Using your Limited Company abroad post-Brexit
The UK will be leaving the EU on December 31st, so what does that mean for contractors using their Limited Company outside of the UK? In this blog we explore the way in which you can contract abroad, post-Brexit.
From January 1st 2021
If you are already registered within the EU and/or are working in-country lawfully by the 1st, you may continue to do so.
If you start a contract post January the 1st, then contracting through your Limited Company in the EU will be pretty much the same as it is anywhere else in the world.
As a UK tax resident, you’ll be classed as a ‘third-tier’ country national, and will most certainly be required to have a work permit.
As your Limited Company is not a local entity abroad, and as an employee of your own company, it will not be able to sponsor a work permit for you. The only visible route at present is for Limited Company contractors to apply for a ‘self-employed’ work permit. It’s worth noting though that these permits are not easy to come by, and do not exist everywhere. Certainly something to keep in mind if you’re considering a contract within the EU.
The exceptions to the new rules
So if you’re a UK director of a Limited Company, being able to freely contract in the EU is going to prove a little more difficult in comparison to pre-Brexit. That is unless you fall under the following four exceptions:
- You already possess the legal right to work within the EU country
- You are able to acquire permission through marriage
- You can prove ancestral rights
- Through investment schemes
So if you fall into one of the above categories, what other issues might you face?
They forgot about us
During Brexit negotiations, the majority of talks centred around the trade of featured goods, and as far as the EU was concerned the discussion of services was never integral to the overall big picture. So in all honestly, no one knows for sure what will happen about companies from the EU being able to contract freely within the UK, and vice-versa. And it’s predicted that once this this has been agreed, it will only be on a reciprocal basis.
What is and isn’t changing
If you’re able to meet certain criteria, then it will be possible to work abroad but remain within your home country’s social security system. Certificates of Coverage are documents issued by the authorities, which will enable this to happen. These are called ‘A1s’ within the EU.
A1s between the UK and EU will end when the Free Movement of Persons ends, therefore when an EU-based director works within the UK using their own Limited Company (or vice-versa), they will be subject to paying local social charges or NICs, and not home ones.
What isn’t going to change are the double-taxation treaties between states, as these are not EU-wide but bilateral agreements. Nationals of the UK, RoI, Channel Islands and the Isle of Man will be free to live and work in one another’s territories, as the Common Travel Area will also not be changing.
6 key compliance areas
UK Limited Companies operating abroad (regardless of location) must observe the law in their envisaged work-country relating to:
- Foreign employers
- Permanent establishments
- VAT
- Income tax
- Social security
- Employment law
To avoid any trouble with any country’s authorities it’ll be imperative for UK Limited Companies to abide by that country’s individual, specific requirements, in relation to the above six key points.
Final thoughts
If you’re considering accepting a contract abroad post-Brexit or your current contract’s lifespan will outlive the December 31st deadline, speak to your specialist SG Accountant, who will be able to advise you based on your specific professional and personal goals. If you don’t have an accountant and need a guiding hand throughout these changes, our team of director-level accountants will be able to help you navigate your way through. Get in touch today to find out more.
Note: All the information and advice in this blog post was correct at the time of writing.
