In most circumstances, we would not advise working through your company overseas without taking advice from our overseas tax specialists, Procorre, as there may be legislation in place preventing you from doing so and strict penalties for non- compliance in certain countries. We suggest that you speak to one of our tax advisers for further information. Income earned abroad is generally taxed in the country you are working unless:
- There is no local income tax as in the Gulf States;
- Specific local legislation expressly excludes such earnings from local taxation;
- There is a suitable Double Tax Convention or Agreement (DTC or DTA) in place between the work country and where you are ordinarily resident. This will usually be the UK.
In general, if you are seconded by your employer to work abroad for less than six months and there is a DTA in force, you will pay your income tax back home. If you work for periods longer than this, tax must be paid in the work country from the start date of your working there.
In order for the DTA to apply the company you are working for must not have a permanent establishment (PE) created by having fixed place of business, nor should its centre of management have shifted to the work country. Furthermore, the costs of engaging you must not be paid by a business that does have a PE in the work country.