Working Overseas? Reviewing the Draft Contract

BLOG1st Sep 2017

Our second blog summarised the importance to us of “Understanding the Project” when any clients work internationally. Once we understand what the work involves, we then normally require sight of the draft Contract. This is crucial for two reasons:

  1. The Contract itself is often the key piece of evidence, used to defend the company against any challenges made, against the company, by an overseas tax authority. Our review therefore ensures that the contract language appropriately describes, as far as possible, exactly what is being supplied by our client. In our experience, this review can be critical to the tax outcome. For example, we have encountered numerous clients who are not actually being engaged to perform any work whatsoever in the overseas country, but rather, they are simply providing personnel to work directly for their customers in those overseas countries. However, the Contract language often, erroneously, indicates that our client is performing services in the overseas country. Our review would always ensure such Contracts are amended, so that a clear distinction can be made to differentiate between a ‘Contract for Services’ versus a ‘Hire of labour Agreement’. The resultant tax consequences, between either type of Contract, vary significantly.


  1. Most Contracts normally contain tax clauses, which are often glossed over briefly, without fully understanding their impact on our client or, in some cases, ignored completely. However, it is vital these tax clauses are understood and, if appropriate, amended or deleted if any are onerous to our client. Our review ensures this is indeed the case.

Once we have undertaken these first two stages in our process, i.e. ‘Understanding the Project’ and ‘Reviewing the Draft Contract’, then we can start researching , understanding, and potentially mitigating, the various tax consequences that could arise, covering  Corporation Tax, Withholding Tax, VAT & Customs Duties, Income Tax & National Insurance, and any other taxes applicable.

Our next blog will explain a little more about what we do at this third stage, the tools at our disposal, and how we interpret our findings so that clients can understand their potential overseas tax obligations.

Please don’t hesitate to contact us for more information about the tax implications of working overseas.

How AAB can help you with

International Services

If you’re facing multi-jurisdictional challenges around global mobility, tax, employer responsibilities, accounting or other issues, we’ll save you the hassle of searching for international advice – the right people are already available in our expert teams and across our Reach Network. AAB works with multinational clients across the globe, so it’s only logical that we have a comprehensive and highly effective support network that work alongside our International teams to serve them, wherever in the world they operate.

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How AAB can help you with

Corporate Tax

Corporate Tax covers a broad and complex area of tax legislation, so we provide a suitably broad and comprehensively experienced team to support your business with pragmatic, commercial advice. Businesses of all sizes and types, and across a wide range of sectors, benefit from our comprehensive corporate tax compliance and advisory service. We have exceptionally knowledgeable tax teams distributed across our offices, ready to support you with their wealth of experience and expertise. We can manage your global tax exposure with a coordinated response that saves you having to seek advice from separate advisors.

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