I have a UK based ltd company and have UK based clients.
My wife has got a job in Italy for a year. If I just work in Italy for my UK company and still bill from the UK what are the tax implications.
Essentially I will just be making phone calls from Italy to my UK accounts and servicing them from there (an online recruitment business).
Is there anything I need to be aware of or any links to information?
Replies (16)
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If you are in Italy how UK "based" is your company is the obvious question to ask, presuming you are the sole employee and sole director consider where control will likely be being exercised ?
I would contact an accountant versed in UK and Italian corporate, income taxes and vat before doing anything especially re Vat place of supply and of course the big unknown of cross border services come 1 January 2021.
Couple of links to place of supply rules (as they are right now, no idea post 1 January) and Double Tax Convention.
Afraid I cannot be much more help, international tax is not a subject I know but I do know that good professional advice may well pay for itself multiple times.
https://www.gov.uk/guidance/vat-how-to-work-out-your-place-of-supply-of-...
https://assets.publishing.service.gov.uk/government/uploads/system/uploa...
As has already been said, get professional help sooner rather than later. And don’t rely on advice from a small UK or Italian accountant; most will not have dealt with these issues before. Get help from an international tax specialist who can demonstrate expertise.
For what it’s worth your move is likely to result in your company being non resident for UK tax purposes and instead being taxable in Italy. You will still need to comply with all statutory filings in the UK but will have many more additional obligations in Italy. You will want to avoid the situation where you end up being taxed in the wrong country initially and then have to pay tax to the second jurisdiction while chasing a repayment from the first. This often happens when people don’t take advice; the tax authority in any country will be happy to take tax you declare even when it is not due them. They are far more reluctant to give it back when you realise your mistake after the second country is asking for the tax you owe them.
Another voice for taking advice.
Tim mentioned the company. You also need advice for your personal situation. The tests are different, as are the implications. On the facts as given, it's not unlikely that you will remain resident in the UK for tax purposes throughout, even though you will presumably also be tax resident in Italy.
But
Is it that complicated? You are not going to be away for a complete tax year, so don't need to inform HMRC that you have "left" the UK. You are not working in Italy in the same sense as your wife, and if she rents somewhere there in her name, you are just visiting.
In reverse, visiting the UK for a year would make you, and any companies you managed and controlled, tax resident here.
I wasn't suggesting he breaks the law, but if the OP was happy to keep his UK affairs as they are, and he were able to, he might be able to consider things like making several visits rather than one, keeping enough ties to the UK. I doubt that HMRC would mind if he continued to pay tax here, so if he wanted to take advice it would be on the Italian side.
Perhaps the OP can add more detail?
@Arthur, the issues is less the UK, who will , as you say quite happily take your tax.
The issue is our friends in the sunshine who will probably want a slice if the business is being operated from there.
I have a client who is French with a UK company (largely operating in the UK, but controlled from France) who told me the French didn't want any tax...............5 years later and he ended up paying a huge amount of tax in France. I asked him every year "are you sure, are you taking proper advice?" and put a HUGE disclaimer on my letters to him. Despite engaging a cross border specialist we are yet to recover a penny in CT. He now have very limited UK operations, as signed off by a very expensive French accountant. Health Secretaries Horse/bolted etc etc, and if it happened again I would ask for the third party advice in writing to at least ensure he had some, even if I didnt understand it!
Just as Tim said (post 3).
(Newly conscious that short replies may be misconstrued, I am lengthening this one wholly, exclusively and unnecessarily to record that it contains absolutely no negative implication. I am simply endorsing Tim's earlier reply.)
Definitely get some specialist advice. I have a vague memory that thinks the Italians have some rules about consultant/one man band companies being transparent so you would be taxed personally on company income whilst resident there.
Do some planning!
I more have recollections from the early 90s of being told that Italian companies kept two sets of books and traditionally paid their retail staff two salaries- their official one and the top up one (from the under declared sales books)
Whilst we did not operate in Italy (though there was a flurry of discussion re an opportunity plus once the idea of our taking our Benetton offering into the USA that came to naught) I did get to spend a day up at Edinburgh University Law Library trying, without much success, to get my head round Italian Company Law (Have you ever seen what they do with Groups and cross holdings, the intra group charts are like works of art, the Benetton chart used to fold out in a horizontal sheet from the back of their stylish accounts and stretched sideways for circa six feet!!)