue appear to have based IR35).  The employment relationship will be deemed to have commenced at the start of the contract, so that by the time the question of Limited Company validity arises, tax deadlines will usually have been missed and significant penalties incurred.It will be evident from the above that there are very few circumstances in which a Limited Company can be considered an appropriate vehicle for working in most EU states. 

It will also be evident that ill conceived or reckless attempts to do so create a significant liability not only for the contractor, but also for ourselves, our clients and possibly others.  For this reason we will not arrange or sponsor any contract where the financial arrangements are not fully compliant with local fiscal law from the outset.

Managing Agents

Managing Accountants

If you have already completed contracts in Europe you will probably have an established relationship with a managing agent who will be aware of your circumstances and tax position.  We are happy to work with your nominated Managing Agent, provided that their approach and adopted payment schemes comply with local legislation.

If you are new to European contracting you may wish to check out the following Managing Accountants to see how the services they offer suit your individual circumstances.

The following Managing Agents are simply a selection of Managing Agents who are known to us, and with whom we have worked successfully in the past.  We do not make any representation or recommendation regarding the quality or speed of the services they provide. 

As with any service, it is always wise to speak to a few alternative providers to check costs and the precise extent of the service offered.  In our experience all of the following tend to provide similar services at similar cost, although the speed of payment to you may vary.

Connexion Group

Contact: Dennis Van den Aardweg

Tel: +352 23 61 92 1

eMail: dennis@connexion.lu

Web: www.connexion.lu 

Established in 1993, Connexion Group are one of the largest providers of contract management solutions in Europe.

Conexions have provided the following factsheets for download from their website. Please note Cerebra does not accept any responsibility for the information provided on the connexions website. We always recommend that you take independant advise on such matters.

Liberty Bishop

Liberty Bishop Ltd

Contact: Kelly Smalley

Tel: +44 (0)1582 461444

e-mail: kelly@libertybishop.co.uk

Web: www.libertybishop.co.uk

PSB

Contact: Theresa Keegan 

Tel: +44 (0) 2074873493

Email: theresa_keegan@internationaltaxsolutions.com

Web: www.internationaltaxsolutions.com

JSA Group

Contact: Hayley Walsh

Tel: +44 (0) 1923 257 266

eMail: jsaagencyteam@jsagroup.co.uk

Web: www.jsagroup.co.uk

Currency

All contracts are negotiated in the currency specified by the client for whom services are to be provided.  Generally speaking this will be Euros (or a Euro member currency), although occasionally clients will request contracts in Sterling.  We will always quote rates in the contract currency; where a GB£ equivalent is quoted this will be for information purposes only, and will have been arrived at using the prevailing rate at the time of quotation according to the “Currency Converter” facility on the Financial Times webpages (FT.com).Depending on your personal circumstances and plans, exchange rate fluctuations may or may not be a major consideration.  It is important to bear in mind that the exchange rate that counts is that prevailing when you change Euros to Sterling (or any other currency).  Anybody with a rapacious UK domestic budget – or other pressing need to repatriate the maximum amount of Sterling on a monthly basis - should consider the effect of exchange rate fluctuations carefully.

For those who intend to work in Europe in the longer term, or who intend to save a significant percentage of earnings, exchange rate fluctuations may be less important. At the moment – and probably for the foreseeable future – the “buying power” of the Euro in Europe is significantly better than that of the £ in the UK. 

Most UK banks now operate personal Euro accounts, so that Euros can now be repatriated to the UK without conversion to Sterling.  This opens up a whole range of possibilities including (for long term players) the opportunity to take advantage of Euro mortgage rates on UK property.  A good managing agent should be able to advise on these and other possibilities.

Country specific information packs [ hosted on www.connexion.lu ]