UK + Polish tax+costs of employing a Polish staff for UK Company
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£100(approx. $125)
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Description
Experience Level: Entry
Estimated project duration: 1 day or less
I need an accountant (or aligned professional) with knowledge of both UK and Polish employment/tax systems to help us understand the best/simplest/most efficient way to pay one staff member in Poland.
We're a small UK company. We have a Polish contractor working for us whilst they were a student. We would now like to take them on full time. They will continue to reside in Poland. We have agreed a total cost-to-our-company salary for them, which will put them in the upper tax band in Poland, so it may be more efficient for them to set up a Polish company and contract to us through that (this apparently allows them to pay 19% rather than 32% tax, and reduced social insurance costs - but might, for example, require that VAT is paid on their work, which would undo any such benefit).
I need a summary of the costs and any red-flags involved in the various possible structures for employment/contracting. We're not wanting to do anything "fancy", just whatever is the simplest, most efficient way to pay them for the agreed work. I'm reasonably sure there will be only one obviously best solution once someone with experience of both systems lays out the key issues, so I expect this is a very quick job for someone who already knows the answer off the top of their head. I realize you can't predict post-Brexit what will work best, so I only care about the current situation.
The issues I know of that need balancing would be
UK side:
- do we have to pay UK Employer's National Insurance, pensions or any other costs/taxes on a foreign worker?
- do we have to pay anything other than invoiced value if they're a contractor (specifically, VAT, but anything else also)
- are there any legal red-flags like employment rights or pension rights we should be aware of in either situation?
Polish side:
- what are all the required taxes/costs the UK company would have to pay in Poland, and who to, if an employee on a UK company? (e.g. employer's contributions to things like pensions, healthcare, income-related taxes, etc)
- what are the employee's taxes (I know about the 18%/32% tax thresholds, what else is there?)
- If they set up their own company, and contract through that, what are the associated costs (costs of setting up / running that single-person company, the tax rates they would need to pay, the social insurance/pension and other costs they would need to pay, and so on - and particularly, do they need to charge us VAT?)
NB: I don't expect to hold you responsible for any advice you give on this - I'm just trying to make sure I've "done my homework" before writing a contract for this person. If it doesn't end up being the most tax efficient system or whatever, that's a shame, but I won't be suing you. What I do expect is that you're able to back up the assertions you make about what various costs/taxes are required - this will probably be just a few links to government websites, and these can be in Polish or English. Your summary should however be written in English.
We're a small UK company. We have a Polish contractor working for us whilst they were a student. We would now like to take them on full time. They will continue to reside in Poland. We have agreed a total cost-to-our-company salary for them, which will put them in the upper tax band in Poland, so it may be more efficient for them to set up a Polish company and contract to us through that (this apparently allows them to pay 19% rather than 32% tax, and reduced social insurance costs - but might, for example, require that VAT is paid on their work, which would undo any such benefit).
I need a summary of the costs and any red-flags involved in the various possible structures for employment/contracting. We're not wanting to do anything "fancy", just whatever is the simplest, most efficient way to pay them for the agreed work. I'm reasonably sure there will be only one obviously best solution once someone with experience of both systems lays out the key issues, so I expect this is a very quick job for someone who already knows the answer off the top of their head. I realize you can't predict post-Brexit what will work best, so I only care about the current situation.
The issues I know of that need balancing would be
UK side:
- do we have to pay UK Employer's National Insurance, pensions or any other costs/taxes on a foreign worker?
- do we have to pay anything other than invoiced value if they're a contractor (specifically, VAT, but anything else also)
- are there any legal red-flags like employment rights or pension rights we should be aware of in either situation?
Polish side:
- what are all the required taxes/costs the UK company would have to pay in Poland, and who to, if an employee on a UK company? (e.g. employer's contributions to things like pensions, healthcare, income-related taxes, etc)
- what are the employee's taxes (I know about the 18%/32% tax thresholds, what else is there?)
- If they set up their own company, and contract through that, what are the associated costs (costs of setting up / running that single-person company, the tax rates they would need to pay, the social insurance/pension and other costs they would need to pay, and so on - and particularly, do they need to charge us VAT?)
NB: I don't expect to hold you responsible for any advice you give on this - I'm just trying to make sure I've "done my homework" before writing a contract for this person. If it doesn't end up being the most tax efficient system or whatever, that's a shame, but I won't be suing you. What I do expect is that you're able to back up the assertions you make about what various costs/taxes are required - this will probably be just a few links to government websites, and these can be in Polish or English. Your summary should however be written in English.
Shamus H.
100% (4)Projects Completed
3
Freelancers worked with
3
Projects awarded
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Last project
31 Aug 2020
United Kingdom
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