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The 183 day Rule, tax and non-geographic work

The 183 day Rule, tax and non-geographic work

Old Aug 12th 2016, 2:05 pm
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Default The 183 day Rule, tax and non-geographic work

Ok, so if you've declared to the UK that you're leaving indefinitely and then move to another EU country, most have a time limit after which you have to declare yourself tax-resident.

What happens with your taxes in those (usually) 183 days? Who are you liable to if...

- you are self-employed and work over the internet
- Your main income comes from passive income, rather than work, in the form of book royalties from books sold worldwide
- plus you do some freelance writing gigs (mainly for US clients, but none in UK or in your new country).

So actually you are not doing any self-employed work "locally" in either the UK or your new EU country. Who do you pay taxes or Social Security to? Or are you counted as a nomad for that period of time?
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Old Aug 12th 2016, 2:17 pm
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Default Re: The 183 day Rule, tax and non-geographic work

Originally Posted by bethsmyls
Ok, so if you've declared to the UK that you're leaving indefinitely and then move to another EU country, most have a time limit after which you have to declare yourself tax-resident.

What happens with your taxes in those (usually) 183 days? Who are you liable to if...

- you are self-employed and work over the internet
- Your main income comes from passive income, rather than work, in the form of book royalties from books sold worldwide
- plus you do some freelance writing gigs (mainly for US clients, but none in UK or in your new country).

So actually you are not doing any self-employed work "locally" in either the UK or your new EU country. Who do you pay taxes or Social Security to? Or are you counted as a nomad for that period of time?
You would pay taxes where you are resident, so if in Spain, then you declare all your world wide income to the Spanish tax people and pay your taxes there, you should ensure that you are not being taxed in the country your pay comes from, or, if there is a tax trety with where you are living then yu can claim the tax paid and get that amount reduced from your tax bill. If the situation is complex then get an accountant to do the work.
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Old Aug 12th 2016, 2:53 pm
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Default Re: The 183 day Rule, tax and non-geographic work

Thanks Mike. But I assume no-one actually registers as a resident from day 1 as they'd be sorting a lot of other things out. Doesn't this worldwide income tax only apply after you've registered as resident - unless you're earning on the ground in the country you've moved to (in which case you'd have to either register or pay non-resident tax rates)?

So you have 183 days to sort it out if you're not earning on the ground.

So do you then fill in the tax forms, applying them retrospectively with the actual date you moved to Spain and your income within this timeframe rather than just from the date you registered? Or do the 183 days disappear into the ether?
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Old Aug 13th 2016, 7:59 am
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Default Re: The 183 day Rule, tax and non-geographic work

You don't state which EU country you are thinking of but in France you do not register anywhere as tax-resident.
It depends on the different rules in each country.
In France, where the french authorities apply their rules regarding residency you are legally required to file a tax return. If you do not and the french tax office consider you to be resident then they will fine you.
Where a dual tax treaty exists between two countries then that supersedes individual country's residency rules.
If you are a USA citizen, then the 183 day rule applies in France.
However, if you are a UK citizen then the 183 day rule is only one test of residency in France.
You could be resident for only 50 days but become tax-resident in France because you trigger one of the other residency tests in the Treaty.
In France, if you work (even only online) then you are required to create a business structure and pay french taxes and social charges.
You can earn money and pay taxes in several countries but being tax-resident in France means that you declare all money earned and tax paid and the final tally is calculated in France.
You need to look at each country individually.
What do you mean - non-geographical work?
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Old Aug 13th 2016, 8:02 am
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Default Re: The 183 day Rule, tax and non-geographic work

In most countries, when you move there, you become resident for tax purposes in that country from day 1, simple as that.
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Old Aug 13th 2016, 8:26 am
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Default Re: The 183 day Rule, tax and non-geographic work

Hi Beth
You say in another post that you have health issues.
When you tell the UK tax authorities that you are leaving then you are no longer eligible for NHS treatment unless you become resident again.

You would have to get into the healthcare system of your chosen destination ASAP.
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Old Aug 13th 2016, 9:30 am
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Default Re: The 183 day Rule, tax and non-geographic work

Originally Posted by cyrian
You don't state which EU country you are thinking of but in France you do not register anywhere as tax-resident.
It depends on the different rules in each country.
In France, where the french authorities apply their rules regarding residency you are legally required to file a tax return. If you do not and the french tax office consider you to be resident then they will fine you.
Where a dual tax treaty exists between two countries then that supersedes individual country's residency rules.
If you are a USA citizen, then the 183 day rule applies in France.
However, if you are a UK citizen then the 183 day rule is only one test of residency in France.
You could be resident for only 50 days but become tax-resident in France because you trigger one of the other residency tests in the Treaty.
In France, if you work (even only online) then you are required to create a business structure and pay french taxes and social charges.
You can earn money and pay taxes in several countries but being tax-resident in France means that you declare all money earned and tax paid and the final tally is calculated in France.
You need to look at each country individually.
What do you mean - non-geographical work?
So the laws are different in different places. Best to check them out individually then. I'm considering a few options where property and the price of living is cheap but with a good climate (eg. Spain, Portugal, Greece).

Sorry, by non-geographical, I mean I'm not working on the ground, ie. not being employed by or employing, or selling to or buying from citizens of the new country (or the old country). Pure internet-based self-employed work. Well, not even work, some of it, being paid royalties.

Last edited by bethsmyls; Aug 13th 2016 at 9:36 am.
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Old Aug 13th 2016, 9:34 am
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Default Re: The 183 day Rule, tax and non-geographic work

Originally Posted by cyrian
Hi Beth
You say in another post that you have health issues.
When you tell the UK tax authorities that you are leaving then you are no longer eligible for NHS treatment unless you become resident again.

You would have to get into the healthcare system of your chosen destination ASAP.
Yes I understand that. It's nothing life-threatening but it is debilitating. I have to wait 9 months between hospital appointments here anyway so I'd probably plump for private healthcare if it was reasonably priced in another country.
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Old Aug 13th 2016, 10:38 am
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Default Re: The 183 day Rule, tax and non-geographic work

Originally Posted by bethsmyls
So the laws are different in different places. Best to check them out individually then. I'm considering a few options where property and the price of living is cheap but with a good climate (eg. Spain, Portugal, Greece).

Sorry, by non-geographical, I mean I'm not working on the ground, ie. not being employed by or employing, or selling to or buying from citizens of the new country (or the old country). Pure internet-based self-employed work. Well, not even work, some of it, being paid royalties.
Again, each country will have its own rules regarding web-based work.
I only know France and even if you use the phone or internet to work then France needs you to register as a business.
You cannot choose where you are tax-resident. It is defined by law.
Yes you need to ask specific questions for your preferred country.
You could always move to a cheaper, more rural part of the UK where you will find hospital waiting times are shorter. Check other health authorities.
You could then continue to work as you are and your OH would find it easier also.
Good luck whatever you do.
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Old Aug 13th 2016, 12:56 pm
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Default Re: The 183 day Rule, tax and non-geographic work

Thank you very much Cyrian.
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Old Aug 17th 2016, 8:19 pm
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Default Re: The 183 day Rule, tax and non-geographic work

Originally Posted by bethsmyls
I'd probably plump for private healthcare if it was reasonably priced in another country.
You seem to think this is an option. In some countries (I speak for the Netherlands, but am relativity certain it applies to several others) it's a legal requirement to have a certain level of coverage, and private schemes don't pass muster.

You can move and live (right now) on the mainland under EU law, but you need to apply national laws in the land where you stay. When the UK leaves the EU, you won't have been resident anywhere long enough to gain residency, so if economically inactive, will likely be heading back to the UK anyway. At this point, HMRC (who aren't stupid) will probably want to see evidence relating to where exactly you paid tax and if you can't provide it, you can only hope you saved enough to pay (or fight) their estimated bill.
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Old Aug 17th 2016, 8:44 pm
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Default Re: The 183 day Rule, tax and non-geographic work

Thanks Red Wine Fairy. I don't understand what you mean about having a level of cover and it not being private. Of course, I would pay social security payments wheverer I was legally obliged to - even if I eventually didn't use public healthcare. But I'm just talking about this potential no man's land of 183 days before you have to claim residency.

I'm not trying to avoid tax or anything - I just genuinely don't know what the answer is and am trying to find out.

I would of course register as self-employed by the end of them, and pay any taxes from then on in, but I just want to know if you have to backdate that to your actual moving date. I probably wouldn't be doing much work for some of those 183 days anyway as I'd be busy finding long-term property, arranging utilities etc. However, I might possibly be paid some royalties depending on the time frame (into a UK account). And yet you have to declare when you're leaving the UK for good. So what happens then?

It seems strange to me that having googled this, I have found no clear answer.
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Old Aug 18th 2016, 6:09 am
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Default Re: The 183 day Rule, tax and non-geographic work

Originally Posted by bethsmyls
Thanks Red Wine Fairy. I don't understand what you mean about having a level of cover and it not being private. Of course, I would pay social security payments wheverer I was legally obliged to - even if I eventually didn't use public healthcare. But I'm just talking about this potential no man's land of 183 days before you have to claim residency.

I'm not trying to avoid tax or anything - I just genuinely don't know what the answer is and am trying to find out.

I would of course register as self-employed by the end of them, and pay any taxes from then on in, but I just want to know if you have to backdate that to your actual moving date. I probably wouldn't be doing much work for some of those 183 days anyway as I'd be busy finding long-term property, arranging utilities etc. However, I might possibly be paid some royalties depending on the time frame (into a UK account). And yet you have to declare when you're leaving the UK for good. So what happens then?

It seems strange to me that having googled this, I have found no clear answer.
You don't have to wait the 183 days, you can do it on day 1, but what people are saying is that, even if you do nothing, after 183 days you will be classed as tax resident, simplest thing is to apply ASAP after you arrive.
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Old Aug 18th 2016, 7:16 am
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Default Re: The 183 day Rule, tax and non-geographic work

Originally Posted by mikelincs
You don't have to wait the 183 days, you can do it on day 1, but what people are saying is that, even if you do nothing, after 183 days you will be classed as tax resident, simplest thing is to apply ASAP after you arrive.
... and when you apply in France, for example, you must justify healthcare coverage from day 1, by private insurance until you're affiliated to the Authors' and Artistes' Insurance Scheme.
https://www.service-public.fr/profes...sdroits/F22388
If you're "inactive" it's now possible to enter the S.S. System after 3 months, but if you receive royalties in your UK bank, you'll be considered as working and you'll have to set up a business structure anyway, since you're physically "creating" in France.
Another negative factor on the France front is the fact that, if "finding long-term property" involves renting, most landlords require justification (by payslips, for example) that the potential tenant's regular monthly income is 3-4 times the rent. Otherwise a Guarantor is necessary.
France and the Netherlands being covered, you may do well to post again on the dedicated Spain/Portugal/Italy forums for advice on those countries. I suspect the answers will be the same concerning healthcare insurance....
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Old Aug 18th 2016, 7:32 am
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Default Re: The 183 day Rule, tax and non-geographic work

Thanks for all the advice. It's really helpful. Especially the concrete facts about renting and healthcare. We still haven't decided on the best place to go and information like this is so handy in helping us decide. A lot of info on websites is outdated or doesn't cover self-employment, and certainly I've never even seen the Déclaration d'activité d'un artiste-auteur mentioned on any other info I've read about self-employment in France.
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