Income tax for people who go abroad to work

eballs · PayPerShop Newbie Joined: 08 Nov 2004 Posts: 3

I am looking for some advice regarding Income tax for people who go abroad to work.

I run a payroll bureau and have a client who is seconding the UK director to work for the Denmark head office for 2 to 3 years on 1 April. The director is going to remain UK tax resident as he will be returning to work in the UK every 2 weeks and I estimate that this will be for more than 183 in the tax year. I am continuing to pay his salary via the UK payroll.

My question is really regarding the taxation in Demark. Will he be required to pay Danish tax on the UK salary and does this involve Double taxation treaties. The director also wants to take his company car with him to Denmark, so how do we treat this for tax, is there a benefit on the P11D?

Any help regarding this would be most appreciated.

Elaine Balls
WKH Chartered Accountants

Ian Congreave · Posted: Sat Feb 05, 2005 7:35 am Post subject: Income tax while working abroad

Dear eballs,

Thank you for the enquiry, I think I am going to have to leave any detailed coverage of this to others - International tax and NICs is a specialist area that I have never been directly involved with.

As this director will remain "resident", you are correct that all of his earnings while abroad remain subject to UK tax. This also appears to include his benefits, like his car, which should continue to be reported on P11D.

His tax situation in Denmark will depend on how the tax authority there handles tax on earnings of foreign residents. The company's office in Denmark should be able to determine that. In the reverse situation in the UK, our tax office may direct that an foreign employee be put on tax code NT, so perhaps they have a similar arrangement in Denmark.

If the director ends up paying full tax in Denmark, the double taxation agreement will then apply so that the director should be able to recover all of the Danish tax through self-assessment.

I hope some other visitors may be able to add to this. We will feature the question in the next newsletter.

http://www.inlandrevenue.gov.uk/pdfs/ir139.htm
leaflet SA29 for NICs
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