Self employed income from Netherlands?

Metrostar

Hello everyone. I'm currently exploring the option of leaving my current full time position in Holland and turning freelance as a business consultant. My clients are to be based mainly in the Netherlands and possibly also in France and Germany. My idea is to register as a sole trader in Ireland and have all income taxed under the Irish system. However, I doubt if I will be in Ireland for 183 days in 2011 - my time will be split between NL (3 months) Spain and Ireland, with Ireland being the lower of the three in terms of time spent. I'm an Irish citizen but have been living out of the country for the past five years. The nature of my work means I can carry it out from any location and I would love to pay my tax in Ireland and help reduce the deficit, but not sure if this would be a legally sound option! What's more, I don't want to face any issues in NL as most clients will be based there and I want to keep open my bank account there (although payments for all work would be made to my Irish account and registered business number). Has anyone got experience of this situation and can tell me if it's a viable option? Would the Dutch authorities demand I pay tax there as income will be derived from Dutch companies? Thanks.

Toblerone1978

Metrostar wrote: »

However, I doubt if I will be in Ireland for 183 days in 2011 - my time will be split between NL (3 months) Spain and Ireland, with Ireland being the lower of the three in terms of time spent. I'm an Irish citizen but have been living out of the country for the past five years. Has anyone got experience of this situation and can tell me if it's a viable option?

A second way to being resident in Ireland is that if you spend 280 days or more in Ireland over a period of two consecutive tax years, you will be regarded as resident for the second tax year but this doesn't appear to be applicable to you either.

I have seen it before, it can be done.

The Revenue's website state the following:
Yes. Should you arrive in Ireland in a particular year and you do not spend enough days here to be resident, you may, if you wish, elect to be resident. A condition of making the election is that you must satisfy your local Revenue office, that you will be resident here in the following tax year. You should also be aware that once you have made an election, you cannot withdraw it.

I'm no expert on Dutch law but most DTA state that you can't be tax resident of the two countries and I'd be surprised if the Dutch-Irish DTA is any difference - the Revenue might be able to assist you more in that regard.

nompere

This is much too complicated a subject to resolve here.

Do note that while Double Taxation Treaties talk about being a resident "of" a contracting state, domestic tax law talks about being resident "in" a jurisdiction. So it's perfectly possible to be tax resident "in" two different countries under domestic law - but only a resident "of" one of them.

What Double Tax Treaties generally do in practice is to ensure that any particular source of income is taxed at the higher rate of the two countries concerned. How much of the tax each gets may vary.

Metrostar

Thanks both. I know it's complicated, just wanted to have a general understanding of the law before I set up meetings with the relevant professionals both here or in Ireland.

For argument's sake, assuming I *was* able to fulfill the residency requirement for Ireland (and was no longer a resident of NL), do you know if I would be able to 'charge' all work to my Irish tax account?

nompere

Whatever professional you discuss your plans with, do make sure he or she understands the difference between trading with a country and trading in a country. Most jurisdictions charge tax on earnings from carrying on a business in the jurisdiction no matter where you might be resident.

Toblerone1978

Metrostar wrote: »

For argument's sake, assuming I *was* able to fulfill the residency requirement for Ireland (and was no longer a resident of NL), do you know if I would be able to 'charge' all work to my Irish tax account?

Presuming your only permanent establishment is in Ireland, then yes. Permanent establishment will be defined in each DTA, although the definition in them all tend to very similar. Again, you professionals should be able to answer this.

TaxingTimes

Also note that under most Double Tax Treaties, if you are actually resident in two or more countries under the "days" rules, you then go to the tie-breaker rules, which determine where you are treaty resident.

Assuming you are "days" resident both in Ireland and the Netherlands, the tie breaker rules include where you have a house and centre of vital interests. Therefore, if you are really living in the Netherlands, have a house, business, bank accounts etc there - it may be likely that you could be treaty resident in the Netherlands.

You do need to get professional advice.

It is not easy to become tax resident in a country you don't actually live in without major planning.

Metrostar

Indeed. It's not going to easy. My preference is to become a fiscal nomad because I will not be living in any country long enough to fulfil residency criteria. But this seems to be very difficult when you're sourcing income from the Netherlands. I will probably need to be a non resident taxpayer and have the income taxed in NL... Will know more soon...

KindOfIrish

it doesn't matter where an income came from. What is matter where you are registered as a business. If in Ireland you will have to pay Irish taxes, if in The Netherlands - dutch taxes obviously.

Metrostar

KindOfIrish wrote: »

it doesn't matter where an income came from. What is matter where you are registered as a business. If in Ireland you will have to pay Irish taxes, if in The Netherlands - dutch taxes obviously.

In my situation it's not this simple, apparantly. Even if the business were registered in Ireland I could end up having to pay the taxes in NL as they have quite strict rules about income sourced in NL.