Other questions

What is an Umbrella Company?

An umbrella company acts as an employer to professionals who are recruited for temporary project work by specialist recruitment agencies or in some cases by end clients. Agencies and end clients only issue contracts to limited companies that can prove that their staff comply with tax and social security regulations.  By employing the professionals, Umbrella companies offer the compliance guarantees required by the agencies, administer the professional’s contractual requirements and deduct from their salary the proper statutory contributions.

My agency told me to contact you.  Why do I need a management company?

• Normally, neither your agency nor the end client can pay you unless you become their employee and they become responsible for your taxes and social security
• Equally, if you have a limited liability company this may not work for you in the location you plan to work because it may not meet local requirements in law, tax or social security and you may end up paying too much tax in the wrong place and no tax in the right place
• In terms of the agency and end client, Conto Direct takes away the tax and social responsibility as well as most of the timesheets and invoicing administration
• In terms of you, the contractor, Conto Direct makes sure that you receive your maximum take-home pay, fully, promptly and without any of the worries that come when you work on your own or in a foreign country

What do I do if I am unhappy with the service you provide?

In the first instance, speak to your Customer Service Manager. If the Customer Service Manager does not resolve your problem to your satisfaction, contact the Director, Yatish Lodhia, ylodhia@contodirect.com who will take up the matter on your behalf.

What services do you provide?

In general, we make sure you have the highest return on your take-home pay by minimising your tax and social security burden. In particular, these are our functions:

• Compliance: we make sure your tax, social security and work status matters meet all legal requirements
• Administration: we pay your tax and social security contributions, deal with the appropriate local authorities, provide the necessary returns and help you register locally
• Professional insurance: all our employed contracts are covered by our Professional Indemnity Insurance
• Banking: we can write a letter to support your application and help you open an account in your country of work
• Personal insurance: we can advise you on a range of personal, family and professional insurances
• Financial services: we can introduce you to qualified financial advisors who can explain the opportunities open to you

Which countries do you cover?

For PAYE and limited companies' solutions, UK, Ireland, and The Netherlands – but check our website, we are planning many more. For Payment and Invoicing (P&I), any country, but only subject to the express instruction of your agency or end client.

Do I need a bank account in the country where I am?

If you are employed, we recommend you open an account with a local bank so that you can withdraw cash and use the services and expertise of a bank familiar with the place where you are working and the local regulations.

Why are there bank charges in my statement?

Normally, we pay our own outgoing bank charges and you your incoming ones. We charge outgoing bank charges only if you have asked for a special same-day service like CHAPS.  Otherwise, if our bank charges have come to you, it is probably a mistake: please contact us and we shall look into the matter at once.

Are my affairs kept confidential?

Your affairs are strictly confidential and information can and will be disclosed to third parties only with your express written consent. However, we are contractually obliged to provide some information to your agency or end client to prove your compliance. Please see our Privacy Policy at http://www.contodirect.com/privacypolicy

Are my affairs reported to official bodies?

Your affairs are reported to the necessary official bodies only if you are employed by us and we make payment of taxes and social charges on your behalf, as is usual in employment.

How do I know that the money held by you is secure?

We would rather not hold any of your money at all because this represents considerable administrative burden on us. However, in order to help you maximise the value of your contract, this often becomes a necessity. You may rest assured that we regard all funds held by us on your behalf as 'client monies' as defined by the leading EU professional bodies. These monies are placed in a tightly controlled, designated client deposit account with our bank until they are paid over.

What is this compliance?

Compliance is the business of making sure that you are working legally and meeting your local tax, social security and residence obligations; and that we can provide evidence to your agencies and their clients that this is the case.

Can I by-pass the agency and work directly with my end client?

It may not be possible or advisable for two main reasons:

• Legally, your agency's agreement and our own employment contract may prevent you from working for the end client or its associates for a period of time or in a certain capacity
• Practically, having an agency will help you find work sooner when the current assignment comes to an end and have more options for future assignments, remuneration packages or work location

Can I have a contract with more than one agency?

Probably not, because of conflict of interest. Please check first with your current agency or contact your Customer Service Manager for further advice.

Can I have a contract with more than one end client?

Possibly yes, providing that there is no conflict of interest and your agency, the first end client and any other party all agree. Your Customer Service manager will advise.
 

TAXES

Can I choose where and when I pay tax?

The answer is No!  These are aspects which are dealt with by the law. You do not have a say in these matters, although we will assist you in legally minimising and delaying any tax due as far as is possible.  The Double Tax Treaty in force between the country where you are working and the country in which you are ordinarily resident determines where the taxes should be paid. Equally, the Social Security Treaties determine where Social Costs should be paid.  The Treaties take precedence over domestic law.

Do I really have to pay any tax at all if I am working abroad?

The general rule is 'yes', regardless of what you hear to the contrary. 

• In most countries, tax-residents are liable for all their income worldwide. In our own country, you are normally resident until and unless you tell the tax authorities that you are going abroad for a prescribed minimum period of time. In your work country, you may become tax-resident automatically if you stay there 12 months or more
• Practically every country will expect you to pay taxes on the money you earn there, unless you are already paying taxes somewhere else
• Your end client may be prosecuted and fined if the tax authorities discover that you have not paid your taxes

If I stay in a country for less than six months, can I avoid paying tax?

The short answer is no. Even if you do not have a tax liability in the work country, you are likely to have to pay taxes on your foreign earnings at home.  Furthermore, the ‘183 day rule’ or ‘six month rule’ only applies where there is an income tax convention between your home and destination countries, and generally only if you are employed. In the European/EFTA area you can expect that:

• if you are employed by a company in your home country and sent abroad, for the first six months you will continue to pay taxes in your home country
• if you are employed by a foreign company to work in that country, you pay taxes in that foreign country from the first day of work
• if you are self-employed, you pay taxes in the country of work from the very start

Tax treaties are frequently renegotiated, meaning that what may have been permissible when you enter a country can backfire on you whilst you are actually there.

The 'rule' is intended to determine which of the two countries will tax you, not for you to use as a weapon to evade tax.

I know of contractors who say that they have never paid tax.  Can I do the same?

It only means that they have not yet been caught. Tax evasion is illegal and the consequences include large fines, interest penalties and even substantial jail terms. This is not a matter to take lightly as exchange of information between countries is now common practice and raids by local police on client sites are frequent. This means that there is a very good chance indeed that tax evasion will be detected and the offenders prosecuted. You should also note that ignorance on this point is no defence.  We do not encourage or condone tax evasion. We are qualified experts who deal with international tax matters every day.  Simply contact us and we will help you to legally maximise your retention.

What if I were to receive a local tax bill and leave the country without paying?

You might well find that the local taxman approaches your home country's tax authorities to recover the debt.  This is far more common than you might imagine, even where countries with apparently unsophisticated tax systems are involved.  Bearing in mind the potential consequencies of tax evasion, is it worth taking this risk?

Can I make my local contracting earnings tax-free in my home country?

The answer will often be 'yes', provided you become non-tax resident in your home country.

SOCIAL SECURITY

If I do have to pay social security contributions, is this in addition to tax?

Yes. However, if you pay taxes and social security contributions in the same country, your social costs will often be allowed as a deduction when calculating your tax, which means a lower tax bill. This is not the case if you pay social security in one country and taxes in another.

What is the E101?

The E101 Certificate is the official proof that you are paying social security. It is issued by the EU country where you pay social charges and exempts you from paying the same anywhere else in the EU or EFTA.

What if I am not from the EU?

You may be able to remain within your home country scheme if there is a social security treaty (or 'totalisation agreement') between your home country and where you are working.  Again, we advise on an individual basis.