Whether you’re booked to play a festival overseas or are lining a worldwide tour, exciting times are ahead! But international gigs come with international tax rules. So before you pack your suitcase. Before you even sign the contract. Take some time understand and plan around these rules. It can help you avoid being taxed twice on the same income.
We’re here to help you navigate these tricky waters and make sure there are no nasty surprises. We’ve put together this quick overview of some of the more common tax complications that come with international income.
Withholding Tax (WHT)
When you perform outside the UK, the country where you’re earning the income will often deduct withholding tax (WHT), usually between 10% and 30%.
WHT is a way for the country where you’re performing to tax income generated within its borders. The UK has tax treaties with many countries, which determine whether that country is entitled to deduct tax – and unfortunately, they often are. Only a few countries – such as Ireland, Denmark, and the Netherlands – may not deduct WHT in certain circumstances.
Unlike the UK’s self-assessment or corporation tax system, WHT is deducted at source, meaning the tax is taken before you get paid. That has cashflow implications and makes it even more important to plan ahead.
WHT rates and rules vary. Some countries deduct from gross earnings, others from net (after expenses). But since WHT is broadly equivalent to income tax, you can usually claim a foreign tax credit on your UK return. Make sure you keep any documents and paperwork relating to any amounts of WHT that have been deducted as evidence for HMRC.
Watch out if you operate through a UK limited company. Some countries, like the US, will ignore this entity and look to tax the income on you, as an individual. This will prevent you from claiming the foreign tax credit in your UK corporation tax. Once again, planning is critical to make sure an alternative entity (your limited company) can be used. Make sure you explore this, before finalising any contracts.
National Insurance/Social Security contributions
In addition to WHT, most countries will want to deduct social security contributions from your fee – essentially the overseas equivalent of National Insurance (NICs). Rates vary by country.
Unlike WHT, you can’t offset overseas social security payments against your UK NICs. But if a treaty is in place and you’re already paying NICs in the UK, you can often avoid these deductions altogether by providing the right certificate:
- For EU countries, you’ll need an A1 certificate
- For the US and other non-EU countries, it’s a Certificate of Continuing Liability
These certificates come from HMRC and often take months to arrive. So it’s imperative you apply early for there. Maslins can handle applying for and monitoring the application on your behalf, to help you avoid delays.
Quick tips
- You may need to file a tax return in the country where you’re performing. Speak with a local adviser to understand your filing and tax requirements.
- Talk to your promoter or agent in the relevant country, as they will probably have advice on how to reduce and avoid deductions.
Maslins can liaise directly with overseas agents and advisers on your behalf.
- Apply for HMRC certificates as early as possible.
- Keep hold of any documents showing WHT deductions – they’re essential for claiming tax credits
- Understand how you will be taxed overseas, in case you need to complete the performance through a different entity (like your limited company), and adjust contracts accordingly
International performances can be thrilling – but tax implications don’t have to be. With careful planning, the right documentation, and expert support, you can make sure your earnings are protected and you’re not paying more tax than necessary. Whether you’re hitting a one-off overseas festival or embarking on a world tour, Maslins can help you sort the paperwork so you can focus on the performance. Get in touch and tell us about your gigs.
