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UK Citizen working for a foreign employer in UK

UK Citizen working for a foreign employer in UK


I have a contract with a GmbH, live & deliver services in the UK. How do I file taxes & pay NIC, PAYE etc?  I am a UK citizen.  My contract is an english contract with the GmbH (german company).  There is also a UK Ltd company that has been set up as a subsidiary, however I have no contractual relationship with the UK ltd company, although they have listed me as a Director of this company.  This is a new company and as such there are no funds in it yet. I want to ensure I am optimising my tax situation, while ensuring I follow all the rules!  Help!


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03rd Dec 2012 14:51

well it depends probably on what the contract says

you say deliver services so it sounds as if you are not employed by the holding company but rather are a self employed contractor. the fact that you are a director of the subsidiary does not make you an employee necessarily. more details please

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03rd Dec 2012 15:22

Hi there!

My contract is an employment contract.  I am an employee of the GmbH (German Ltd company).  


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By afairpo
03rd Dec 2012 15:59

You'll pay income tax and NICs, the question is how …

As an employee, you'll pay income tax and NICs on your employment earnings, the only question is the mechanism for collection.

Depending on the structure/arrangements, the UK subsidiary may be your host employer for PAYE/NIC purposes - if so, it will have to deal with PAYE/NICs etc. The lack of funds is irrelevant. As you are a director of the UK sub, it seems fairly likely that it could be regarded as a host employer. If the UK sub is a host employer then the reporting/filing obligations are for the UK company to deal with, although as a director it would be a good idea to make sure that it is complying with its obligations. 

If the arrangements are such that the UK subsidiary is not your host employer for PAYE, then your German employer is liable to register in the UK and account for NICs (at least) in respect of your earnings (that's primary and secondary NICs). You will have to deal with accounting for  income tax on your earnings - either by direct payments arrangements agreed with HMRC, or via your self-assessment tax return.

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By kevlaw
03rd Dec 2012 19:35

Not sure that is quite right...

My understanding is that where there is no UK employer then the person liable is the employee.

Therefore the employee should register for PAYE himself, calculate his own deductions, and act as his own employer.


EDIT: After looking into this a bit, I'm not sure that my understanding is correct where the employer is another EU member state!

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By afairpo
03rd Dec 2012 22:27

EC Reg 883/2004 and s689 ITEPA

On NICs - EC Regulation 883/2004 means that, from 1 May 2010, an employer in another EU Member State with employees in the UK is treated as having a place of business and registered in the UK for NIC purposes and has to pay secondary NICs and deduct contributions from the employee. As a result, at a minimum, the NICs have to be dealt with by either the UK or the German company - not by the employee.

On PAYE generally - it depends on whether there is a UK 'relevant person' - s689 ITEPA; being a director of the UK company might be enough to make that company a relevant person (or host employer) for these purposes, depending on the circumstances/arrangements.

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04th Dec 2012 15:53

i think i agree

the uk subsidiary looks as if has been set up to service the UK and that you will be paid thro that, ask the germans about PAYE

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