Setting Up Irish Company For Working Abroad

[Daniel]

Hi,

I've been offered a short-term position by an Irish company. So the arrangement would be that I would set-up a limited company that I would be the sole director of and pay myself a salary from the company.

The position itself involved carrying out work in Canada. The duration is a minimum of 6 weeks however it may be extended and could last as long as 12 - 24 months. There may be occasions where I have to travel back to Ireland on business for short stays (1 / 2 weeks). Either way, I will be staying in Canada even if the position is not extended so I will be a Canadian tax resident for this year and the next and I would most likely seek a permanent position in Canadian working for a Canadian based company. I have a Canadian Visa called an IEC Working Holiday Visa and I am entitled to live and work in Canada for 2 years.

What I want to know is can I consider the cost of my flights to Canada, cost of flights back to Ireland, my accommodation costs while there and a subsistence rate as a company expense?

The maximum subsistence rates decrease as the duration of the stay increases but let's just say that this will fall into the category of a long-term absence.

From Revenue website:

Long term absence
A long term absence will be more than six months.

• For the first month of the absence you can allow subsistence for the overnight rate. This is to facilitate the employee to find self catering accommodation.
• For the remainder of the absence you can allow subsistence costs and a portion of the ten hour day rate. The subsistence cost can cover the cost of reasonable accommodation. You can allow 50% of the day rate (ten hours) for the location.

So my understanding would be that the cost of (reasonable) accommodation (let's say €1250 per month) can be considered a company expense and 50% of the day rate ($110.83 for Toronto, divided by 2 and converted to € is about €35 per day). So can this €2300 per month be considered as a company expense? Then the remainder of the company's profits are paid to me a salary and I would pay Irish tax on this? Canadian tax rates are lower than Ireland and there is a double taxation treaty in place so I shouldn't have any Canadian tax liability.

 

[torblednam]

Not a chance this will fly.

Where exactly are you going to be absent from??

You need to read these tax briefings as a starting point.

[broken link removed]

[broken link removed]

 

[T McGibney]

And in addition, you won't be entitled to the 12.5% Corporation Tax rate as you clearly won't be carrying on a trade in Ireland.

Get strong professional advice if the figures in question are anyway sizeable and remember always that if it sounds too good to be true, it probably is.

 

[Daniel]

Thanks for the replies and links. I guess the below excerpt answers my question:

"Similarly, an individual whose services are provided via an intermediary
and who incurs expenses in living away from home cannot claim the cost of living
away from home."

"The fact that an intermediary may provide the individual’s service under a series of
short-term contracts does not alter the position. Each location at which the individual
provides services becomes a "normal place of work" while the services are being
provided to that end-user. The expenses of travelling from home to each of these
locations or the expenses of living at those locations cannot be reimbursed tax-free."

"The situations dealt with in Tax Briefing 3 of 2013 are to be distinguished from
situations where a company provides goods or services, other than the services of a
specific individual, to its customers or clients. There is no change in Revenue’s
interpretation or application of the law in relation to such cases. Previous Revenue
published practice as set out in Revenue leaflets IT51 and IT54 and Statement of
Practice SP IT/02/2007 continues to apply."

If I could justify Dublin as my normal place of work would this justify my claims of expenses for accommodation and subsistence in Canada? I guess this is how the company that I currently work for as a permanent employee can send employees abroad for periods of over 6 months covering their accommodations costs and paying them a subsistence rate and using this as a business expense.

Questions on the corporation tax, if I have a limited company and I pay myself a salary that leaves zero profit left in the company, there's nothing left to pay corporation tax on though?

 

[T McGibney]

If I could justify Dublin as my normal place of work

But according to your opening post, Dublin will not be your normal place of work for the duration of this contract.

Questions on the corporation tax, if I have a limited company and I pay myself a salary that leaves zero profit left in the company, there's nothing left to pay corporation tax on though?

Well obviously.