Consolidating foreign subsidiary example role of radioactive elements in dating events and artifacts
Under this arrangement it seems possible to run monthly payroll and pay these foreign workers as if they are employees on an NT (No Tax) code. HMRC suggests that it would need to assess whether the worker was an employee – even though the status of employee is meaningless for a worker in another country.Any assessment about employment would be under the local laws.Nonetheless, conceptually, a UK firm could issue a UK employment contract to a worker in Bratislava and call them an employee - even though the concept would be rather meaningless.Because such foreign ‘employees’ will never visit the UK, there is possibly no UK tax liability either for the company or the ‘employees’ despite the fact that their efforts will generate income for the British ‘employer’. The UK’s taxation authority, HMRC, may issue NT codes to enable this practice but guidance from HMRC is confusing and ambiguous.Even if an NT code is issued, there may still be National Insurance liability with both employer and employee paying NI.
But the tax liabilities falling on the UK ‘employer’ remain unclear.The associate enters the country in which the work is to be done under a short-term visitor visa (if not where they reside) and doesn't declare intention to work.The associate is self-employed and behaves as a sole-trader.In this case, local laws may dictate the time period and other conditions before the worker is automatically considereed an employee.
In Italy, for example, a worker becomes an employee if they gain over 80% of their income from one source and if this persists for more than eight months.This approach is legally unstable and will only lead to confusion.