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I have a client, who is Domiciled in the UK, he has been living in Holland for the last 15 years, the first 7/8 years he worked through an english agency paying english taxes, then the following 6/7 years he worked through the dutch taxation system.  He was out of the country for more than 183 days a year and also the average of 91 days over a 4 year period, he did not bring any money into the UK.

Now due to family issues, he has to re-locate back to england and will be here for more than majority of the time.

He has a haulage company that he registered last year in holland, where he employs english drivers to do the work, is it better for tax reasons that he registers this business in england as opposed to the money going through the dutch taxation system, i understand if the money if taken into holland he will be taxed at their rates, but then will be taxed at our rates for the money that he brings back into the uk (less double taxation relief)

Any help would be greatly appreciated as i need to advise him of his options.


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14th Mar 2012 12:28

More than residency

An interesting question - if he has a business in Holland, then even if he moves back to the UK, will he have a permanent establishment there.  If so the business will normally be subject to tax there.  There may well be commercial reasons also why continuing to have a Dutch registered company is beneficial.

So, first off, i think you need to look at the comparable tax rates (is it a BV he has registered?)and work out what the impact will be, also look at the commercial position and then consider whether having a UK holding/subsidiary company or UK connected company is worth having to mitigate / minimise the tax eg UK co being paid by BV for services it performs, but watch out for transfer pricing issues.

If he is UK resident as well as domiciled then he will be taxable in the UK on his worldwide income, subject to getting the benefit of the Double Tax treaty. If he planned to leave the UK again in the future then there may be  a benefit to keeping the Dutch company and keeping retained profits in it rather than paying them out as dividends.

My normal comment to those in this position is to seek some specialist advice - but then I would as International Tax is an area I have particular experience in and one which many practitioners do not.

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