Tax as company director

[Nicetoknow]

Hi

My husband and I both work for a small business that is incorporated in Ireland. I am 40% shareholder and a director. There us one other director (60% shareholder) I work full time for this company. My husband works part time.

During covid we have come to realise that given we can work remotely we would like to try life abroad...somewhere warmer for a year or two. Malta seems like a good option because we'd like to stay in Europe and we could get by without speaking a foreign language.

On investigation (googling) I see that because I am a company director I would need to continue to pay PAYE on my full salary in Ireland and so would my spouse. This is a pain since it looks like I would have to pay a lot less tax ( zero tax on income not remitted to Malta) if I was not a director.

Am I right in my understanding? Would it be mad no relinquish being a director to enable me to may less tax? Would that break any rules? Thanks

 

[dublin67]

Yes, you are correct in that once you are a director PAYE applies to directors fees regardless of tax residency. Some tax treaties will override that but most won't. You could try and separate the employment status from your director's status but that can be a difficult argument to win with the Revenue. Leaving as a director would, most likely, get rid of your tax problem but it greatly reduces your options as directors pretty much run the company. If you husband works in the company then why not increase his salary by the amount that yours is reduced. If he isn't a director he won't have the problem you have. You can keep up a small level of directors fees (€5K) - it isn't bomb proof but it may provide you with options.

 

[Gordon Gekko]

I think you need specialist tax advice; it should be possible to structure your affairs in a manner where you’re getting dividends rather than salary for example.

 

[Nicetoknow]

Thanks - we are both working in the company but only I am a director. I will seek specialist advice but I feel you need to know the right questions to ask so this has helped - thanks again.

 

[Nicetoknow]

Yes, you are correct in that once you are a director PAYE applies to directors fees regardless of tax residency. Some tax treaties will override that but most won't. You could try and separate the employment status from your director's status but that can be a difficult argument to win with the Revenue. Leaving as a director would, most likely, get rid of your tax problem but it greatly reduces your options as directors pretty much run the company. If you husband works in the company then why not increase his salary by the amount that yours is reduced. If he isn't a director he won't have the problem you have. You can keep up a small level of directors fees (€5K) - it isn't bomb proof but it may provide you with options.

When you say it isn't bomb proof - what exactly is the risk? I've never had any dealing with Revenue (except to pay all my taxes!)