I’m currently paying taxes in my home country (UK) since I have a regular job with a UK company. I live in Estonia with a DNV (and most likely plan on staying the full year).
Technically, if I stay more than 6 months I need to pay taxes here, however, they seem to make it quite complicated and expensive, given my employer doesn’t have an entity here.
This just got me thinking whether you guys in a similar situation just ignore this and assume nobody will say anything, or do you do everything by the book? Or do you make sure you don’t stay more than 183 days?
Your first mistake is paying taxes in the UK when you don’t live there. UK is a territorial tax country. It sounds like you need to hire an accountant in both countries. Don’t try to figure this stuff out for yourself, you will just end up paying more. I have some expérience dealing with HMRC snd they are very difficult to deal with.
Still, if his employer doesn’t have any branch in Estonia, for them paying taxes on employee behalf in Estonia could be so difficult that he could end up loosing his job.
I think what he needs to do is hire a UK accountant to reclaim 100% of the taxes he paid to the UK government. Then hire an accountant in Estonia. You can probably set up an Estonia based company, wire your company a few thousand dollars every month, and pay Estonia taxes only on the amount you pay yourself. Estonia has a low tax rate so you might end up keeping more money even with accounting fees.
You’re not getting the point of what I was saying. If he does that, his employer would probably fire him. This is because from a uk company is kind of a nightmare having an employee abroad (it’s different if he’s a freelance contractor)
Sure he is paying “useless” tax in UK but at the same time, this helps to keep his job. The reclaiming on tax could not be as much as the benefit of keeping his current job.