Readers question: I was wondering if I could get some advice about being self-employed and living abroad. I want to open a business account as a sole trader in the UK and pay my national insurance and pension to the UK. However, I live in Slovenia with temporary residency, as I am a British citizen. I live here as I got married to a Slovenian. I wanted to know how can I open as a sole trader as I work from home online teaching on a platform based in Asia. They just pay my salary nothing else. What would I have to pay to Slovenia as I live here and would I have to pay double social security? Or claim my benefits from the UK when I need them. Also, would I need a virtual office in the UK? My students, I just interact with them from the website the company provides.
Experts answer: Our expert is Michelle Reilly, CEO of 6CATS International and Founder of 6CATSPro.
Residential status
A person’s liability to pay Slovenian tax is determined by their residence status. An individual will be deemed to be a resident of Slovenia if their officially registered permanent address, habitual place or the centre of their personal and economic interests are in Slovenia.
In addition, any person who has been present in Slovenia for more than 183 days over the course of a tax year (calendar year) will be deemed a resident. A non-resident of Slovenia is generally someone who spends less than 6 months in Slovenia and does not meet any of the above conditions.
Generally, a resident of Slovenia will be taxable on their worldwide income, while non-residents are taxable only on their income derived from Slovenia. Extended business travellers are likely to be considered non-residents of Slovenia for tax purposes unless they enter the country with the intention to remain there for more than six months.
If you meet the requirements to fulfil tax residence status, you won’t be able to pay tax and social security in the UK, and you should register for tax and social security in Slovenia. It is possible to register as a sole trader in the country.
Paying UK taxes
If you eventually intend to return to the UK, it may be in your interest to keep your NI contributions up to date. To do this, you can set-up a direct debit with HMRC to continue paying class 2 NI contributions. You will need to complete the form titled ‘Application to pay self-employed National Insurance contributions by Direct Debit’.
If you don’t believe that you qualify for tax residence status in Slovenia, and you are currently a UK resident, then you can carry on paying taxes in the UK as your income will be sourced from Asia, not from Slovenia.
More on sole trader tax and sole trader accounts.
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