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Old 06.07.2007, 16:27
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Double Tax Treaty with the UK

Hi all,

My apologies if this subject has already been handled.

I have an offer for a six-month+ "contract" in Switzerland. In reality, I will go on the payroll for this purpose and taxes will be deducted at source.

My understanding is that my UK limited company will simply be dormant during this period and I will not be liable for tax back in the UK on any Swiss earnings.

Does anyone know if this thinking is correct, if there are any caveats etc. (for example suppose the budget was cut and with it, me)...

Thanks for any help!
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Old 06.07.2007, 17:28
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Re: Double Tax Treaty with the UK

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Hi all,

My apologies if this subject has already been handled.

I have an offer for a six-month+ "contract" in Switzerland. In reality, I will go on the payroll for this purpose and taxes will be deducted at source.

My understanding is that my UK limited company will simply be dormant during this period and I will not be liable for tax back in the UK on any Swiss earnings.

Does anyone know if this thinking is correct, if there are any caveats etc. (for example suppose the budget was cut and with it, me)...

Thanks for any help!
Your uk limited company while associated with you stands on its own. If you are not billing through your uk company then there are no tax liabilities subsequently related to your earnings in Switzerland. What is however interesting is the go on the payroll for this purpose statement. Whose payroll? An agents? If so then maybe you are being badly advised... see other posts in other threads
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Old 06.07.2007, 18:46
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Re: Double Tax Treaty with the UK

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Your uk limited company while associated with you stands on its own. If you are not billing through your uk company then there are no tax liabilities subsequently related to your earnings in Switzerland.
But a personal UK tax return will have to be completed at the end of March and the foreign earnings will have to be declared and the taxes paid will be declared as a deduction - unless you deregister for tax but if it's only for 6 months it's maybe not worth the bother.

The double tax treaty will apply but it is possible that, UK tax being higher, there will be some personal liability.
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Old 06.07.2007, 19:11
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Re: Double Tax Treaty with the UK

HM Revenue have a good site where you can find a lot of info - here.
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Old 07.07.2007, 14:44
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Re: Double Tax Treaty with the UK

Thanks all for your replies.

Well, putting some numbers on this: if I earn a gross of 18000CHF/month. If I then keep about 12.5-13.5CHF/month, depending on pension contributions, choice of living location, etc. etc. That's about 30% tax.

Assuming also that I don't want to lose my tax-residency in the UK (I certainly have no intention of doing this at the moment).

Am I looking at a possibility of paying another 10% of everything I earn in Switzerland back to the IR? (I guess it's also slightly dodgy vis-a-vis IR35 to switch to what is effectively permanent employment for this brief period, although I can put the argument that the client/skills are interesting enough to make this worthwhile as a temporary arrangement).

Finally, in response to Richard: I think going with the agency is the only practical solution at the moment because I am very much going to Switzerland on a 'try before you buy' basis at the moment; I have many reservations.
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Old 07.07.2007, 14:51
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Re: Double Tax Treaty with the UK

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Assuming also that I don't want to lose my tax-residency in the UK (I certainly have no intention of doing this at the moment).

Am I looking at a possibility of paying another 10% of everything I earn in Switzerland back to the IR?
If you are tax resident in the UK then you fill in a UK tax return, declare your gross foreign earnings, declare the tax paid in Switzerland as a deduction, and wait for the bill.
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Old 07.07.2007, 17:52
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Re: Double Tax Treaty with the UK

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If you are tax resident in the UK then you fill in a UK tax return, declare your gross foreign earnings, declare the tax paid in Switzerland as a deduction, and wait for the bill.
Sorry to bang on about this, but is there any way of putting a very approximate figure/percentage on the extra I might pay?
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Old 07.07.2007, 20:59
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Re: Double Tax Treaty with the UK

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Sorry to bang on about this, but is there any way of putting a very approximate figure/percentage on the extra I might pay?
I guess that depends on what you declare .
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Old 09.07.2007, 17:26
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Re: Double Tax Treaty with the UK

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Sorry to bang on about this, but is there any way of putting a very approximate figure/percentage on the extra I might pay?
Sorry to bang on about this (!), but would I be right in assuming that the agency that you want to have payroll you actually found you the contract? If so then you have few alternatives, if no then quickly PM me.

You effectively have two options here.
  1. You decide that you want to do a sabbatical and take 6 months of work. You then open everything as if you are intending to stay long term in CH - do the work and leave. Your pension contributions will be frozen for 5 years but your tax load will be low.
  2. You go through the route of making a split year declaration at HM tax office and see what figure they finally come out with. Note it is not really possible to say what this figure will be in advance as it has very much to do with what you can deduct and how much you are earning.
If you are earning somewhere around the SFR 900 per day then your net monthly income for Switzerland will be around:

Amount: 18,000
Deductions:
Agency: 3,000
AHV: 1,500
ALV: 300
BU/NBU: 300
PK: 1,150 minimum

So I guess you can reckon with 11.5 -12K ish

Tax liability will be around(very around) 2500 per month so your net net will be around SFr. 9K

As far as the UK are concerned you can then deduct all the additional costs of living over here as long as you maintain accomodation in the UK. So your income of 15K per month will fall to 10K per month which is 40% rate ie 4K and from that you can deduct 3K for Switzerlandish so UK will be in the region of 1K per month.

It is not that simple but it will work out about there...

Richard
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Old 30.07.2007, 17:55
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Re: Double Tax Treaty with the UK

"If you are earning somewhere around the SFR 900 per day then your net monthly income for Switzerland will be around:

Amount: 18,000
Deductions:
Agency: 3,000
AHV: 1,500
ALV: 300
BU/NBU: 300
PK: 1,150 minimum

So I guess you can reckon with 11.5 -12K ish

Tax liability will be around(very around) 2500 per month so your net net will be around SFr. 9K"

Hi with respect to the above Am I correct in thinking that after your payroll company has taken its deductions there is a further 2500 taken off resulting in the NET of 9K from a GROSS of 18K.
Basically 50%

Thanks for clarifying
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