Freelancers' Questions: Is my tax set-up for international clients correct?
Freelancer’s Question: I’m a UK citizen, and I was a freelance editor in the UK for three years, before I moved here -- the Netherlands, which I did before Brexit, and so I have full rights to work and stay here.
I’ve got a part time job in the Netherlands, but I still work remotely as an editor for a number of UK companies. I’ll also be working for a Swiss company starting soon.
What the Dutch say...
The Dutch advice I’ve found is that the work counts as services supplied outside the EU, and therefore VAT must be declared in the countries where the work is done, not where I’m based (i.e. it has to be declared in Switzerland, and the UK). Does this essentially mean declaring tax as a non-resident in the UK and Switzerland, as well as filing as a resident in the Netherlands? And how would I go about this, in the UK and Switzerland?
Lastly, I'd like to work with a financial adviser who could help me file correctly in each country. I'm aware that this would most likely be an adviser based in the Netherlands, but is there any advice on how to find such an adviser. What sort of questions should I ask the adviser, to gauge whether he or she will be of suitable help?
Expert’s Answer: You say that you are a freelancer now living in the Netherlands, meaning you should have registered with the Kamer van Koophandel (KvK), the Dutch Chamber of Commerce which doubles as the commercial register. If you work in the Netherlands and your freelance editing turnover exceeds €20,000 (£17,600), you need to be VAT-registered there.
Assumption, questions, and hope
Next, I am going assume your client in Switzerland is a business, not a consumer. You will therefore need to visit this website dedicated to working outside the Netherlands. Then, by answering a few questions, you will have the answers you want on the correct VAT treatment of your transactions.
As you can hopefully see, the Dutch tax authority (Belastingdienst) helpfully provides quite clear guidance.
In your case and based on my assumptions, the advice that the site gives is as follows: “The service is taxed in your customer's country. The law of that country applies.”
How do you achieve compliance as a Dutch service provider?
- You should ask the tax authorities of your customer's country whether and how you should file a tax return.
- You should then send an invoice without Dutch VAT.
- Be aware, you do not declare this service in your VAT return.
- Similarly, you do not declare this service in the declaration of intra-community services.
Next, you should contact the Swiss VAT authority and put your query to them. You can do this by using the online form here.
But just so you know in advance, my expectation is that the Swiss will ask you to do nothing. Rather, your client must account for the notional VAT on your services when preparing their VAT return.
Income tax considerations
Let's now address income tax. If you have left the UK for more than a whole tax year (6th April to the following 5th April), you should have notified HMRC that you are on your way to becoming a non-tax resident in the UK. The effect is that unless you maintain a fixed place of business in the UK, you will pay tax and social security on your freelancer earnings in the Netherlands alone and not in the UK.
Your earnings from your clients in the Netherlands, the UK, and Switzerland all need to go on your Dutch income tax return and need not go on your UK return, provided that HMRC accepts that you are no longer tax-resident in the UK.
If they do not, you will be subject to worldwide tax in the UK and the Netherlands, which can become complicated. You will need an accountant familiar with both countries.
More positively, there is no question from what I can see of you having to pay Swiss tax -- unless you have a fixed place of business there which, on the face of what you say in your question, you do not.
Personal recommendations, plus a little help from Google
Lastly, you ask about a suitable adviser. Well, I hesitate to recommend anyone I have not used myself!
Any reasonably accomplished firm of qualified accountants in the Netherlands can help you.
If that’s not good enough, from my professional experience, I can vouch for Susanne Schorel-Willems at Schipper Accountants, and Bart van Miejl of Expatax. Should it be helpful to you in introducing yourself to either, please mention my name. And whether you’re today focused on your life in the Netherlands, your old clients in the UK, or your new client in Switzerland, a quick Google web search should bring you up the contact details of both advisers! Happy international freelancing.
The expert was Kevin Austin, managing director of overseas work advisory Access Financial.