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Sam
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Category: Tax
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I am currently working as a contractor from Mon-Friday

Resolved Question:

Hi,
I am currently working as a contractor from Mon-Friday in Dublin since March 2014. I have a Ltd company here in the UK and my salary is paid into my Business account here (UK) in Euros and converted by the bank to Sterling. I have a UK accountant who is processing my tax return in order to establish what I need to pay in tax in the UK.
I have been advised this week by the company in Ireland that manage my contract that I need to also register to pay tax in Ireland. Is this correct? The Income tax rate in Ireland is up to 40%. Do I have to pay both in Ireland and the UK? The agency’s have advised me of their tax solution which is to join a company who will effectively become my employer, so that I register for Irish tax as an employee. The calculations they have shown me work out that I would be paying approximately 50% of what I earn in various Irish taxes. Is this a common practice and the best / only solution?
Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.
Hi
Thanks for your question
Yes that right - as you spend more than 90 day working and living) in Ireland you are deemed to be resident for Irish tax purposes.
Then the tax you suffer inn Ireland you can then claim credit for - under the Double taxation treaty between us in the UK and Ireland.
I would NOT take up the solution offered as you in that instance become the employer and employee and not only suffer employee tax and National Insurance but also the Class 1 employer charges - so costs far more.
You are in fact already an employee of this company that pay you (and not a contractor or sub contractor) and they should be deducting tax from you through their payroll system as you advise you are paid a salary.
If however you mean that you are paid gross, as a sub contractor (and they are your contractor) then see link here as to what should be happening
http://www.revenue.ie/en/tax/rct/subcontractor.html
They should be making appropriate tax deductions
Let me know if you require any furtehr assistance
Thanks
Sam
Customer: replied 2 years ago.

Hi Sam,

Thanks for your reply.

I don't understand what you mean about the solution offered by the agency and me becoming the employer and employee? Why would I be both?

The alternative is that I would need to also register another company in Ireland with an Irish accountant to pay tax as a Ltd company there?

Im unsure if I am a subcontractor by definition. I invoice the agency that I have the contract with on a monthly basis who then invoice another agency who manage all the contractors for the company that I actually work for. Does this make me a subcontractor? If so the link you sent me is very interesting.

Expert:  Sam replied 2 years ago.
Hi
Thanks for your response
As this is the way that some contractors work, they offer you the chance to operate as an umbrella company which in essence makes you the employer and the employee (as is the case now with your own limited company - wit the exception that the Class 1 Employer NI is suffers by your UK limited company whilst these umbrella companies you the employee suffers it (so you payslip shows gross pay less Employee Tax and NI and then also Employer NI) and its this they fail to be upfront about.
You are a subcontractor as for this specific job (s) you are engaged by a contractor who pays you - rather than receive the money directly from the customer.
You are only a contractor when you are engaged directly by the customer.
Even as a subcontractor you may remain a contractor if you provide staff for the job.
But the main contractor is always the business engaged directly by the customer and I can advise there is NO need for you to register another company in Ireland - you are not being engaged directly by the customer
Do let me know if you require any further assistance - but it would be appreciated if you would rate the level of service I have provided.
Thanks
Sam
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