Paying director outside UK via invoicing

From the UK perspective - is it legal for a director to invoice a UK Limited if he resides abroad?

Didn't find your answer?

Good evening,

I am one of three directors of a UK limited company, looking to move to Germany this year. Currently I'm paid a monthly wage via PAYE.

In preparation for this, I've been in touch with a German tax advisor who has recommended that I register as a freelancer and invoice my company to get paid in Germany.

Of course, his responsibility only covers the German legal system, so I would just like to know whether his solution works from the UK's/HMRC's point of view. I have of course heard that it is not allowed for a director to invoice his own Limited company in the UK, hence I'm currently paid via PAYE. But with that in mind, I wonder if it is allowed when the director is not UK resident, as I would be.

Thanks for looking over this,

Matt

Replies (4)

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By Matrix
15th Feb 2017 17:34

Will you be making decisions for the UK company while in Germany and concluding contracts? If so, you should also ask the German adviser if your activities create a permanent establishment in Germany and the local tax implications thereon. I would also check he has all the facts before he recommends you invoice as a freelancer to confirm the company does not need to register as an employer in Germany.

Thanks (1)
Caroline
By accountantccole
15th Feb 2017 17:42

I've got French clients that do a similar set up, so the French authorities get their cut of taxes through the sole trade. The French accountants seem happy with it. I have pointed out that I am not sure when the director has his "sole trade hat " on and when they are acting as director, but most come to the UK from time to time for board meetings. I think it depends on what you are doing, is the sole trade a valid stand alone business and your work for your company fits with that work? Or are you simply being a director remotely? In which case a German payroll might be more appropriate, and like Matrix says you would need to watch the branch issue.

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By DrMatt
15th Feb 2017 17:57

Thanks Matrix, accountantccole,

My produce graphical output (2D and 3D artwork and some programming) for use in software that the company sells via the internet. As such, I will not be concluding any contracts and the closest I will get to making business decisions in Germany would be discussions with the other directors over skype. The German tax advisor believes therefore that it will be possible to avoid creating a permanent establishment in Germany, at least for a year (after which the arrangement may change for a number of reasons).

I'm more interested in the UK/HMRC view of things, and judging by accountantccole's response, there should be no problem there?

Thanks again,
Matt

Thanks (0)
By Tim Vane
15th Feb 2017 20:46

You may still be liable for some NI after moving abroad and you may have to charge VAT to your company, but that's a german VAT issue. I assume you've done the maths and worked out that doing it that way is cheaper.

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