Scheme for non-EU Contractors to work in UK
18
Contracting in the UK? Think Cyprus First. An Immigration Solution for Contractors From outside the EU looking to work In the UK and Europe
Transcript of Scheme for non-EU Contractors to work in UK
Contracting in the UK?Think Cyprus First.
An Immigration Solution for ContractorsFrom outside the EU looking to work
In the UK and Europe
UK Immigration Routes
● Tier 2 Sponsored WorkerIn practice requires working as an employee
● Tier 1 EntrepreneurRequires substantial capitalRequires employing other people
Problems with using UK Tier 1 Entrepreneur
● The Capital Requirements of £200,000 are onerous.
● You must create two full time posts, which together must last for a year each and even if you are simply paying the minimum wage costs at least £11,662 per staff member.
● There are substantial dangers to your immigration if your staff leave the business.
Problems with using UK Tier 2● The “Employer” requires a Sponsorship license
● Most jobs require advertising, and a Resident Labour Market Test is required.
● This is a route is only suitable for an employee – employer relationship.
● Ownership limited to 5%
Using a “Contractor Sponsor”
● A small number of “Contractor Sponsor” companies do exist, these masquerade as Consultancies to the Home Office.
● Typically they charge high fees, take a large proportion of the billing – you are not an owner, but rather a Sponsored Employee who found the consultancy opportunity.
How our Solution Works● The Contractor becomes a part owner of their own Consultancy set up with other
professionals, as part of a capitalised foreign owned company in Cyprus.
● The Consultancy employs the Contractor as a specialist Consultant, paying the required pay level to allow the Consultant to obtain Immigration to Cyprus.
● The Consultant works from the Cypriot office, on their “client's matter” for a couple of months, to achieve the status of being “habitually employed” for the Consultancy.
● The Consultant can then be posted, by the Consultancy which he is a part owner of, to any EU state, including the United Kingdom, for a period of around 6 to 12 months at any time.
Capital Requirements● The Consultancy needs capitalisation of around €171,000 plus setup costs of
around €10,000.
● This capitalisation requirement can be shared between up to 10 to 15 Owner Consultants.
● Thus, assuming 8 consultants are working together, the Capitalisation per consultant is around £20,000 each.
● It should be noted this Capital requirement is not a spent “charge” for the scheme. It purchases shares in the company used to finance the scheme., and cover the expenses and salary of the Owner Consultant should they not be generating income.
Scheme operational costs● The Consultancy needs to pay rental on a suitable office to be eligible.
● The Consultancy should pay for facilities such as Electricity, Internet and water.
● The Consultancy should employ a local Cypriot to aid with administrative matters.
● The Consultancy needs to cover legal, accounting, marketing and regulatory expenses.
● The Annual Operating cost of the scheme is estimated at €30,000, shared between the owner Consultants.
● The scheme is multi-jurisdictional in construction, and is coordinated by a team of experts in UK, EU and Cypriot immigration and Cypriot Corporation law working together.
● Audited Accounts are prepared in line with Cypriot regulations.
Taxation Benefits● Cyprus charges 12.5% Corporation Tax on profits
Less than UK Tax rate.
● Cyprus has a €19,500 Personal Tax Free allowance, larger than the UK Personal Tax Free Allowance with progressive taxation between 20% and 35% (above €60,001)Less than UK Tax rate.
● Dividends for non-domiciled residents are taxed at 0% Less than UK Tax rate.
● Social Fund contributions are 7.8% from employees Salaries, 7.8% employers contribution, and 3.7% in other contributions. Less than UK National Insurance rates
A Personal Umbrella with Immigration Included
● To a large extent you can compare this to an Umbrella scheme where you are also a shareholder.
● The Initial Capital Contribution from each Consultant Owner covers their share of the Initial Setup costs, their share of the scheme operating costs for a year and ensures around 6 months base salary can be paid, even if their assignment were to suddenly end and they could not find another opportunity.
● Whilst a Consultant Owner who has already has an assignment either lined up, or in place, where they could work for a couple of months remotely will obviously be better placed to take advantage of the scheme, this is not strictly necessary.
● Where a Consultant Owner has no assignment, they can still join the scheme, although it is advisable that they invest around £30,000
Minimum Financial Levels● Based on an exchange rate of £1 = €1.15 the minimum level of
Capitalisation when split between 8 Consultant Owners is around £19,673 per Consultant.
● This assumes each Consultant Owner is paid €28,800.00 per annum in taxed salary, take home €24,653.85, plus a dividend payment.
● The scheme is financially viable for Contractors earning as little at £16 per hour for a contract
● As the costs of operation are substantially static, the effective “take home” salary and profit, after taxes rises as the hourly rate increases.
Reasonably safe for BREXIT● Whilst the scheme in part uses European Law, it relies on
Court Judgements which relate to the provision of Goods and Services across Europe rather than the “freedom of movement” provisions.
● The scheme can be used for at least two years, and the right of British service providers to be able to supply services to the EU will be a core negotiating aim. Accordingly, the scheme is likely to remain viable even after BREXIT.
Comparison at £37.50 per hour
● Using a UK Company Outside IR35 74% Take Home £4,781
● Using a UK Company Inside IR35 74% Take Home £4,065
● Using a traditional Umbrella Company 60% Take Home £3,902
● Using our Cyprus First scheme80% Take Home £5,200.15
Comparison at £62.50 per hour
● Using a UK Company Outside IR35 67% Take Home £7,305
● Using a UK Company Inside IR35 56% Take Home £6,074
● Using a traditional Umbrella Company 54% Take Home £5,886
● Using our Cyprus First scheme83% Take Home £8,991.82
Typical Costs for Cyprus● Rented 2 Bedroom Apartment €300 per month● Telephone line with internet €50 per month● Water and Municipal Rates €30 per month● Electricity €100 per month
Whilst it is obligatory to have suitable accommodation in Cyprus, all expenses incurred abroad (in the UK or elsewhere in the EU) whilst servicing the Contract are tax deductable expenses of the Cypriot Company servicing “short term” assignments.
Maximum assignment time● Ideally, an initial period of two months working from the office in
Cyprus should occur to develop “habitual working” status there, after that assignments should be between 3 to 6 months in duration.
● Where there is economic or project justification, periods of 12 months should be possible.
● It is also reasonable to return to the same project, after taking a “short break” of a couple of weeks back in Cyprus to renew the entry visa. During this time one would continue to work on the project remotely from the office in Cyprus during the week, and could enjoy the beach and generally pleasant weather during any time off.
Key Benefits
● Comparatively Low Capital Requirements for entry● Provides access to opportunities in the UK and
across the EU to non-EU citizens● Tax efficient● Dependants can enjoy a high quality of life, either
staying in Cyprus or travelling with the consultant worker when assigned to perform work in the UK / EU.
