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Old 23.02.2015, 08:32
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Dual Taxation (UK/Swiss) Practicalities

Hello All!

I am a UK citizen who has been working full time in Zurich for the last 2 years. Up until now I have maintained my non-resident status in the UK (spent less than 91 days in the UK) but for personal reasons next tax year I would like to spend more time in the UK.

I have spoken to a tax expert in the UK and it seems that if I want to spend more time working from home then it is inevitable that I will become resident in the UK for tax purposes. What I am unclear of (and the tax expert I spoke to was not much help on this) was the actual practicalities of this arrangement.

Some of the things I am concerned about:

1) How will the tax be collected by HMRC? Will I just file my tax return and declare my Swiss income and then they will send me a bill? Does my Swiss employer have to register for PAYE?

2) What about UK social security? Do I need to pay it? How do I pay it?

3) Since I will be working from home in the UK for a Swiss employer. Could the Swiss employer be regarded as having a taxable presence in the UK and thus be liable for UK corporation tax?


While my Swiss company is more than happy to let me work from home in the UK, they are not familiar with this arrangement and cannot offer any advice. All of the information I can find online relates to the question of how residency is tested but I can't find anything about the actual practicalities of paying tax in the UK and Switzerland.

If anyone has any personal experience with this arrangement then I'd be very interested to hear from them. Furthermore, if anyone knows a tax expert with experience of this situation then I would very much appreciate if you could please share their contact details.

Thanks!
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Old 24.02.2015, 15:51
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Re: Dual Taxation (UK/Swiss) Practicalities

I'm not an expert in this area by any means, but have previously been in a similar position where I've contemplated spending more than 90 days in the UK.

My understanding is that you will indeed become a UK tax resident; however, provided you can clearly demonstrate that you are paying tax on your income in Switzerland, and your work is not in the UK market, you should get full relief under the double taxation treaty.

You're best speaking to a tax adviser who has good knowledge of the UK/Swiss DTA. There will be quite a few of these in Zurich.
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Old 24.02.2015, 15:55
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Re: Dual Taxation (UK/Swiss) Practicalities

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I'm not an expert in this area by any means, but have previously been in a similar position where I've contemplated spending more than 90 days in the UK.

My understanding is that you will indeed become a UK tax resident; however, provided you can clearly demonstrate that you are paying tax on your income in Switzerland, and your work is not in the UK market, you should get full relief under the double taxation treaty.

You're best speaking to a tax adviser who has good knowledge of the UK/Swiss DTA. There will be quite a few of these in Zurich.
Not quite, you would be liable to UK taxes on your world wide income & capital gains, however credit will be given for any tax paid in Switzerland.
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Old 24.02.2015, 16:01
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Re: Dual Taxation (UK/Swiss) Practicalities

Thanks for your response Mr Moose. My understanding is as fatmanfilms says, that I would be liable to pay income tax in the UK on my Swiss income but I would be able to deduct the amount of tax I have already paid in Switzerland. This is not a problem, I would just like to understand how this tax in the UK is collected and whether by working at home in the UK I could make my Swiss company liable for UK corporation tax.

If anyone knows a good tax adviser with knowledge of the Swiss/UK DTA please put me in touch!
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Old 24.02.2015, 16:05
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Re: Dual Taxation (UK/Swiss) Practicalities

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Not quite, you would be liable to UK taxes on your world wide income & capital gains, however credit will be given for any tax paid in Switzerland.


I'm not quite sure how what I said is contradictory to your explanation. I said full relief would be available under the double taxation treaty - i.e. full relief from double taxation.
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Old 24.02.2015, 16:10
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Re: Dual Taxation (UK/Swiss) Practicalities

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I'm not quite sure how what I said is contradictory to your explanation. I said full relief would be available under the double taxation treaty - i.e. full relief from double taxation.
It's pretty clear you did not get it & repeated something you did not really understand, despite being an IFA.
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Old 24.02.2015, 16:17
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Re: Dual Taxation (UK/Swiss) Practicalities

Clearly you are being deliberately inflammatory, based on your own ill-conceived prejudices - not to mention illogical.
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Old 24.02.2015, 16:52
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Re: Dual Taxation (UK/Swiss) Practicalities

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Hello All!

I am a UK citizen who has been working full time in Zurich for the last 2 years. Up until now I have maintained my non-resident status in the UK (spent less than 91 days in the UK) but for personal reasons next tax year I would like to spend more time in the UK.

I have spoken to a tax expert in the UK and it seems that if I want to spend more time working from home then it is inevitable that I will become resident in the UK for tax purposes. What I am unclear of (and the tax expert I spoke to was not much help on this) was the actual practicalities of this arrangement.

Some of the things I am concerned about:

1) How will the tax be collected by HMRC? Will I just file my tax return and declare my Swiss income and then they will send me a bill? Does my Swiss employer have to register for PAYE?

2) What about UK social security? Do I need to pay it? How do I pay it?

3) Since I will be working from home in the UK for a Swiss employer. Could the Swiss employer be regarded as having a taxable presence in the UK and thus be liable for UK corporation tax?

While my Swiss company is more than happy to let me work from home in the UK, they are not familiar with this arrangement and cannot offer any advice. All of the information I can find online relates to the question of how residency is tested but I can't find anything about the actual practicalities of paying tax in the UK and Switzerland.

If anyone has any personal experience with this arrangement then I'd be very interested to hear from them. Furthermore, if anyone knows a tax expert with experience of this situation then I would very much appreciate if you could please share their contact details.

Thanks!
I write sometimes on this issue.

It is unusual to be dual-tax-resident in the UK and Switzerland, but it does happen. It is possible to appeal under the Tax Treaty against the effects of that, but not always worthwhile. Often the issue can be resolved administratively. See, for example: http://www.hmrc.gov.uk/manuals/dtmanual/DT18153.htm

On both a theoretical and practical basis, the most important conflict, at least of high-net-worth individuals, is the Swiss wealth-tax component of Confederation, Cantonal and Communal tax: there is no credit against this against UK tax. And of course British income and consumption tax rates reflect this (they may be higher).

There is a Social Security (i.e. AVS/NIC) Totalisation Agreement (double contribution agreement) https://www.gov.uk/national-insurance-if-you-go-abroad . You need not pay contributions to both unless you choose to do so: this would normally help the low-paid and certain self-employed individuals and perhaps some persons on the threshold of retirement. If you are subject to NIC (not likely if you are only going to be dual-resident for a few years, as there is (I'm not looking it up to confirm, but most Totalisation Agreements have such clauses) a provision that those in the UK for only a few years continue to pay into the other country's system. (Just as well, since State Pension isn't normally payable if you don't have 10 years' credits -- and parenthetically every British person should use one of the (several) workarounds to try to get 30 years of credits since it's a cheap investment for a decent payout. Voluntary Class 3 is the most expensive -- £722.80 -- see the alternatives: https://www.gov.uk/personal-tax/national-insurance ) If you pay NICs as an employee of a foreign non-resident company you will probably be exempted from the employer's portion of the NICs: that's a gift to certain such workers, and to employees in Britain of foreign governments.

British taxation is, for those with significant non-wage earnings, by self-assessment. Your Swiss earnings may fit on form SA106 https://www.gov.uk/government/public...-foreign-sa106

It is wildly improbable that your Swiss employer will be deemed tax-resident as a corporation simply because you are working in the UK. The question is whether the firm is "doing business" in the UK, and that's a complicated issue. Having a local representative is not, by itself, enough to make a foreign firm taxable. Does it actively market in the UK, and have UK customers? Does it have a "permanent establishment" (a term of art) in the UK?

Your Swiss employer does NOT need to, and should not (although he can, but it will cost him and he'd lose the exemption from employer share of NIC) register for PAYE. You can be taxed as if you were self-employed, paying instalments to HMRC (probably after your first SA100 self-assessment return.) You'd be billed for your first year's tax in arrears.

Despite spending more than 90 days in the UK you might not be resident. It all depends. https://www.gov.uk/government/public...-tax-liability I think this is especially true if your long stay is only in one particular year. Think of "ordinary residence" as well as "residence". Of course you've only been away 2 years so HMRC will tend to think of you as a returning resident.

Filing Swiss taxes despite being based abroad is easy. You need to decide whether you want to remove yourself from Swiss taxation and onto British taxation. You haven't provided enough information for me to give you any opinion. What does your Mandataire fiscal / Begriff Bevollmächtigter say?

Sorry, the above isn't legal advice, just some things that came to mind as I ready your query.
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Old 24.02.2015, 17:32
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Re: Dual Taxation (UK/Swiss) Practicalities

Thank you for your detailed response! Let me try to elaborate some more on the issues you raise:

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I write sometimes on this issue.

It is unusual to be dual-tax-resident in the UK and Switzerland, but it does happen. It is possible to appeal under the Tax Treaty against the effects of that, but not always worthwhile. Often the issue can be resolved administratively. See, for example: http://www.hmrc.gov.uk/manuals/dtmanual/DT18153.htm
I suppose it is possible that I would be judged to have UK tax-residency and not Swiss tax-residency. I did not think of this scenario. Let's say I file my UK tax return and say I've been in the UK for more than 90 days. What happens then: do HMRC contact me? How is my tax residency status actually decided and who do I speak to about it?

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On both a theoretical and practical basis, the most important conflict, at least of high-net-worth individuals, is the Swiss wealth-tax component of Confederation, Cantonal and Communal tax: there is no credit against this against UK tax. And of course British income and consumption tax rates reflect this (they may be higher).
I am not a high-net-worth individual so I do not think this should be a major issue for me.

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There is a Social Security (i.e. AVS/NIC) Totalisation Agreement (double contribution agreement) https://www.gov.uk/national-insurance-if-you-go-abroad . You need not pay contributions to both unless you choose to do so: this would normally help the low-paid and certain self-employed individuals and perhaps some persons on the threshold of retirement. If you are subject to NIC (not likely if you are only going to be dual-resident for a few years, as there is (I'm not looking it up to confirm, but most Totalisation Agreements have such clauses) a provision that those in the UK for only a few years continue to pay into the other country's system. (Just as well, since State Pension isn't normally payable if you don't have 10 years' credits -- and parenthetically every British person should use one of the (several) workarounds to try to get 30 years of credits since it's a cheap investment for a decent payout. Voluntary Class 3 is the most expensive -- £722.80 -- see the alternatives: https://www.gov.uk/personal-tax/national-insurance ) If you pay NICs as an employee of a foreign non-resident company you will probably be exempted from the employer's portion of the NICs: that's a gift to certain such workers, and to employees in Britain of foreign governments.
If I understand correctly, I would not have to pay NIC in the UK unless I have dual resident status for more than a few years? And if I do have to pay NIC I would not have to pay the employer's portion. This is great news!


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British taxation is, for those with significant non-wage earnings, by self-assessment. Your Swiss earnings may fit on form SA106 https://www.gov.uk/government/public...-foreign-sa106



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It is wildly improbable that your Swiss employer will be deemed tax-resident as a corporation simply because you are working in the UK. The question is whether the firm is "doing business" in the UK, and that's a complicated issue. Having a local representative is not, by itself, enough to make a foreign firm taxable. Does it actively market in the UK, and have UK customers? Does it have a "permanent establishment" (a term of art) in the UK?
This is good news! I would be working at home performing research so I would not be actively marketing anything the UK or interacting with any customers. It seems unreasonable to consider my office at home a "permanent establishment" of the company but I think I need to seek further clarification on this point.

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Your Swiss employer does NOT need to, and should not (although he can, but it will cost him and he'd lose the exemption from employer share of NIC) register for PAYE. You can be taxed as if you were self-employed, paying instalments to HMRC (probably after your first SA100 self-assessment return.) You'd be billed for your first year's tax in arrears.
great news

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Despite spending more than 90 days in the UK you might not be resident. It all depends. https://www.gov.uk/government/public...-tax-liability I think this is especially true if your long stay is only in one particular year. Think of "ordinary residence" as well as "residence". Of course you've only been away 2 years so HMRC will tend to think of you as a returning resident.
I plan to be spending more time the UK for the near future (next few years). I believe I will certainly be considered resident. I do not understand the difference between "ordinary resident" and "resident" I'm afraid.

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Filing Swiss taxes despite being based abroad is easy. You need to decide whether you want to remove yourself from Swiss taxation and onto British taxation. You haven't provided enough information for me to give you any opinion. What does your Mandataire fiscal / Begriff Bevollmächtigter say?
I have not considered the option of removing myself from Swiss taxation entirely? Under what conditions would this be possible given I will still be spending a lot of time in Zurich? Sorry i don't know what "Mandataire fiscal / Begriff Bevollmächtigter" means.

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Sorry, the above isn't legal advice, just some things that came to mind as I ready your query.
This post is incredibly helpful! Are you a professional tax adviser? If so, could we arrange to talk? If not, then I'm very impressed anyway! Thanks again!
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Old 24.02.2015, 17:42
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Re: Dual Taxation (UK/Swiss) Practicalities

I believe the OP will be conclusively resident in the UK after 90 days residence for the following reasons:-

The OP HAS been resident in the the UK during the last 3 tax years, therefore with 2 ties accommodation & UK employment over 40 days he WILL be resident.

If the OP has Family ties then he would become resident after 45 days in the UK.

The OP should contact the Inland Revenue as UK tax is self assessment.
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Old 24.02.2015, 22:17
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Re: Dual Taxation (UK/Swiss) Practicalities

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Thank you for your detailed response! Let me try to elaborate some more on the issues you raise:

I suppose it is possible that I would be judged to have UK tax-residency and not Swiss tax-residency. I did not think of this scenario. Let's say I file my UK tax return and say I've been in the UK for more than 90 days. What happens then: do HMRC contact me? How is my tax residency status actually decided and who do I speak to about it?
Normally you file a notice with HMRC that you are/are not tax resident and they react to that in due course. If they do not send you a notice to file SA100, then you should still file it. Just download a copy. See this page: https://online.hmrc.gov.uk/shortforms/form/PT_CertOfRes and other advice on the HMRC Web site.

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I am not a high-net-worth individual so I do not think this should be a major issue for me.
Sorry to hear that.

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If I understand correctly, I would not have to pay NIC in the UK unless I have dual resident status for more than a few years? And if I do have to pay NIC I would not have to pay the employer's portion. This is great news!
You do not have to pay both NIC and AVS/AHV. Indeed the Swiss Government no longer allows residents of other EU/EEA countries to pay in voluntarily (Swiss citizens living in non-European countries can and do. I did for some years and now collect a small AVS pension as well as a partial UK State pension and some other countries' as well. This is something that can be gamed if one is aware of the rules early enough in life.)

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This is good news! I would be working at home performing research so I would not be actively marketing anything the UK or interacting with any customers. It seems unreasonable to consider my office at home a "permanent establishment" of the company but I think I need to seek further clarification on this point.
It seems to me that if you are a British citizen and you are spending more time in the UK than in Switzerland and if your centre of interests is in the UK and you have a home there and not in Switzerland the fact that you work for a Swiss employer does to make you a Swiss resident. I think, objectively, you will be a UK resident and not a Swiss one and that you should tell both countries' tax authorities what you are doing when you move.

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I plan to be spending more time the UK for the near future (next few years). I believe I will certainly be considered resident. I do not understand the difference between "ordinary resident" and "resident" I'm afraid.
A simplistic definition of "ordinary residence" is being, or intending to be, tax resident of the UK for 3 years or more. As I wrote earlier, HMRC will almost certainly deem you to be a returning resident. You would then notify the Swiss tax authorities that you have left and, if they ask, provide a letter from HMRC that you are now subject to full worldwide taxation in Britain.

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I have not considered the option of removing myself from Swiss taxation entirely? Under what conditions would this be possible given I will still be spending a lot of time in Zurich? Sorry i don't know what "Mandataire fiscal / Begriff Bevollmächtigter" means.
Sorry. A mandataire is what in Britain would be a tax accountant or a tax return preparer. It occurred to me after I wrote my posting that because (unlike me) you are not a Swiss citizen you are probably not filing tax returns with your canton and commune. I do even though I spend more time in the UK than Switzerland because I have Swiss property.

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This post is incredibly helpful! Are you a professional tax adviser? If so, could we arrange to talk? If not, then I'm very impressed anyway! Thanks again!
I am a lawyer not an accountant. Tax lawyers don't do tax returns and I only do them for family and friends. You can DM me if you like and I'll answer a reasonable number of questions. I have a Swiss landline telephone number (Cablecom) that rings on my iPhone for free. I can give you the number by DM later. It's quite remarkable given what NATEL charges for roaming; I have one of those too. In fact it's cheaper to use my UK O2 than NATEL, even in Switzerland. (My UK Vonage Extensions app is nice, but only allows outgoing calls, not incoming. And because the caller ID shows up as my home number people often try to ring me back on that number even when I'm not there.)
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Old 24.02.2015, 23:28
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Re: Dual Taxation (UK/Swiss) Practicalities

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A simplistic definition of "ordinary residence" is being, or intending to be, tax resident of the UK for 3 years or more. As I wrote earlier, HMRC will almost certainly deem you to be a returning resident. You would then notify the Swiss tax authorities that you have left and, if they ask, provide a letter from HMRC that you are now subject to full worldwide taxation in Britain.
)
You can forget your simplistic definition, there is a statutory definition of UK residence that became law at the start of the current year. It has nothing to do with your 'intentions'.

Depending on the no of days yo spent in the UK over the last 3 years, they may conclude you never left the UK unless you had a full time contract of employment in CH in which case you would be definitely non resident.

You deregister & pay any outstanding tax in cash when you leave CH. The UK revenue will not provide such a letter as UK taxation is subject to self assessment.
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Old 27.02.2015, 17:47
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Re: Dual Taxation (UK/Swiss) Practicalities

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You can forget your simplistic definition, there is a statutory definition of UK residence that became law at the start of the current year. It has nothing to do with your 'intentions'.

Depending on the no of days yo spent in the UK over the last 3 years, they may conclude you never left the UK unless you had a full time contract of employment in CH in which case you would be definitely non resident.

You deregister & pay any outstanding tax in cash when you leave CH. The UK revenue will not provide such a letter as UK taxation is subject to self assessment.
"Ordinarily resident" is a term of art: http://www.hmrc.gov.uk/manuals/cbtmanual/CBTM10020.htm The encyclopaedic treatise "Simon's Taxes" has chapter and verse.

"Resident" is something else.

Domicile is more keyed to "intention" but one can be ordinarily resident on arrival if the intention is to stay long enough.

It's all on the HMRC Web site. The different concepts apply for different purposes. If one is domiciled in the UK his or her estate can be subject to IHT years, decades even, after definitive departure. Whether HMRC can collect its money from the overseas heirs is another story. Unless there is UK property. That wasn't the question, but "domiciled" and "ordinarily resident" can crop up when you least expect it.

And the OP is returning from abroad after two years. Best to get a UK accountant and anticipate the issues, not depend upon a public forum.
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Old 27.02.2015, 17:52
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Re: Dual Taxation (UK/Swiss) Practicalities

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"Ordinarily resident" is a term of art:
http://www.hmrc.gov.uk/manuals/cbtmanual/CBTM10020.htm

"Resident" is something else.

Domicile is more keyed to "intention" but one can be ordinarily resident on arrival if the intention is to stay long enough.

It's all on the HMRC Web site. The different concepts apply for different purposes.
Sorry but where did I talk about ordinarily resident or domicile?

I was talking about being liable to taxes in the UK, nothing more, perhaps you should download, read & understand the Statutory definition of UK residence which is now law. There are no if's & buts it's very clear.
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Old 27.02.2015, 18:00
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Re: Dual Taxation (UK/Swiss) Practicalities

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Hello All!

I am a UK citizen who has been working full time in Zurich for the last 2 years. Up until now I have maintained my non-resident status in the UK (spent less than 91 days in the UK) but for personal reasons next tax year I would like to spend more time in the UK.

I have spoken to a tax expert in the UK and it seems that if I want to spend more time working from home then it is inevitable that I will become resident in the UK for tax purposes. What I am unclear of (and the tax expert I spoke to was not much help on this) was the actual practicalities of this arrangement.

Some of the things I am concerned about:

1) How will the tax be collected by HMRC? Will I just file my tax return and declare my Swiss income and then they will send me a bill? Does my Swiss employer have to register for PAYE?

2) What about UK social security? Do I need to pay it? How do I pay it?

3) Since I will be working from home in the UK for a Swiss employer. Could the Swiss employer be regarded as having a taxable presence in the UK and thus be liable for UK corporation tax?


While my Swiss company is more than happy to let me work from home in the UK, they are not familiar with this arrangement and cannot offer any advice. All of the information I can find online relates to the question of how residency is tested but I can't find anything about the actual practicalities of paying tax in the UK and Switzerland.

If anyone has any personal experience with this arrangement then I'd be very interested to hear from them. Furthermore, if anyone knows a tax expert with experience of this situation then I would very much appreciate if you could please share their contact details.

Thanks!
About " Could the Swiss employer be regarded as having a taxable presence in the UK and thus be liable for UK corporation tax? "

If that was the case then a lot of companies who "outsource" would be paying taxes in, for example, India.
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Old 27.02.2015, 18:43
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Re: Dual Taxation (UK/Swiss) Practicalities

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"Ordinarily resident" is a term of art: http://www.hmrc.gov.uk/manuals/cbtmanual/CBTM10020.htm The encyclopaedic treatise "Simon's Taxes" has chapter and verse.

"Resident" is something else.
Ordinary residence is not a thing as of April 2013. The only place it applies is historically, for people ordinarily resident before that date. This is not relevant to OP, who is asking about their future residence.

Primary source: the Statutory Residence Test is in schedule 45 of the Finance Act 2013, and abolishing the concept of ordinary residence appears, at first glance, to be dealt with in schedule 46. http://www.legislation.gov.uk/ukpga/...0130029_en.pdf

Secondary sources:
As fatmanfilms says, the rules are clear. OP should take a look at them, either the RDR3 guidance, or one of the easily-digestible summaries available. OP's emphasis on a 90 day cut off is oversimplified / wrong, but the full rules are easy enough to get your head around.

Last edited by armed_neutrality; 27.02.2015 at 18:50. Reason: quote from PWC doc
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Old 27.02.2015, 19:04
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Re: Dual Taxation (UK/Swiss) Practicalities

One thing I've wondered about is transitional overlap due to the tax years not aligning. This must be really common. UK is April to April, but CH is January to December.

So someone moving here from the UK early-mid 2014 will have just submitted their UK tax return for the year to April 2014, for which they were resident in the UK. And they will be about to submit a CH tax return for the year to December 31 2014. There is an overlap of 95 days. How is this dealt with?

This must happen to people moving in the other direction, too. And you must get 9 month as well as 3 month overlaps sometimes, depending on the moving date.

Note that the HMRC "split year" treatment doesn't necessarily help. If someone moves from UK to CH on April 6, there will be no split year for the UK, but there will still be the 95 day overlap and thus potential for double taxation on all sorts of income attributable to that period.

I asked my adviser about this recently and his answer was rather vague. I'm hoping it will become obvious looking at the complete proposed CH tax return, once he's prepared it.
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Old 27.02.2015, 20:56
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Re: Dual Taxation (UK/Swiss) Practicalities

I am almost always sorry when I post anything on this forum because invariably there is a risk of flaming, when all I am trying to do is alert people who find links on a search engine and who wrongly think the answers are simple.

In the UK papers today there is an issue of a mother and child where the father works in Germany and therefore the seriously disabled child is ineligible for UK benefits to the degree these are handled by HMRC.

People who proudly criticise may get satisfaction from it. But they chase away those who may have something useful to say, and leave only T.S. Eliot's Hollow Men.

Bye.
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Old 27.02.2015, 21:54
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Re: Dual Taxation (UK/Swiss) Practicalities

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I am almost always sorry when I post anything on this forum because invariably there is a risk of flaming, when all I am trying to do is alert people who find links on a search engine and who wrongly think the answers are simple.
Come on, some of your info was out of date and it was better to correct it than let it stand. That's all.
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People who proudly criticise may get satisfaction from it. But they chase away those who may have something useful to say, and leave only T.S. Eliot's Hollow Men.

Bye.
Don't be so melodramatic!
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