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Could April’s IR35 reform apply even to contractors based outside the UK?

Ask many independent professionals and their clients working around Europe and beyond to cite just two key issues that will likely cause them to carefully review their present arrangements in 2020, and they will probably mention Brexit and the upcoming changes to IR35 law in the UK.

Both of these developments bring a certain level of uncertainty to many of those calling upon the advice and guidance of our contractor accountants in Germany, France, Holland and elsewhere.

Let’s imagine, for instance, that you live permanently in a country other than the UK and operate through your own limited company registered in that country and subject to taxes there. However, you also work for a UK-based client. Will the latter factor alone cause you to be impacted by the IR35 reform that takes effect in the UK from 6th April?

We can help to put your mind at rest

We serve many independent professionals like the above here at Link Global Management, including people who come from the UK but are no longer tax residents. Despite this, they may fear that taking on UK-based contracts will mean they come under the terms of the IR35 changes.

The good news is that if this is the situation you are in, you shouldn’t have to worry about IR35. The fact of the matter is that IR35 is UK tax legislation, so if you are working through a limited company outside the UK, the rules will not apply to that company’s activities.

This is presuming, of course, that you continue to reside in that country and work through your foreign-registered limited company, even if you are providing services for a UK-based client.

The UK tax office, after all, has no real power to influence overseas firms. So, as long as your company remains registered outside the UK and you are still a taxpayer in that foreign country, it is the laws there that you will need to abide by.

Could Brexit further complicate your situation in 2020?

Some contractors, however, are in a very different situation, with Brexit prompting them to move back to the UK, become a UK taxpayer and form and operate through a Personal Service Company (PSC) registered in the UK.

If this describes your situation, you will – of course – need to bear IR35 in mind, in common with any other UK-based contractor. Again, we can guide you with regard to how your arrangements can be best structured in light of the law, including if you work for clients abroad.

As a rule of thumb, the key is to comply with the tax laws of whatever country your company is registered in, even if you are serving clients based outside that country.

For a more detailed discussion with our contractor accountants in Germany, Belgium, Denmark, Australia or wherever else in the world you may be working in 2020, including on how you can adapt to the latest evolutions in local legislation affecting independent workers, please do not hesitate to contact us.


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