Overseas contracting: top things to remember when contracting abroad

If you’ve had enough of the British weather and pine for warmer weather, or, if you’re keen to try out working in a different country, then contracting overseas could be a great option. Plus, it’s never been easier to work overseas – a laptop and a phone are all you may physically need.

But, before you book your flight ticket, there are some important things you need to take into consideration, these include:

Documentation

For the brief amount of time, we remain in the EU, you don’t need a visa to travel to other EU countries. However, you may be required to obtain a permit to contract in some EU states.

If you’re looking to work as a contractor in countries outside of the EU, such as Dubai, for instance, you need to obtain a visa. Depending on the country, this can be a lengthy process, and as such some clients require you to have all the relevant documentation already in place before they’ll offer you a contract.

Money

When working abroad, you’ll probably get paid in the currency of the country you’re contracting in. When you want to convert this money to sterling, you’ll face exchange rates and possible transfer fees. This can be costly if you are doing it on a regular basis.

As it’s impossible to know when exchange rates will go up or down, it’s important you research the cheapest way to exchange or transfer money. It can work out cheaper to use a provider like Transferwise rather than a high street bank as they use a mid-market rate and offer low-fees on transfers.

Relocation expenses

Relocating abroad is not cheap, it becomes even more expensive if you plan to take your family with you. The costs of flights, visa’s and accommodation can soon add up. If you’re moving to work on a long-term contract, it may be worthwhile enquiring if your client can assist with some of the relocation costs.

Taxes

Working as a contractor overseas can be complicated in terms of tax. Where you pay tax and how much depends on your country of residence and the country you are contracting in.

If you’re classed as a UK-resident, you’ll be required to pay tax on your income here in the UK and in the country you’re contracting in. If you are not a UK resident, you don’t pay UK tax on your foreign income.

There is some good news though, the Double Taxation Treaty allows you to claim some tax relief. The rate of relief that is available depends on the agreement that is in place between the UK and the country in which you’re working.

Finally, if you plan to return to the UK at some point, we strongly advise you make voluntary National Insurance Contributions, as this maintains your entitlement to receive certain benefits and the State Pension.

Contracting overseas opens up the opportunity for you to work on projects you may not have the chance to do so here in the UK. Plus, it exposes you to new cultures and gives you the chance to learn a new language, which all look great on your CV. However, relocating abroad for work is a big decision and there are lots of things to consider first, particularly your tax situation.  

Our team at SG Accounting, have lots of experience in helping contractors prepare themselves for working abroad. Give us a call on 01962 867550 and we’ll be happy to discuss your current situation and offer advice on how best to reduce your tax liabilities whilst working overseas.