Tax Efficiency, IT Contract

[pflangan]

Hi,

I've been offered a short term contract in Ireland and am trying to figure out the most efficient way of taxation.

My question is this;

Given a figure of say 1000 per week gross, what can I expect to take home as net? (either under umbrella, or as a limited company)

In england, as a director of a limited company, I pay myself a minimum wage on PAYE, then the profits are taken out monthly as dividends. These are taxed at a much lower rate than PAYE and National Insurance.

The net effect of a 80k gross is that I average a net take home of around 70% of my gross.

What is the best I can hope for in Ireland?

 

[z103]

What is the best I can hope for in Ireland?

Well the budget is tomorrow, so it might be better to see what the outcome of this is.

 

[Mini3277]

Ok you've got a few options. firstly taking money by way of dividend is usually not beneficial in Ireland.

I assume you're going to remain a UK resident for taxation purposes?

Assuming you are going to be non-resident that by far the most beneficial way of getting money out is through a limited company.

Oh course you're to have to meet Irish company law. You're going to need to an Irish shareholder and director in order to make the company Irish resident. If your able to do this then you set the company up, and charge an invoice across from your UK company to the Irish company. That way you clear the money out leaving the company with a minimal profit, which you can either leave or take by way of dividend.

Naturally there are complications with what I've stated above. There could be a number of issues preventing you from doing the above.

 

[pflangan]

Thanks,

I've trawled through this site, and haven't seen much mention of tax efficiency from the withdrawal of dividends.

I'm weighing up the options of my best guess net take home in the UK vs. net take home % in Ireland.

For those that don't know, this is the established english route.

e.g. pay of 4000 per month.

Minimum wage: 897 per month gross, 808 net.
Expenses (travel, accommodation away from home) e.g. 500
Profit: 2603, corporation tax at 21% 546, net dividend: 2057

Monthly take home net/gross: 3365 / 4000 (84%)

On top of this, once your total dividend income exceeds the upper tax threshold (34800 for 2008) you pay an additional 22.5% on dividend income above this level.

Working this out, 3365*12 = 40380, means that tax is due on an additional £5580 at a rate of 22.5% = 1255.

Spreading this out monthly net/gross is now 3261 / 4000 = 81%.

I know there is no hope of getting anywhere near these figures in Ireland, just wanted to know what the comparison is.