Tax Advice For Recruiters Placing International Contractors

About the author: Peter Hann is an accountant based in Croydon, UK who specialises in international taxation.

This ebook helps UK recruiters understand the tax implications of placing contractors overseas. It explains concepts and solutions for common issues including Double Taxation Agreements, Withholding Tax - in particular Withholding Tax on Technical Services, Permanent Establishment and tax disputes.

Tax considerations for contracts for services overseas

Overseas contracts

Double Taxation

Withholding Tax

Individual taxation

Permanent establishment

Risks of using a personal UK company to provide personal services abroad

Risk of tax disputes

Advice from a Tax Accountant

Tax considerations for contracts for services overseas

As transport links increase and the global village shrinks, the number of staff heading abroad for overseas experience increases. The rising number of international transactions and interactions is putting an increasing strain on the international tax system and the complexity of the rules is also increasing. This is not helped by a growing mismatch between the traditional tax rules and the reality of the modern world. The tax rules were developed at a time when international mobility was not so great and the internet did not exist. The country of residence of the service provider was always clear and the place where the services were performed could be identified without any problem. The host country could formulate rules for taxing income earned on its soil, while the home country of the person providing the services would apply tax on a worldwide basis. The risk of double taxation of the individual or business performing the services could be dealt with by unilateral double taxation relief or through a tax treaty.

This system of international taxation is beginning to suffer from strains as services may increasingly be provided online, people are travelling much more widely between countries and the length of their stay in a country may be briefer. The main consideration for the service provider in this situation is to make sure that the inadequacy of the international tax system does not result in unnecessary tax burdens or double taxation.

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Client comment

"Great advice and excellent service on contracting and immigration solutions in the UK. I would highly recommend Tim and the team to assist you with accurate, clear and concise contracting advice in the UK or any other country for that matter."

Prishen Pillay,Global DBA Operations Lead

Shell International Trading & Shipping