Remote Working Overseas - Income Tax

Hi I have tried a number of different times and receive different answers every time and it is getting very confusing. How does it work with tax and NI if I work for a UK remote company and I get paid into my UK bank account but living on a British Sovereign Base in Cyprus due to partners posting with the military. I do not return to the UK for another year and the majority of time I will be based in Cyprus. I do not own my own home in the UK. I have read about the double taxation treaty which Cyprus have signed, so therefore would I be entitled to still pay UK tax through PAYE and have that exempt from Cypriot tax? I earn just over my allowance to pay tax in the UK and I don't earn enough to contribute to tax in Cyprus anyway.

Hi,

If you are not employed as a 'crown servant' and are performing your employment duties in Cyprus, you are not considered to be on UK soil by performing your work at the base.

The UK/Cyprus Double Taxation Agreement at Article 14 says that salaries, wages and other similar remuneration derived by a resident of Cyprus in respect of an employment shall be taxable only in Cyprus unless the employment is exercised in the UK. You can see guidance here:

Cyprus-UK Double Taxation Convention as amended by the 2018 Protocol – in force

Thank you.

I have a job as a civil servant, my military spouse will be posted to RAF Akrotiri in October and my role is being supported as Hybrid so that I can continue to work. I am very confused though about the tax implications as I will be living in Cyprus when I work from home and then physically in the UK for work some times as well. Do I have to register as tax resident in Cyprus and will this affect all my income for tax purposes?

Hi vicky.culley,

Article 18 of the UK / Cyprus double taxation agreement, which can be found at:-
 Cyprus-UK Double Taxation Convention as amended by the 2018 Protocol – in force,
advises that salaries, wages and other similar remunerations paid by the UK government, is respect of work rendered to the UK,
shall only be taxable in the UK, unless you are a national of Cyprus.  
Any non government employment, even on the base, will be taxable in Cyprus.

Thank you.

Hi - I am in a very similar situation. I have moved to Dhekelia in Cyprus (UK Sovereign Base) with my husband who is in the Army. I am working remotely here for a UK government department, but am returning to the UK approximately once a quarter to go to the office to work for a few days at a time, before returning to Dhekealia to work remotely. I'm assuming your response above applies to me as well e.g. because the work I'm completing is for the government in the UK, and I'm a UK national, that work will only be taxed by the UK. Therefore, I don't need to make any changes to my tax code or notify HMRC formally?

Additional info: I'm only here for approx 1 year

Hi,

As you have left the UK and are continuing to work for a UK employer then you should complete form P85. You can see guidance here:

Tax if you leave the UK to live abroad

Thank you.
 

It's a government department in the UK, it isn't a standard UK employer. The advice given on this thread https://community.hmrc.gov.uk/customerforums/pt/f29e9d65-a1e2-ed11-913a-00155d978126 from HMRC admin conflicts with the advice that you're giving me. See below advice from your colleague: Article 18 of the UK / Cyprus double taxation agreement advises that salaries, wages and other similar remunerations paid by the UK government, in respect of work rendered to the UK, shall only be taxable in the UK, unless you are a national of Cyprus. Any non government employment, even on the base, will be taxable in Cyprus. ,which can be found at:- Cyprus-UK Double Taxation Convention as amended by the 2018 Protocol – in force, --- The HMRC website https://www.gov.uk/tax-right-retire-abroad-return-to-uk states that: You must tell HM Revenue and Customs (HMRC) if you’re either: leaving the UK to live abroad permanently - I am not going to work abroad full-time for at least one full tax year - I am not Therefore, if I am not going to be working abroad for one full tax year, and I am working for a government department in the UK in respect of work rendered to the UK, I should not need to change my tax details

Hi,

As you correctly point out, Article 18 of the UK / Cyprus double taxation agreement ( which can be found at:- Cyprus-UK Double Taxation Convention as amended by the 2018 Protocol – in force,) advises that salaries, wages and other similar remunerations paid by the UK government in respect of work rendered to the UK, shall only be taxable in the UK, unless you are a national of Cyprus. Your UK Govt employer should therefore continue to tax you under PAYE, and no change to your tax code would be required.

Apologies for any confusion caused by our previous reply.

Thank you.

Hello, My question is about Corporation Tax for a UK company employing a Cypriot based in Cyprus. I work for a UK based private company. We have an employee requesting to relocate back to Cyprus and they are Cypriot nationality with right to work in UK. As they are a Cypriot themselves, what tax obligations would we, a UK Company, have to continue employing them if they were to move back to Cyprus. I believe as a Cypriot the employee would be responsible for paying income taxes in Cyprus, is this right? As a company, with a permanent Cypriot employee in Cyprus would we be liable for Corporation Tax in Cyprus? I seem to be going round in circles reading the Gov guidance. Thanks, 

Name removed admin .

Hi,

The taxation of an employee working for a UK company, irrespective of their nationality, can be complex and usually depends on various factors, including tax treaties between the UK and Cyprus, the duration of the employment in each country and other specific circumstances.

If the employee is a tax resident of Cyprus and works exclusively in Cyprus, they will be subject to taxation in Cyprus. The fact that the employee works abroad should not affect Corporation Tax.

It is important to seek advice from the tax authorities in Cyprus to determine the company’s exact tax obligations. You can see further guidance here: 

Employees working abroad - GOV.UK (www.gov.uk)

Thank you.