Does my one-person company have a permanent establishment where I live?
It can, and that is the question most contractors never ask about their own company. A company is taxable in a country where it has a fixed place through which its business is carried on, and for a one-person consultancy the place where the person works is capable of being exactly that. The company does not need an office, a sign or staff. A study used consistently for the company's only activity is enough to put the question in play. If it is answered against you, the company has a filing obligation and a share of its profit taxable in that country, and the invoicing arrangement you set up to keep things simple becomes two corporate returns instead of one.
My client is withholding tax I do not think I owe, what now?
Deal with it before the invoice is paid rather than after, because recovering withholding already remitted is slower and sometimes impossible. Clients withhold for two reasons: a domestic rule that applies to payments to non-residents, and caution where they cannot tell whether you have a taxable presence in their country. Both are answered with documentation rather than argument. Establish where the services are performed, whether your company has a fixed place in the client's country, and what the treaty between the two countries does with business profits in that situation. A written position, provided up front, is what lets a client's accounts payable release the gross amount.
I live in one country and invoice through a company in another, is that a problem?
It is not automatically a problem, but it is rarely as neutral as it looks. Three countries now have a possible claim: the one where the client is and the services are used, the one where the company is incorporated, and the one where you actually sit and do the work. Incorporation decides where the company is formed, not necessarily where it is managed or where its business is carried on, and both of those can sit with you. The structure has to be described accurately in each system before it can be defended in any of them. Set that out once, in writing, rather than answering three sets of questions differently.
Is my contracting corporation a personal services business?
It is worth testing before a year end rather than after an audit. Some systems have rules aimed at a corporation that exists to supply one person's services to what is in substance a single employer, and where they apply the ordinary treatment a small company expects is withdrawn, along with most of its deductions. The tests look at whether you would reasonably be regarded as an employee of the client but for the company: who controls the work, who supplies the tools, whether you can subcontract, whether you carry financial risk, and how many clients there really are. Cross-border work does not exempt a corporation from rules of this kind.
Which country taxes my contracting income if I have only one client?
The single-client fact does not by itself decide the country, but it does raise the two questions that do. First, whether you are genuinely contracting or are in substance employed by that client, because employment income is sourced where the work is performed and brings a payroll duty with it. Second, whether your company has a taxable presence in the client's country, which is usually about whether you work at their premises and how continuously. Where the answer to both is no, business profits are generally taxable where your business is carried on. Where the answer to either is yes, the client's country has a claim to be dealt with.
Should my company file a return in the country where I do the work?
Possibly, and the absence of an office does not settle it. Two separate obligations are in play. The company may have to file because its business is carried on in that country through a fixed place, which brings a corporate return and an allocation of profit. You may have to file personally because you live there and are taxed on what the company pays you, and on your share of its income under some systems. The two filings are connected but not interchangeable, and paying yourself a salary does not remove the corporate question. Work out both positions at the same time, before the first corporate year end closes.
How many days can I spend in a country before I become tax resident?
It depends on the country, and a day count is only ever the start. Many use a threshold in a tax year, some also look at averages across several years, and some have no day test at all and decide on where your home and life are. Two countries can both conclude you are resident, which is what the treaty tie-breaker exists to settle. Counting days without checking the tie-breaker is how people end up filing as resident nowhere. See the residency tie-breaker.
Do American citizens living abroad have to pay taxes?
American expats and green card holders need to file US returns for life, and many of them pay little or no US tax once the relief is applied — but the filing is what unlocks the relief, so the two questions have different answers. The exclusion for foreign earned income, the credit for foreign tax already paid and the treaty between the two countries between them usually leave the total at roughly the higher of the two countries' tax rather than the sum. Skip the return and none of it applies. See Americans abroad.
