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Is NICs due?

Non-resi Director/employee

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H&W UK consultancy ltd. That family moved to Portugal 7/8years ago, no ties with UK, other than the ltd. I’m the registered office, all work is done on the oil rigs in international waters off Scotland. 

I spoke to Giles Mooney the other day who didn’t see from a UK CT/PAYE point of view why the salary couldn’t be, say, 95% of income to clear out any taxable profit, with no income tax on the non-resi Director/shareholder. 

1. Presumably no E’er / E’ee NICs either, as not a UK worker?

2. Does anyone know what his tax status in Portugal would be?

 Thanks 

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By Jdopus
20th Mar 2019 09:24

I'm not familiar with Portugal's tax rules, but it seems likely to me that his UK salaries will be taxable in the country he's resident in. There's no point in saving your client £1000 of UK tax if you make him liable to £3000 of Portugese tax. I would advise that you raise the matter with the client's Portugese accountant.

No NIC liability that I can see, but you may wish to check if your client wants to make voluntary contributions for the pension entitlement.

Thanks (1)
20th Mar 2019 17:17

Working on rigs in the UK sector is a tax and NIC minefield, so you need to take proper advice from someone who knows the sector, not a generalist.

1. The UK-Portugal DTA explicitly makes the UK offshore sector part of the UK for tax purposes, so your Portuguese resident is actually carrying out UK duties when on the rig. For a UK employer, if I have understood your post (central management & control may be in Portugal, but it's a UK-registered Ltd). What part of that is not taxable?
2. The DTA explicitly allows the UK to tax the UK employment income of Portuguese resident individuals.
3. The UK North Sea is the UK for NIC purposes. Both employer and employee have UK liabilities.
4. The offshore employment intermediary rules may apply, but that depends on the detail of the arrangements.

I could go on, but this isn't the place: take proper advice, both in the UK and in Portugal (the latter is probably only entitled to the second bite of the cherry - post-Brexit, it may take NICs in addition to any UK NICs, as we don't have a NIC treaty that will cover it).

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to David Heaton
20th Mar 2019 17:26

Thanks David - thorough & knowledgeable as ever.

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