Client is a ltd co, providing software dev services to a client based in the EU. Client (director) plans to move to Germany (unrelated to the contract) for 12 months (no longer) and I am looking at the implications of this temporary stay overseas on (principally) the company.
Client suggested setting up a German company and "invoicing the contractor through this during his stay". I can't see any logical reason for doing that personally and for just 12 months, I think this would overly complicate matters. The way I see it, there is no reason for him not to continue working through the UK company (assuming UK tax resident status can be maintained for the company and the director - he won't be there for a full tax year).
I am struggling with the Germany/UK DTT much more than I have with other treaties which have been much clearer. I suspect the director will become a German tax resident aswell as remaining a UK resident, but that the DTA will prevent double taxation. German advice is also being sought.
If this was a permanent relocation, then the company would become non-resident along with the director, but for 12 months I'm not sure. I don't think it will, as whilst the company will be operated from Germany for 12 months, I would argue that this doesn't constitute a 'permanent establishment'. Yes, central management and control will be carried out from Germany for 12 months but will then revert back to the UK.
It is a minefield, so any nuggets of wisdom will be gratefully received!