Employing people outside of the UK

[SaraC]

I work for a UK based company.

If we were to employ a German employee, and they would be based in Germany, how would that work from a payroll point of view?

I have already established that for NIC we would have to pay the German equivalent through German Social Security (does anyone know anything about this?) but what about PAYE?

Thanks for any help.

Sara

[JSK TAXATION]

Sara,

UK PAYE can only apply to non residents in respect of duties carried out in the UK. If all of the non resident's duties are carried out abroad then there is no possibility of applying UK PAYE to their pay. The employee will of course be subject to tax on the income in the FDR.

Had their been duties carried out in both countries then you would need to look at Article 11 of the FDR/UK double tax treaty to decide which country has the primary taxing rights.

The same situation will be applicable to NIC. Where duties carried out in both countries, the employee will be able to claim credit in their country of residence for social security contributions paid in the country where their duties are performed. This is under the terms of the EU Reciprical Agreement for SSCs.

I hope this helps. let me know if you need further information. Kind regards.

John S King
Chartered Tax Adviser
www.taxation-advice.com

[SaraC]

Thanks you John, that's very helpful.

Sara