# preliminary tax question



## esperanza2 (7 Oct 2007)

I have been self-employed since September 2006 and I will pay income tax for the first time this October.

i have decided to set up a Limited company in January of next year and therefore cease my self-employed activities.

My question is: Will I still have to pay preliminary tax from January 2008 to September 2008?


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## xxx (8 Oct 2007)

No you pay your income tax now for 06 and prelim for 07. In 2008 you will be taxed as paye


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## esperanza2 (8 Oct 2007)

xxx said:


> No you pay your income tax now for 06 and prelim for 07. In 2008 you will be taxed as paye



Ok, i'll pay for my preliminary taxes until the end of 2007. Why will I be taxed as paye from 2008? I didn't say anything about becoming a PAYE paying employee!


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## xxx (8 Oct 2007)

Sorry, thought you would be taking wages from the limited company


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## ubiquitous (8 Oct 2007)

esperanza2 said:


> Why will I be taxed as paye from 2008? I didn't say anything about becoming a PAYE paying employee!



How do you intend to survive then if you won't be taking any income from the company?


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## esperanza2 (9 Oct 2007)

ubiquitous said:


> How do you intend to survive then if you won't be taking any income from the company?



  I said I was self-employed, that means I am a sole trader. I didn't found a company. god, how people jump to conclusions here! If you're not sure, then ask questions, but please don't make presumptions!

Seems  you didn't read my post correctly.

How do I intend to survive? Not all of us have to work for a living. ;-) No seriously, I've been hired by the UN, a tax-free salary. ;-) Finally passed the concours! )


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## Niall M (10 Oct 2007)

may i ask why you are setting up a limited company?


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## ubiquitous (10 Oct 2007)

esperanza2 said:


> I said I was self-employed, that means I am a sole trader. I didn't found a company. god, how people jump to conclusions here! If you're not sure, then ask questions, but please don't make presumptions!
> 
> Seems  you didn't read my post correctly.



Excuse me but you *did* say...



esperanza2 said:


> i have decided to set up a Limited company in January of next year and therefore cease my self-employed activities.



ps. Seems *you* didn't read my post correctly.


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## esperanza2 (10 Oct 2007)

ubiquitous said:


> Excuse me but you *did* say...
> 
> 
> 
> ps. Seems *you* didn't read my post correctly.




Yes, I did. I haven't yet set up a limited company. I'm just setting it up, I won't be employed by it.


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## ubiquitous (10 Oct 2007)

esperanza2 said:


> Yes, I did. I haven't yet set up a limited company. I'm just setting it up, I won't be employed by it.



Yes that's why I was wondering how you intend getting paid by the company for the work you will be doing. Directors salary is the route used by most directors in your position. It is taxed on the paye system, and if you receive a salary you are treated for paye purposes as an employee. Other alternatives such as dividends are generally not as tax-efficient. Hence my question...


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## esperanza2 (10 Oct 2007)

ubiquitous said:


> Yes that's why I was wondering how you intend getting paid by the company for the work you will be doing. Directors salary is the route used by most directors in your position. It is taxed on the paye system, and if you receive a salary you are treated for paye purposes as an employee. Other alternatives such as dividends are generally not as tax-efficient. Hence my question...



Ok, fair enough. But I was wondering about something... if the director was nto living in Ireland but in another European country, would (s)he still be paying PAYE?


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## ubiquitous (11 Oct 2007)

If they intend to take money out of the company in the form of salary or fees, yes.


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## esperanza2 (14 Oct 2007)

ubiquitous said:


> If they intend to take money out of the company in the form of salary or fees, yes.



Are you sure? What if the director is in a high-tax paying country? Would the local rules for tax not apply, and not Ireland's PAYE system? If it is true, sounds like a very interesting business opportunity. Paying lower taxes while living in a country with high taxes but cheaper standard of living than Ireland.


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## Nige (14 Oct 2007)

In that case, the director would probably pay tax in BOTH Ireland and their country of residence (but if there is a double taxation agreement would get a credit for the Irish tax paid).


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