# Working abroad for 12 months - tax implications?



## cbruen1 (20 Jun 2011)

Hi I hope this thread is in the right place. I've been working as an IT contractor for the past 10 years. My current situation is that I'm a director of a shelf company that's run by the management company that I use, so I don't have my own company. Some years I've worked 12 months and the last couple of years I've worked less than 12 months with time off in between contracts. The company charge me 150 per month for any month that I invoice, and they just pay me a net amount at the end of the month.

Anyway the above may or may not be relevant. I've been looking at contracts abroad and I'm in with a shout of getting one for 12 months in Switzerland. If I decide to take it what are the tax implications here - I know that if a person works abroad for more than a certain number of days in the year this has an effect on a person's tax, but I have no idea what that is  

If anyone has advice or thoughts on the best / most optimal way to work the 12 months abroad then I'd appreciate some feedback.


Cheers


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## evoke (20 Jun 2011)

you will have to check how long switzerland lets you work in the country without paying their tax. i live with a contractor from scotland. he can work in ireland for 180 in a year without having to pay irish tax. He has is company for his contracting registered in scotland.

 maybe it might be better to pay swiss tax since it is lower than ireland. i know my friend work over there and he pays 7.8% compared to 20% here.

What kind of IT jobs is it? java, servers helpdesk?


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## cbruen1 (20 Jun 2011)

evoke said:


> maybe it might be better to pay swiss tax since it is lower than ireland. i know my friend work over there and he pays 7.8% compared to 20% here.
> 
> What kind of IT jobs is it? java, servers helpdesk?



Hi it's .NET development. I had a quick chat to an accountant here and  he said that even though I'd be gone for a year I would still be  resident here, as from July this year to July next year would mean I  wouldn't be gone for the required number of days in either year -  something like that I don't fully understand it but the gist of it was  that I wouldn't be considered non resident for the 12 months. We do  apparently have some sort of arrangement with Switzerland though so I  wouldn't be taxed twice.

Anyone know more about this or am I describing it correctly? I heard  that the Swiss tax rates are less than here so is better / possible to  pay tax there instead of here?


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## legend (21 Jun 2011)

swiss tax and related insurances are alot higher than Ireland and also depends on where the company is based, Swiss is based on Cantons and the tax rates differ between cantons, also depnds on the employer and there attitude to overseas contractors if you are obliged to register with the swiss authorities you'd want to be getting a very good rate !


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## Paddy199 (21 Jun 2011)

cbruen1 said:


> I had a quick chat to an accountant here and he said that even though I'd be gone for a year I would still be resident here


 
Thats just not true. 

You can elect for split year residency. Albeit you are still ordinary resident, but thats irrelevant here. 

Please seek advice from someone that knows what they are talking about. You need to speak to someone about mobile workers taking up a foreign employment.


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## Joe_90 (21 Jun 2011)

Paddy199 said:


> Thats just not true.
> 
> You can elect for split year residency.


 
On the basis that the OP will return and be resident in Ireland 2012 is split year relief available?


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## cbruen1 (21 Jun 2011)

legend said:


> swiss tax and related insurances are alot higher than Ireland and also depends on where the company is based, Swiss is based on Cantons and the tax rates differ between cantons, also depnds on the employer and there attitude to overseas contractors if you are obliged to register with the swiss authorities you'd want to be getting a very good rate !



The role is based in Basel. Does registering with the Swiss authorities cost a lot, or is it hassle?



Paddy199 said:


> You can elect for split year residency. Albeit you are still ordinary resident, but thats irrelevant here.
> Please seek advice from someone that knows what they are talking about. You need to speak to someone about mobile workers taking up a foreign employment.



Ok the person I spoke to was an accountant and he went off and looked up the info before he spoke to me. Can you recommend someone to talk to?


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## kennyb3 (22 Jun 2011)

Paddy199 said:


> Thats just not true.
> 
> You can elect for split year residency. Albeit you are still ordinary resident, but thats irrelevant here.
> 
> Please seek advice from someone that knows what they are talking about. You need to speak to someone about mobile workers taking up a foreign employment.


 
I think your a bit soft in the head and stating stuff like 'that is simply not true' when you are wrong is a bit stupid really.

The OP plans to return and thus split year relief wont apply - as they will be resident next year. 

Here this might help OP.


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## cbruen1 (22 Jun 2011)

kennyb3 said:


> The OP plans to return and thus split year relief wont apply - as they will be resident next year.
> 
> Here this might help OP.



I may not return straight away. Sometimes contracts are renewed or I might like it and stay on, so it's not definite that I'd be coming back.


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## Jim2007 (22 Jun 2011)

legend said:


> swiss tax and related insurances are alot higher than Ireland and also depends on where the company is based, Swiss is based on Cantons and the tax rates differ between cantons, also depnds on the employer and there attitude to overseas contractors if you are obliged to register with the swiss authorities you'd want to be getting a very good rate !



Swiss Taxes area primarily driven by the community in which you reside as the major portion of your taxes are paid at this level.  The Kanton and State taxes are much smaller and don't have much of an impact since most working people will reside within the Kanton in any case.

The employer has no impact what so ever when it comes tax determination!  With the exception of a couple of small expenses that are allowed as a deduction.

Again registration is irrelevant in the context of taxes, since without an exemption from the tax authorities withholding taxes to an amount equivalent to income taxes will be applied in any case.  To get such a letter you would have to be registered in the first place.

When it comes to registration itself, without it one can't rent an apartment, get a tram pass for a month, take out a telephone contract and so on. Just to start with.

I can't comment on Irish taxes or social welfare charges as I've been over here for the past 20 years.  All I can say is that the *effective tax* rate on salary of about 120K would be around 20% - 25% and [broken link removed] would seem to suggest that there really is not much difference between the two countries.

On the social welfare side I would also point out that after 12 months contributions the OP would qualify for full unemployment benefits in Switzerland would amount to a payout of about 115K over an 18 month period provide he decided to seek further work in Switzerland.

Jim (20 years in Switzerland, 15 of which as an IT contractor)


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## Jim2007 (22 Jun 2011)

cbruen1 said:


> The role is based in Basel. Does registering with the Swiss authorities cost a lot, or is it hassle?



Registration is mandatory not optional.  When you get your employment contract from the agency you will have to take it plus your passport to the local community office and register it with them.  Depending on what the back log is, you'll get a call back in a few weeks and then have to go and collect the identity card.  As an EU citizen with a 12 month contract you will be issued with a renewable EU-B permit, which after 5 years can be converted to a C Permit - permanent residence status.

If is very important that you do this as early as possible, because at some point the agency and the employer will ask to see it and if you don't have it or are not in process of getting it, they'll be non to happy to say the least as there are big consequences for both of them - the agency will loose it's bond of about 100K and the employer will be restricted in taking on foreign workers going forward, if you are caught without the permit.

Furthermore since you will be working within about 500m from the German boarder there is every chance that you will be controlled be either the Germans or the Swiss at some point.  I was controlled a couple of times over the period I was working there.

Jim


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## Jim2007 (22 Jun 2011)

cbruen1 said:


> Anyway the above may or may not be relevant. I've been looking at contracts abroad and I'm in with a shout of getting one for 12 months in Switzerland. If I decide to take it what are the tax implications here - I know that if a person works abroad for more than a certain number of days in the year this has an effect on a person's tax, but I have no idea what that is



I don't want to comment too much on the Irish situation as it is too long ago from me to say any thing definitive.  However, I would suggest that you find a better accountant as the one you talked to has not got a clue!

Firstly things go very slow in Switzerland when it comes to employment, so an August start date is more likely than a July one.  In which case you will on the face of it be Irish resident for tax purposes for the current year and Swiss resident for the following year.   However given that you will be on a 12 month contract and depending on your personal situation, the Swiss revenue may rule that you are permanently resident in Switzerland from the date on your work permit and simply inform the Irish authorities of their decision - this is what happened when I move out here along time ago.  You'll just have to wait and see.   

Jim.


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## Jim2007 (22 Jun 2011)

Paddy199 said:


> Thats just not true.



Fully agree



Paddy199 said:


> You can elect for split year residency. Albeit you are still ordinary resident, but thats irrelevant here.
> 
> Please seek advice from someone that knows what they are talking about. You need to speak to someone about mobile workers taking up a foreign employment.



Most of this I think refers to movements within the EU and while Switzerland is part of the Schengen area it is not part of the EU

Jim.


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## Paddy199 (23 Jun 2011)

cbruen1 said:


> Ok the person I spoke to was an accountant and he went off and looked up the info before he spoke to me. Can you recommend someone to talk to?


 
Try Alan Moore [broken link removed] or any tax consultant with the necessary experience in this area. No affiliation whatsoever with Alan.


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## cbruen1 (24 Jun 2011)

Paddy199 said:


> Try Alan Moore [broken link removed] or any tax consultant with the necessary experience in this area. No affiliation whatsoever with Alan.



Thanks will check that out.



Jim2007 said:


> Firstly things go very slow in Switzerland when it comes to employment, so an August start date is more likely than a July one.



Thanks for all the info Jim, I'm starting to realise that things move very slowly in Switzerland


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## sean.c (8 Jul 2011)

Having worked in Italy for several years, this is my angle;  I am not an accountant or a specialist, and you really will need to talk to one who knows about Switzerland.  One thing you can do is look up all this stuff on Revenue.ie yourself, it's a great resource.  Particularly about residency and stuff.

1. You can apply for a P90 (or P50? I can't remember) when you leave. This declares that you are leaving Ireland and will not return within that tax year.  This has dual purposes:
a) Gives you the benefit of any unused allowances for this tax year.
b) It will notify Revenue that you are no longer in the country.  If you intend declaring yourself non-resident, you will need to prove when you left.

If, after 3 years (again, I think!) you are still working abroad, you can apply to declare yourself non-resident and get a lot of tax back - maybe.

2. Italy and Ireland also have a dual taxation agreement, and my advice was that taxes have to paid "where the benefit of the work is".  As I was working remotely for an Irish company, that mean I had to pay tax in Ireland.  Assuming the agreement between Ireland and Switzerland is similar, you may have to pay tax in Switzerland.

At the end of the day, you have to pay income tax SOMEWHERE.  It's terribly important that you are paying tax to the correct Finance Ministry, and can prove it to the buearocrats who will try to get you to pay tax in THEIR Ministry...

One method I have seen a lot of cross-border contractors use is to pay their invoices to an offshore company (e.g. in Jersey), and remit to their personal accounts only enough to live on.  Their rent and other major expenses are paid directly by the company, so the living expenses are quite modest, and so is the tax bill.  You'll need professional advice on how to do that because the lines between tax avoidance and tax evasion can be blurry...


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## Paddy199 (8 Jul 2011)

Sean.c,

This is an area, as far as I'm concerned, that is too critical to get wrong and I would strongly advise on getting professional tax advice. Also bear in mind, that non residents come under more scrutiny by Revenue. There are so many angles for saving tax (such as the one you mentioned, holding a foreign bank account and remitting as you need it which is perfectly legal by the way) - yes its a technical area, why not get advise and save yourself a few bob in the long run? Please don't forget the other taxes such as PRSI and USC. These are dealt with entirely different than the PAYE. What about your state pension? These all need to be dealt with.


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