Our advice on non-resident tax gives client peace of mind

The Problem

We were approached by Helen, who was living in the UK and had recently been offered a new full-time job in Germany. As part of her role, she would be expected to continue working in the UK for five days every month. Her family would be moving with her to Germany and she would be selling her house in the UK. Helen wanted to know where she would be taxed because her new position was to start on 1 September – partway through the UK tax year.

The Solution

We applied the statutory residence test to her circumstances and prepared a report for her to confirm her UK tax position. For the tax year during which she would be leaving the UK, she was still a UK resident for tax purposes because she had spent too many days in the UK.

Once we’d established Helen would still be a UK tax resident, we then considered whether Germany would class her as a tax resident there, too. Again, due to the number of days she would be in Germany, she’d be classed as a resident for tax purposes there as well.

This led us to review the UK/Germany double-tax treaty to confirm which country would have primary taxing rights over her income sources each tax year. We confirmed for each income source what the UK tax position would be and whether double-tax relief would be claimed in the UK or Germany.

Thanks to our advice, Helen felt much happier about accepting the role in Germany. Going forward, we will help her with her annual UK tax return to ensure double-tax relief is claimed.