Job Discussion Forums

[MadGoldfish]

Right, you guys have sorted me for what I think will turn out to be a decent school. So now let's see if you've got any idea about tax!

I'm not an English teacher at the moment and I'm planning to do some freelance consulting work for my current company, to keep my finances ticking over while I set myself up out in Moscow.

I'll be on a consultant's contract, paid into a UK bank account. I'm not liable to tax in the UK as far as I can gather, coz I'll be domiciled offshore. Am I liable to Russian tax? The company is a UK based company, not incorporated in Russia and with no payments going through Russia at all.

Any ideas?

[ancient_dweller]

You are paid a salary in Britain? Are you PAYE or self-employed? Or are you the director in a company from which you receive dividends?

As i understand, if you are PAYE, you pay tax in britain. if you are self-employed, u will need to show that the person remunerating you exercises no control over you and you really are self-employed. In this case, in order to avoid paying tax you would have to show revenue and customs that you are in fact domiciled abroad. in order to prove you are domiciled abroad, residence/visa registration documents and foreign tax returns may be necessary.

If you own a company, through which you do not receive a salary but only receive dividends, the requirement to prove you are not an employee is dropped, but proof you are non-domiciled still applies.

Paying tax in russia is easily avoided - at your own risk. Depending on your visa status you may or may not be liable for tax. If you are on a business visa, you will struggle to prove your non-dommicile status for UK tax purposes as you can only stay for 3 months in any 6. if you are on a work permit, your sponsor will be required to provide a minimum salary which would be taxed. if you are an individual entreprenuer then you would need to set up a company in russia. This is where it all gets fuzzy. Any other type of visa does not allow you to work, (but 'work' is not defined in Russian law). Although, you being in a company office without necessary documentation could cause problems very easily if someone felt so inclined.

In conclusion, you will have to pay tax somewhere!

Try opening your consulting firm in the british virgin islands, but spend more than the required days outside the UK. You still have to show the UK that you are resident somewhere else to avoid its tax though.

I'm not an expert but i worked for a short period of time in a wealth management department. People pay �1000's an hour in fees for this kind of information.

If the money is in britain you will have to prove you don't need to pay tax on it. A strong way to do that is showing you paid tax elsewhere.

[MadGoldfish]

Hi Ancient,

Thanks for the reply.

I'll be domiciled in Russia on a work permit, working for a language school mainly and (I assume) being taxed on that income. I'll complete the p85 to show the HMRC I'm domiciled offshore. That means I'm not liable to UK income tax.

The company is registered in the UK and their service is provided in the UK, subject to UK corporate tax etc. They won't have a presence/incorporation in Russia. I'll be invoicing them for work done but all the payments will be made into a UK account. Therefore as far as the Russians are concerned it's UK revenue..

If I go down the route of declaring it to the Russian govt. then I may need to incorporate a company right?

I'm prepared to pay tax on the earnings somewhere, it's just figuring it out that's the problem!

[ancient_dweller]

Lost on me now. I don't know enough about Russian tax law to say anything more. good luck anyway!

[Sashadroogie]

I think a solicitor is the only person who can give any sort of answer to this question. Do you have any former legal students? Or any other contacts? Sometimes they are quite happy to give a consultation, almost free, in order to practise speaking English. A better bet than here, I'm afraid...