Overseas risks for consultants
28 March 2012
RECRUITERS PLACING BRITISH consultants on overseas assignments by contracting with their UK personal service companies (PSCs) are in danger of exposing those they place to significant risks, an international firm of accountants has warned.
March 2012
Recruiters placing British consultants on overseas assignments by contracting with their UK personal service companies (PSCs) are in danger of exposing those they place to significant risks, an international firm of accountants has warned.
“It is vital they consider all tax implications before starting work in their host country”, the consultancy firm, its international, told Recruiter. “When your placement performs services in another country, there is a likelihood tax will be due in that country on the income generated by those services.“Put simply, if the services are performed by the individual in their name (ie as a self-employed person) they are personally taxed in the host country because the self-employment is deemed to have a fixed base there.”
Those who do contract with a placement’s UK PSC, its international advises he or she must comply with the Double Taxation Treaty (DTT) between the host country concerned and the UK — and especially the Permanent Establishment (PE) rules. DTTs are designed to protect against the risk of double taxation where the same income is taxable in two states.
The placement’s PSC has an immediate PE in the host country if it meets certain conditions, says its international. This means: - it has a ‘place of business’ there - it has a ‘fixed’ place of business there - it engages in an activity with a ‘degree of permanence’ there.
As a responsible recruiter, you must encourage your placement to take advice from qualified and regulated experts, its international advises.
Consultants placed into Belgium operating through their non-Belgian PSCs are at particular risk, says its international, and could be liable for tax going back up to three years (for a civil misdemeanour) and up to seven years (for a fraudulent act).
Regulated by the ICAEW, its international is an international tax and financial consultancy.
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Recruiters placing British consultants on overseas assignments by contracting with their UK personal service companies (PSCs) are in danger of exposing those they place to significant risks, an international firm of accountants has warned.
“It is vital they consider all tax implications before starting work in their host country”, the consultancy firm, its international, told Recruiter. “When your placement performs services in another country, there is a likelihood tax will be due in that country on the income generated by those services.“Put simply, if the services are performed by the individual in their name (ie as a self-employed person) they are personally taxed in the host country because the self-employment is deemed to have a fixed base there.”
Those who do contract with a placement’s UK PSC, its international advises he or she must comply with the Double Taxation Treaty (DTT) between the host country concerned and the UK — and especially the Permanent Establishment (PE) rules. DTTs are designed to protect against the risk of double taxation where the same income is taxable in two states.
The placement’s PSC has an immediate PE in the host country if it meets certain conditions, says its international. This means: - it has a ‘place of business’ there - it has a ‘fixed’ place of business there - it engages in an activity with a ‘degree of permanence’ there.
As a responsible recruiter, you must encourage your placement to take advice from qualified and regulated experts, its international advises.
Consultants placed into Belgium operating through their non-Belgian PSCs are at particular risk, says its international, and could be liable for tax going back up to three years (for a civil misdemeanour) and up to seven years (for a fraudulent act).
Regulated by the ICAEW, its international is an international tax and financial consultancy.
Have your say
