Go Back   English Forum Switzerland > Help & tips > Finance/banking/taxation  
Reply
 
Thread Tools Display Modes
  #1  
Old 23.02.2011, 11:24
Newbie
 
Join Date: Feb 2011
Location: Zurich
Posts: 8
Groaned at 0 Times in 0 Posts
Thanked 4 Times in 3 Posts
turingmachine has no particular reputation at present
Double Tax Agreement

Hello,

I will be moving to Zurich this week to to start a 6 months contract as a software engineer. I was wondering if someone could help me as I am unsure if I am liable to pay an additional tax if I go back to the UK after 6 months. I will be taxed as a Suisse resident through a 3rd party payroll company and will be taxed 30% and my rate is 830CHF a day.

The recruiter has told me that I won't be taxed but a colleague has told me to stay in Switzerland for a year so I am not liable for any tax if I go back to the UK; otherwise I will had to pay the difference between UK and Suisse tax.

Thanks,
Jim.
Reply With Quote
  #2  
Old 23.02.2011, 12:49
Newbie
 
Join Date: Feb 2011
Location: Zurich
Posts: 8
Groaned at 0 Times in 0 Posts
Thanked 4 Times in 3 Posts
turingmachine has no particular reputation at present
Double Taxation Agreement

Hello,

I am from London and will be moving to Zurich this week to to start a 6 months contract as a software engineer. I was wondering if someone could help me as I am unsure if I am liable to pay an additional tax if I go back to the UK after 6 months. I will be taxed as a Suisse resident through a 3rd party payroll company and will be taxed 30% and my rate is 830CHF a day.

The recruiter has told me that I won't be taxed but a colleague has told me to stay in Switzerland for a year so I am not liable for any tax if I go back to the UK; otherwise I will had to pay the difference between UK and Suisse tax.

Thanks,
Jim.
Reply With Quote
  #3  
Old 04.05.2011, 23:26
Junior Member
 
Join Date: May 2011
Location: London, UK
Posts: 63
Groaned at 0 Times in 0 Posts
Thanked 54 Times in 18 Posts
IanSmithUK has earned some respectIanSmithUK has earned some respect
Re: Double Taxation Agreement

Given your post was made in February, I would be interested to hear what you did, and if you went to Switzerland anyway, what your experience has abeen.

I am in a similar position in that I have been offered a six month contract and need to make a decision in the next day or two.

Thanks to these forums I found out about the "double-taxation" rule which my agency had known about but neglected to inform me about until I brought it up this afternoon. The agency called it the "183 day rule" and after I pointed out that we've gone from "earn about 100/day more than your UK daily rate through your own UK company at the moment" to "and pay a lot more tax and insurance, and pay for a higher cost of living, and expensive accommodation and occasional flights back to UK, and work a longer standard week etc" this wasn't looking like the contract that had been "sold" to me.

Like many (I suspect), I have been a bit naive going in and hadn't realised the various issues around Switzerland (had been told I couldn't use my UK company and would have to form a Swiss company, but not that it required 10,000 deposit). The trouble is the only contracts in my line of work (Silverlight development) seem to be the investment banks and I can't get a sniff of an interview in London for some reason so a contract in Switzerland seemed a good way of getting into this line of work that might in a year's time help me break the Catch-22 situation in London.

The agency are now talking about trying to negotiate a new one year contract with a longer (3 month) notice period to get round the double-taxation rule, but I'm not convinced that helps much as the end-client seems to have some track record of suddenly deciding to cut back on contractors or introduce 10% pay reductions or enforced holidays. Not getting a renewal on a six month contract, or being "let go" early would be a financial disaster with UK tax of 40% having to be paid on top of the Swiss tax.

Would love to hear any other contractor's experiences of starting out with this sort of six month contract.
Reply With Quote
  #4  
Old 04.05.2011, 23:55
Ittigen
 
Posts: n/a
Re: Double Taxation Agreement

Many years ago I was told by BAE Stevenage personnel department that any money earned abroad should be kept off shore during the first tax year (6 April to 5 April) and should only be brought into the UK during (or later than) the following tax year.

Obviously you need to ask your UK tax inspector if this loophole is still open.
Reply With Quote
  #5  
Old 05.05.2011, 08:08
NotAllThere's Avatar
Forum Legend
 
Join Date: Oct 2008
Location: Baselland
Posts: 12,383
Groaned at 191 Times in 168 Posts
Thanked 17,892 Times in 7,278 Posts
NotAllThere has a reputation beyond reputeNotAllThere has a reputation beyond reputeNotAllThere has a reputation beyond reputeNotAllThere has a reputation beyond reputeNotAllThere has a reputation beyond reputeNotAllThere has a reputation beyond repute
Re: Double Taxation Agreement

It's very simple. If you live in country A and are tax resident in A and B, then you pay taxes in A, as normal,,and submit a tax return to B. In your tax return you declare the taxes you paid in A, and that is deducted from your B liability. You then pay the difference. There are no refunds in double taxation - you pay the higher amount.

Given that, you need to work out your tax residency. You can be resident in more than one country. If you're in Switzerland for six months, then return to the UK, then you'll most likely be resident in both countries, and pay tax in CH, then the remainder in the UK.

Bear in mind that rates in Switzerland haven't fallen much in the last few years, but the exchange rate (to the UK) has altered dramatically. I'm convinced that agencies are using this to give what seems like a good rate to UK contractors, while enlarging their profit margin. It's what I would do...

You cannot work through your UK ltd co in Switzerland, except under very specific circumstances. You must go through a payroll company, or create a Swiss company, which takes 20'000CHF + a few K of fees.

Ittigen's loophole is almost certainly closed.
__________________
Down with racism. Long live miscegenation!
Reply With Quote
  #6  
Old 15.05.2011, 12:45
Newbie
 
Join Date: Feb 2011
Location: Zurich
Posts: 4
Groaned at 1 Time in 1 Post
Thanked 0 Times in 0 Posts
apacuk has no particular reputation at present
Re: Double Taxation Agreement

In general this is correct. However, between UK and Switzerland the Double Taxation Treaty is more beneficial and seems to suggest that Swiss earned income, if you're paid by a Swiss company and using a Swiss office, is only taxable in Switzerland and not taxable in the UK at all.

The caveat is that when the UK Tax work out your UK tax bands, they can take into account your Swiss earning in order to do so - so you'll probably find yourself in the UK 40% band.

This is what I'm being advised - I'm interested in any "real life" experiences of people who have done this. Of course, if you did pay UK tax on your Swiss earnings less a credit for Swiss tax paid, even though I believe this is wrong, I don't expect HMRC will correct anyone.
Reply With Quote
  #7  
Old 31.10.2011, 18:39
Newbie 1st class
 
Join Date: May 2008
Location: vaud
Posts: 13
Groaned at 0 Times in 0 Posts
Thanked 4 Times in 3 Posts
lankylewis has no particular reputation at present
Re: Double Taxation Agreement in UK

Hello
Not sure if this adds anything to the thread but I have been thinking about the dble taxation agreement with the UK and wondering if I have understood the situation correctly.

I am non-res in the Uk and now living is Switzerland.

We have an income in the UK as well as my salary here. My UK income is added to my swiss income to calculate the tax rate I pay on my Swiss salary. Does that sound correct?

Thanks for any advice.
Reply With Quote
  #8  
Old 31.10.2011, 19:54
Senior Member
 
Join Date: May 2008
Location: Basel
Posts: 391
Groaned at 3 Times in 3 Posts
Thanked 309 Times in 149 Posts
terramundi has an excellent reputationterramundi has an excellent reputationterramundi has an excellent reputationterramundi has an excellent reputation
Re: Double Taxation Agreement

yes, that's right. They use it to calculate your tax rate but you don't pay tax on it. However you pay UK tax on UK income (if that income is over the tax free allowance) - you'll have to fill in a UK tax return every year in order to pay your UK tax if you haven't had it deducted at source

We have never been asked by the UK authorities about our foreign income to calculate our tax rate in the UK - we are non-resident but domiciled in the UK. They have only been interested in income earned in the UK
Reply With Quote
  #9  
Old 31.10.2011, 21:32
fatmanfilms's Avatar
Forum Legend
 
Join Date: Apr 2010
Location: Verbier
Posts: 18,676
Groaned at 354 Times in 283 Posts
Thanked 18,385 Times in 9,921 Posts
fatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond repute
Re: Double Taxation Agreement

To stop being liable to UK taxes you have to 'LEAVE' permanantly , the definition of leave is open to interpretation however unless you are away for at least 1 UK tax year you will not have left.

If you have a wife, children & house available to you in the UK, you visit every 2nd weekend, it's most unlikely that the revenue will accept you have 'left permanantly', you would just be working away from home.

UK tax is self assesment, it's up to you to pay, not up to the Revenue to ask you to pay......
Reply With Quote
  #10  
Old 25.05.2012, 14:32
Senior Member
 
Join Date: May 2012
Location: Zurich
Posts: 285
Groaned at 8 Times in 5 Posts
Thanked 98 Times in 78 Posts
The Spartan has no particular reputation at present
Re: Double Tax Agreement

Nice to see someone had good advice before coming here, I for one had none and was told conflicting things. Your friend was indeed correct If you're not out of the country for a whole tax year you have to pay taxes in the UK when you return.

My searches to find some loophole have proved fruitless so I'm thinking of knocking it on the head and going back as lets face it, it's a bit of a sham in the sense that I lose 30% of my income here (only 8-9% in tax) and then the taxman in UK wants a slice on top.
Reply With Quote
Reply




Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Double taxation US/Swiss george77 Finance/banking/taxation 13 01.08.2019 03:20
www.frenchtaxonline.com and double taxation acrossthepond Finance/banking/taxation 0 02.09.2009 14:11
revised double taxation agreement with the US dino Finance/banking/taxation 8 12.07.2009 22:09
double taxation-- how to avoid? American working in CH ignorant bliss Finance/banking/taxation 28 01.07.2009 15:56


All times are GMT +2. The time now is 23:13.


Powered by vBulletin® Version 3.8.4
Copyright ©2000 - 2020, Jelsoft Enterprises Ltd.
LinkBacks Enabled by vBSEO 3.1.0