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Old 16.05.2011, 18:01
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Contracting in the UK while resident in Switzerland

Tax is the concern. Has anyone done this?

As a UK citizen, C permit holder with familiy living in Switzerland, I guess I would be looking at using a UK umbrella company, or UK limited company. I would also hope to be spending more than 180 days in the UK. Trouble is, when I bring dividends back to Switzerland to pay bills, it is going to look like income, even though it has been taxed in the UK. Has anyone experienced this from a freelancer perspective, rather than as an employee of a Blue Chip relocating you?

Last edited by p42; 16.05.2011 at 18:15.
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Old 16.05.2011, 19:14
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Re: Contracting in the UK while resident in Switzerland

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Tax is the concern. Has anyone done this?

As a UK citizen, C permit holder with familiy living in Switzerland, I guess I would be looking at using a UK umbrella company, or UK limited company. I would also hope to be spending more than 180 days in the UK. Trouble is, when I bring dividends back to Switzerland to pay bills, it is going to look like income, even though it has been taxed in the UK. Has anyone experienced this from a freelancer perspective, rather than as an employee of a Blue Chip relocating you?
Based on my situation, which certainly has common features, I would say that firstly, if you are the company director of a UK company, the 180 days rule is not applicable, at least from a HMRC perspective.

Assuming your UK company had a UK business bank account then you would just transfer the dividend amount from your UK business bank account to a personal UK bank account. I don't believe what you then did with the money would not be of interest to the HMRC as long as you properly declare the dividend paid into your UK bank account.

I cannot comment on how Switzerland would view this but that's how things have been explained to me.

Hope it helps.
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Old 17.05.2011, 10:53
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Re: Contracting in the UK while resident in Switzerland

Your reply nicely explains how I would be paid out in the UK. Small salary and dividends to a personal account paid nett. However, I have outgoings in Switzerland, apartment rental, family living expenses, and a tax return to fill in for Switzerland.

So I would have a small overseas income to declare, and a larger overseas income from dividends. I am wondering what the likely Swiss tax implications of this are. Am I going to have to pay a Swiss pension on top of this? Hopefully my C Permit will be OK unchanged as it still has 4 years left.
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Old 17.05.2011, 11:14
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Re: Contracting in the UK while resident in Switzerland

Unfortunately, I cannot really offer any more advice from my own personal experience. What I can say is that as soon as you try to live in one country but have a company in another then you really need to seek professional advice from International Tax Specialists as things can get very messy, very quickly.

I've been told by my recruitment firm in the UK that the HMRC are being even stricter in these times of austerity, especially with newly formed companies in their first couple of years of trading. They may well consider it suspicious if you and your whole family does not actually live in the UK.

There are many accountancy firms in the UK that help contractors with their own companies. I'd give one of them a call in the first instance. Alternatively, there are a few contractor forums out there that may also have some more detailed answers for you.

Good luck!
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Old 17.05.2011, 11:29
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Re: Contracting in the UK while resident in Switzerland

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I would say that firstly, if you are the company director of a UK company, the 180 days rule is not applicable, at least from a HMRC perspective.
Link for this pls?
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Old 17.05.2011, 11:32
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Link for this pls?
My UK accountants told me this so no link however in my case.

I maybe should have rephrased the sentence to read 'in my case, as a director of a UK company, the 180 day rule is not applicable'.
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Old 17.05.2011, 11:39
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Re: Contracting in the UK while resident in Switzerland

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I've been told by my recruitment firm in the UK that the HMRC are being even stricter in these times of austerity, especially with newly formed companies in their first couple of years of trading. They may well consider it suspicious if you and your whole family does not actually live in the UK.
Good luck!
I can believe it.

I find it difficult to believe that there isn't a single expat on here who hasn't been tempted to go back to the UK and do a small contract, 6 or 12 months, while family remains here.

I don't intend avoiding tax advice, but knowing of someone who has actually made it work would give me more confidence before I start. Said tax specialist would need to be an expert in my local Kanton too.
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Old 17.05.2011, 13:25
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Re: Contracting in the UK while resident in Switzerland

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My UK accountants told me this so no link however in my case.

I maybe should have rephrased the sentence to read 'in my case, as a director of a UK company, the 180 day rule is not applicable'.
Must have meant from this perspective;

The golden rule of contracting abroad is simple: tax should be paid where money is earned. The only instance where this rule is waived is in the case of a permanent employee (not the director of a one-man company: see above) of a foreign company who has been seconded to work abroad. In this instance, tax may be paid to the authorities of the employer's country for the first 183 days. This scenario can almost never apply to a contractor. In the case of contractors, the ‘183-day rule’ does not therefore serve to allow the contractor to "choose" where to pay tax; instead, it dictates how long an individual may spend in the country before becoming tax-resident, and therefore liable for tax on their worldwide income.
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Old 17.05.2011, 14:32
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Re: Contracting in the UK while resident in Switzerland

I did a three month contract in the UK. My aim, however, was to not be taxed in the UK. I worked through my Swiss GmbH. There are two factors to consider, the company tax and the personal tax. For me, as the company generated no profit in the UK, there was no UK tax to pay. As I was not in the UK for long enough to be tax resident, I didn't have any personal tax liability there either. At least, that's the story my accountant and I have put together, from our interpretation of tax law - international tax law being notoriously grey. This was a while ago - things may have changed!

Given the current exchange rate, there would have to be a very special set of circumstances to tempt me to do even a short contract in the UK. What is still a good rate there, is very poor here. Why are you even considering it?

But your plan is to be resident in the UK. Your company tax will be UK - so no issues there. The question is the dividend income. If you get dividend income from the UK, upon which tax is already paid (hence the tax credit), then I would have thought the dual taxation treaty would mean there's no further tax to pay in Switzerland. That should be a question a reasonably competent local accountant should be able to handle.
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Old 20.03.2012, 03:58
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Re: Contracting in the UK while resident in Switzerland

I think this link gives some relevant information. After reading I am still unclear what the situation would be! Maybe you can interpret it better than me and post a short summary. There is also this form which gives some detailed info. Again, I was still clueless after reading it.

To me, it reads that only the dividends portion of a contractor's earnings is eligible for claiming UK Income Tax relief. I assume that Interest, royalties, pensions and purchased annuities are not really relevant.

Can someone suggest a tax consultant in the UK who I can pay to advise?

Last edited by MarkL2005; 20.03.2012 at 04:05. Reason: Added form link
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Old 20.03.2012, 08:56
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Re: Contracting in the UK while resident in Switzerland

Try asking in www.contractoruk.com
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