Compliance by Country: The UK

Through our monthly ‘Compliance by Country’ series we aim of provide information that candidates need to consider in order to ensure that they fully comply with the rules/requirements of working in different countries.

We recently gave advice for compliance in Switzerland and The Netherlands.

For the third post of the series, Smriti Malik BCom MBA, Senior Manager at Access Tax & Accounting Limited provides answers to frequently asked questions for contractors working in the UK.

What are the residency rules/requirements in the United Kingdom where the contract will take place and how does one go about registering if required to do so? 

There are no individual registrations required upon arrival in the UK.

A UK National will have an existing NI number which will be used for paying National Insurance contributions in the UK and a UTR number for settlement of income tax.

A non UK National will need to apply for a NI number at the Job Centre and a UTR (Unique Tax Reference Number) which will be required in all tax related matters. Both the registrations involve filling in forms and sending them to the HMRC. Registration numbers are then received by post.
Do I need to move from a Limited Company to an umbrella company? 

Not necessarily. It is possible to work in the UK through your Limited Company.

If you have a UK Limited Company, it will be your employer in the UK that is liable for corporation tax and VAT. If you have a foreign Limited Company, you need to get it registered as a foreign employer in the UK without tax liability. Further your employer will also be liable for PAYE and employer’s NI contribution in the UK. If the contractor chooses to take dividends from his Limited Company in the UK, these dividends will be subject to dividend tax, taxable in the hands of the contractor.

You can choose to work through a Limited Company or under an umbrella, as both are recognised as legal structures in the UK. Umbrella will give you lesser administration burden but a Limited Company can give you higher net take home.


What are the income tax and social security rates in the UK? 

Resident individuals are liable to pay tax on their worldwide income in the UK.

Income tax is charged at a progressive rate from 20% on earnings up to GBP 31,785 to 45% on earnings over GBP 150,000.

Social security is obligatory for all employed contractors working in the UK. Employees pay Class 1 NI. The contribution is 12% for income greater than GBP 155 per week up to GBP 815 per week and 2% over GBP 815 per week.

Employers pay 13.8% NIC on weekly earnings over GBP 156.
Are you able to give an indication of the legitimate tax allowances available to expatriates? 

There are no special expatriate tax rulings in the UK. However the UK offers tax free personal allowances of GBP 10,600 to non – UK nationals who are tax residents.
Do I need a VISA to work in the UK?

All EEA (EU and EFTA) and Swiss nationals can enter and work in the UK without needing to apply for a Visa, but if you are a national of Croatia, you need to apply for permission before you start work.
Should I keep my company registered in my home country? What are the pros and cons of this?

You should keep your company registered if you plan to use it for your next assignment or in future.

The benefit of keeping your current company active can be to facilitate its use for your future assignments rather than incurring costs by closing the current company and incorporate a new one for future use.

The negative of keeping a company can be maintaining its dormant status (inactive but alive), complying with a few legal formalities like filing dormant accounts every year.

A cost analysis should be done comparing the costs involved in closing down the company and keeping a dormant company.

For more information on freelance and permanent SAP jobs from Recruit 121, call us on +44 02920 496121 or email us at: info@recruit121.com

Recruit 121 Limited and Access Tax & Accounting Limited are unrelated companies, other payroll solution providers are available and contractors should take independent advice so that their individual circumstances are properly considered.

EDITOR: Ian Zagrecki BA MA

AF

Compliance by Country: Switzerland

As Recruit 121 Limited places candidates across the globe, our monthly ‘Compliance by Country’ series aims to provide information that candidates need to consider in order to ensure that they fully comply with the rules/requirements of working in different countries.

We previously shared with you tips on compliance in The Netherlands. In the second blog of the series Helene Truffa, Swiss labour leasing specialist at employment experts Capital Consulting, provides answers to frequently asked questions for contractors working in Switzerland

What are the residency rules/requirements in Switzerland and how does one go about registering if required to do so? EU nationals are required to apply for a work permit prior to starting the assignment in Switzerland. The rules around the work permits are dependent upon the worker’s personal circumstances; there may be a requirement for the worker to register at the local commune/municipality at arrival, or if returning back to the home country every week, the employer can apply to a cross border permit in which case the registration is managed by the employer. Always seek local professional advice before starting an assignment and before registering in Switzerland.

Do I need to move from a limited company to an umbrella company? When working in Switzerland, the use of a non-local registered limited company is prohibited in most circumstances. Only a Swiss licensed recruitment agency or Swiss payroll provider will be in a position to provide a compliant employment framework for your contract. Income tax and mandatory social contributions (including Swiss private pension) will be deducted at sourced and managed on your behalf by the licensed entity.

What are the income tax and social security rates in Switzerland? Income taxes vary from Canton to Canton, and typically are due at your primary place of residence in Switzerland. Personal circumstances such as marital status and number of dependants also influence the tax calculations, as well as the level of monthly income. As for the social contributions, these include pension, unemployment insurance, accident insurance and other mandatory components; the level of social charges levied vary based on your age and gender.

Are you able to give an indication of the legitimate tax allowances available to expatriates? Currently, expatriate workers who maintain their centre of vital interests abroad can deduct the cost of secondary accommodation and international travel from Swiss income tax. Many companies also offer the option of deducting from the monthly gross taxable a lump sum of CHF 1,500 which is meant to cover the standard double costing of accommodation and travel when working temporarily in Switzerland.

Do I need a visa to work in Switzerland? Nationals of EU and EFTA member States do not require a visa but do require a work permit prior to start working in Switzerland. With a valid employment contract, Nationals of EU and EFTA member States will be granted a work permit; non-EU/EFTA nationalities may only be admitted if no other resource is found within Switzerland or another EU/EFTA member state and the visa sponsorship needs to be made directly by the end client.

Should I keep my company registered in my home country? What are the pros and cons of this? There are multiple factors to be taken in account, such as the length of the assignment abroad, if there is any other revenue generated in the home country, the costs of maintaining the company while working abroad etc..

Before starting a contract in a location you are unfamiliar with, it is wise to seek advice on local requirements from a local expert before accepting the role, and to seek advice on home-country matters from your accountant before making the move.

For more information on freelance and permanent SAP jobs from Recruit 121, call us on +44 02920 496121 or email us at: info@recruit121.com

Recruit 121 Limited and Capital Consulting are unrelated companies, other payroll solution providers are available and contractors should take independent advice so that their individual circumstances are properly considered.

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Compliance by Country: The Netherlands

At Recruit 121 Limited we pride ourselves on connecting the world’s best-run businesses, with the very best talent. In doing so, we have provided thousands of candidates to more than 500 SAP customers around the globe.

When placing candidates in different countries, we work closely with contract management specialists to ensure that candidates fully comply, not only with the stipulations of the job they are working on, but also with the regulations of the country that they are placed in.

Here, Naveen Joshi, B.Com, GMS, EPGDIBS, Head of Research & Development at contract management and talent mobility specialists Access Financial, provides answers to frequently asked questions for contractors working in the Netherlands.


For a contract where a consultant will be working in The Netherlands, what are the residency rules/requirements and how does one go about registering in the country if required to do so?

It is mandatory for everyone to register in person with the municipality where he/she will reside, within 5 days of arrival, if he/she intends to stay in the Netherlands for 4 months or more.

Partners and children travelling with the contractor must also be registered in person.

Upon registration with the municipality, the contractor will receive a provisional certificate of registration. Thereafter, the contractor has to report to the Immigration and Naturalisation Service (IND) to apply for a residence permit. Once, IND has accepted the application, they will inform the municipality, who will then issue the BSN (burger service number or citizen service number) and send it to the registered address.

Do I need to move from a Limited Company to an umbrella company? 

It is possible, in the Netherlands, to work through your own foreign Limited Company (Personal Service Company). However, before starting your business activities you have to register your foreign PSC with the Dutch Chamber of Commerce and also have to apply for a VAR (Verklaring arbeidsrelatie). There are four types of VAR and the relationship between you and your agency/client will determine which VAR you will receive. If you are considered as a deemed employee, the agency/client hiring you will be responsible for paying income tax and social security contributions on your behalf. Also, the staffing agency or umbrella company who has hired you must also be registered with the Dutch Chamber of Commerce and should be compliant under the WAADI Act. As a deemed employee, all of your income will be considered as wages and subject to Dutch income tax and social security.

Hence, it is recommended to move to an umbrella company that is registered with the Dutch Chamber of Commerce and compliant under the WAADI Act.


What are the income tax and social security rates in The Netherlands? 

In the Netherlands, social security contributions (national insurance) are paid together with the income tax and included in the first two income tax brackets. Income tax is charged at a progressive rate from 36.5% to 52%, including national insurance contribution of 28.15% (for 2015). In addition, the employer is required to pay contributions under unemployment insurance, occupational disability insurance, sectoral contributions, child care contributions and health insurance. All social security contributions paid by the employer are calculated on the maximum contribution base of €4,331.33 per month. For an employee earning a monthly wage of €4,331.33 or more, the maximum social security contribution paid by the employer is approximately €750 per month per employee.
Are you able to give an indication of the legitimate tax allowances available to expatriates? 

High skilled migrants coming to work in the Netherlands can take advantage of the 30% ruling, if certain conditions are met. Under the 30% Ruling, the employer can grant a tax free allowance equivalent to 30% of the total salary, without any receipts of expenditure. The 30% allowance paid for extraterritorial expenses is exempt both from income tax and social security. Contractors approved for the 30% Ruling cannot claim any further extraterritorial expenses, though they are still eligible for other allowances (for example, relocation allowance, travel allowance for commuting and business travel etc.).

Those who do not qualify for the 30% ruling can get deduction for extraterritorial expenses.
Do I need a VISA to work in the Netherlands? 

If you are not an EU/EFTA national, you will require a long-stay national visa or temporary residence visa (an MVV) to work in the Netherlands. You and your sponsor in the Netherlands are required to apply for the MVV and residence permit at the same time. Nationals of Austria, Canada, Japan, New Zealand, South Korea and USA are exempt from the requirement for a MVV but the sponsor in the Netherlands is still required to apply for residence permit. Once the residence permit is approved, you are eligible to enter to the Netherlands and start work.

Should I keep my company registered in my home country? What are the pros and cons of this?

Certainly if you plan to use it again, after your assignment in the Netherlands is over.

The pros and cons are the cost of keeping the company dormant compared with the cost and administration of closing down one company and incorporating another.

For more information on freelance and permanent SAP jobs from Recruit 121, call us on +44 02920 496121 or email us at: info@recruit121.com

Recruit 121 Limited and Access Financial are unrelated companies, other payroll solution providers are available and contractors should take independent advice so that their individual circumstances are properly considered.

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