Paying a director in Germany

[Matt21]

Hi all,

Short run-down of situation:

• Limited UK company with three shareholders (equal shares).
• Produces software typically sold through app-stores with revenue going into UK accounts appropriately (and thus taxed there).
• All directors work from home due to the nature of the product.
• Directors paid via PAYE (no dividends happening yet - these need not be addressed today).

Now, starting this year, one of the directors has moved to Germany to pursue a full-time job while working for the Limited company in his spare hours. He will remain there potentially for several years, perhaps longer.

The other two shareholders remain in the UK. The company would like to reimburse him for his work. It seems that PAYE isn't the correct way to go. So can anybody tell me:

1. The correct approach to paying him from the standpoint of the UK tax authorities.
2. The correct approach to him getting paid from the standpoint of the German tax authorities.

This isn't a pressing matter yet, so there's no need to go see a Steuerberater (German tax adviser) just yet, I'm just looking to get a feel for how easy it will be if/when the day comes.

I would also be keen to know if this changes when 2/3 directors live in Germany (on a long-term (years) basis).

Thanks for your time,
Matt

 

[UK Contractor Accountant]

As the Director will be not resident the UK and all work undertaken is oustide the UK you can pay salary without the need to operate PAYE and NI.

He will of couse have to declare his earnings to the German Tax Authority.

There are rules on the number of days he can spend in the UK after becoming non resident so be sure not to fall foul of the rules as he may be determined resident in the UK again with the resultant tax consequences.