Double Taxation Agreements

It is certainly a good idea to know that you have all the correct permission to work abroad before you go so you can really enjoy the experience. There is a great deal of information available on the Inland Revenue website about the tax implications of living and working abroad, so it makes sense to ensure you know your status.

Tax Resident in the UK?

As a general rule of thumb, less than six months a year spent outside the UK allows you to stay as ‘tax resident’ in the UK. However, there are implications on where your tax is due if you’ve earned money in another country, so there are a number of ‘double taxation agreements’ between countries to ensure the system is fair. Essentially, double taxation agreements are official financial situations made between your country of residence and the country where the income arises to make it that a person does not pay tax on the same income twice.

Working Abroad

If you are working through a UK company, either your current employer or a company that arranges work placements such as a nanny agency or a summer camp, you should find that your tax status has been arranged already. Do check that you are fully aware of your status and the implications (for example, are you required to fill in a form in your ‘new’ country, or do you need to inform you local tax office of your plans?)

If you are working abroad and have arranged your own employment, it is imperative that you know where and what you need to be paying in tax. The majority of EU countries have a double taxation agreement with the UK, but it may be that additional tax is due in your ‘new’ country, so although you will not be taxed on the same income twice, there may still be additional tax to pay. In France, for example, there is a wealth tax that does not exist in the UK. This means that even though there is a double taxation agreement on ‘wages’, if your total wealth is over €750,000 (including artwork, properties, yachts and so on!) there is a further tax to pay.

How to Check Your Tax Status

If you are unsure of your status or legal position, a good place to start is by calling your local UK tax office, or the UK tax office where you were last UK resident. They are usually very helpful and are not trying to catch you out, especially if you show that you are keen to do the right thing but just need some advice. You can call them from overseas, but it’s best to do this as soon as possible. They will be able to tell you what forms you need to fill in and how you need to be able to show that your tax has been paid up to date in the UK. This is especially important if you are transferring money, as the authorities in your ‘new’ country may wish to see that the correct tax has been paid on the money and that no tax is due.