Non resident income in EU

[mrb]

Good time of the day to everyone

When reading through various tax resumes on the KPMG website one typically finds the below sentence about majority of EU countries
What would be the taxation proceedings for an income received by an EU bank of a country of my origin, where I no longer live in and I no longer remain a tax resident of?
In fact I would like to de-register from my home country fiscal residency and will not posess any tax residency in any country within EU.
I am planing to live outside of EU contracting for my emplyer who is a company registered in a European tax area country (I have no ties to that country whatsover).

What is the general rule of thumb applied by tax authorities in Europe in that matter?
Is it just a mere annotation without practical application?

Salary earned from working abroad​

Is salary earned from working abroad taxed in Xxxx ? If so, how?
The taxation of salary earned from working abroad depends on an individual’s residency status and source of income.
As a rule, any remuneration derived by a tax resident individual is subject to tax in xxxx .
(…)
Non-residents are generally not subject to tax on income for work performed outside of xxxx.

 

[Sols]

You're taxed based on where you live. Whichever jurisdiction you end up living in, that's whose tax laws you need to familiarise yourself with. The tax and type of tax you have to pay often depends on how your income is earned (mainly salary vs. dividends; income tax vs. capital gains tax).

The company that you work for may need to figure out how to pay you once you become a non-resident. In most cases, employment is only offered to residents, as things like payroll taxes and social security contributions become very complicated for non-resident employees. Non-residents are most often hired as contractors instead. As a contractor, tax is entirely up to you to figure out. This is a question for your boss or HR department.

 

[Larin]

What that specific line refers to is the fact that, if for example, you live in Thailand, and work for a UK company in Thailand, you would be considered a non tax-resident in the UK and would therefore not be liable to pay income tax in the UK. The reason that gets mentioned is because the same rules do not apply for other sources of income, such as capital gains, which in fact could be taxed in the UK if you sold a local property there.

As Sols pointed out, the above would say nothing about your liability to pay income tax in Thailand (on the income from a UK-based company) and would need to be looked at separately.

Also, as Sols pointed out, the UK company could run into all sorts of tax issues in Thailand if they were to employ you directly there on full-time basis, so many company choose not to, or do so through third parties.

 

[mrb]

Thank you @Larin and @Sols

that is exactly what I mean, I would be contracting and the contract usually includes a clause defining the contractee as responsible for their own tax obligations and specifically calling them non-emplyees of the company.

The HR couldn’t care less
My worries are, the local EU (domestic) tax office would not go for it that easily, and would request a foreign tax residency certificate, from said Thailand to recognize their own fella as non-resident tax payer.
Even if conditions of less 183 days on home soil and no vital ties would be fulfilled, they would still try taxing the income under a non-resident rule (an avergage of 20% tax rate among EU jurisdictions, IIRC) without such certificate.

Am I frontrunning and/or being paranoid about the tax men viciousness?

 

[Larin]

My worries are, the local EU (domestic) tax office would not go for it that easily, and would request a foreign tax residency certificate, from said Thailand to recognize their own fella as non-resident tax payer.
Even if conditions of less 183 days on home soil and no vital ties would be fulfilled, they would still try taxing the income under a non-resident rule (an avergage of 20% tax rate among EU jurisdictions, IIRC) without such certificate.

Am I frontrunning and/or being paranoid about the tax men viciousness?

Generally, if you are not a tax resident of a country, the country's tax authorities would not come after you. The rule you quoted from KPMG is not conditional on you being a tax resident somewhere. It simply says that if you are not a tax resident in a country work performed outside of that country is not taxable. If you are staying physically away from that country then you should not run foul of that rule.

Where I've seen tax certificates come up is with withholding taxes, where a company may ask for a tax residency certificate to correctly withhold any taxes as may be applicable. If your employer is not withholding any taxes and is not asking for a tax certificate then you should be fine.

*please note that none of this should be considered tax/legal/accounting advice. Always seek independent advice as it may cost you much more down the round if you do not.