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UK tax on overseas earned income (with UK co)

UK tax on overseas earned income (with UK co)

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Friend moved permanently overseas to work (Sweden). Still employed by same UK company (income earned in Sweden). Non-resident for tax purposes I believe. Should he still be liable for UK tax? HMRC, after about 1/2 hour searching through internal guidance, advised that he is still liable due to the fact that the employer is UK-based. However, I can't find any written guidance that confirms this. Can anyone confirm that this is correct? And provide a link to a source that confirms this if possible? 

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Caroline
By accountantccole
17th Aug 2021 16:01

It is likely that he should be on a Swedish payroll if the move is permanent and he isn't commuting to the UK to do the work.
Or is there a Swedish entity that he has been seconded to in some way?
NI equivalents may be more of an issue - he would need be paying into the Swedish system to get any entitlements to healthcare etc.

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By Kevinmck14
17th Aug 2021 17:25

There isn’t a Swedish entity, the employer only has a UK company...so no option of getting put on Swedish payroll. It’s a long-term contract (10 years) and he has settled in Sweden (Swedish girlfriend, house etc). He hasn’t set foot in the UK in 2 years. So I can’t see why he would be taxable in the UK simply because the employer is UK based. Eager to find the relevant tax legislation that this relates to

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Caroline
By accountantccole
18th Aug 2021 09:23

No Swedish entity means secondment unlikely to be an option.
A UK entity has obligations to make payroll declarations/ comply with local employment legislation in other countries if that is where its employees are based.

I don't know anything about the Swedish rules but as I live and work in the Alps we have lots of UK clients with French payrolls to cover their short term and long term employee placements. Here the social charges are huge so often an employee moving to France would be expected to take a pay cut to address the additional obligations the employer has to take on

His personal tax situation is a secondary matter, but getting the payroll in the right system will make that easier to deal with.

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By Tax Dragon
21st Aug 2021 06:51

What might the UK tax position (and reporting responsibilities) be if the situation were reversed - Swedish employer, an employee working full-time in the UK?

It doesn't always flip, but it's not a bad question to ask yourself.

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