UK IT contractor working from Germany: tax guide

German law makes you fully liable to income tax if you have a residence or your habitual abode in Germany, and a continuous stay of more than six months always counts as habitual abode. The UK may still treat you as resident under the statutory residence test, so the 2010 UK Germany double taxation convention decides where you are resident for treaty purposes. Your UK company, IR35 and social security position need separate checks.

When do you stop being UK resident?

UK residence is tested tax year by tax year under the statutory residence test. HMRC guidance note RDR3 says you are automatically non resident if you were UK resident in one or more of the previous 3 tax years and spend fewer than 16 days in the UK in the year. The third automatic overseas test covers full time work abroad and needs fewer than 91 days in the UK and fewer than 31 days on which you work more than 3 hours in the UK. HMRC’s manual (RFIG20150) sets full time as an average of 35 hours or more a week, counting all employments and trades together.

If no automatic test applies, 183 days or more in the UK makes you resident; otherwise the sufficient ties test applies. In the year you leave, split year treatment under Case 1 needs UK residence that year and the previous year, non residence the next year through the third automatic overseas test, and meeting the overseas work criteria. You tell HMRC with form P85, or through the SA109 residence pages if you file Self Assessment.

When does Germany treat you as resident?

The Court of Justice of the European Union set out the German rules in its judgment in case C 223/25 of 17 September 2026. Section 1(1) of the Income Tax Act (EStG) makes natural persons who have a place of residence or their habitual abode in Germany subject to unlimited income tax liability. Under section 8 of the Fiscal Code (AO), you are resident where you occupy a dwelling in circumstances showing you will keep and use it. Under section 9, a continuous stay of more than six months always counts as habitual abode from the start, and brief interruptions are ignored. People without either are subject to limited liability on German income.

The European Union’s Your Europe guidance gives the general picture: each country has its own definition of tax residence, you are usually tax resident where you spend more than 6 months a year, and if two countries claim you, the double tax agreement usually decides. The EURES guide to Germany, dated 3 July 2026, gives the basic tax allowance as 12,348 euros for 2026 and says that shortly after moving you must register at the Residents’ Registration Office.

Confirm filing deadlines and tax rates with a German tax adviser (Steuerberater) before you move.

What does the UK Germany treaty say if both countries claim you?

The gov.uk Germany tax treaties page publishes the 2010 convention, which entered into force on 30 December 2010 with effect in the UK for Income Tax from 6 April 2011, and a consolidated text as amended by the 2021 protocol, which has effect for UK Income Tax from 6 April 2022. The Federal Ministry of Finance says such agreements distribute taxation rights between countries; see how double tax treaties work.

Article 4(2) is the tie breaker for individuals: permanent home available to you, then the state with which your personal and economic relations are closer, then habitual abode, then nationality, then mutual agreement. Article 14(2) keeps employment income taxable only in your residence state if you are in the other state for no more than 183 days in any twelve month period, your employer is not resident there and the pay is not borne by a permanent establishment there. Article 15 lets directors’ fees be taxed where the paying company is resident, and Article 7 taxes business profits only where the enterprise is, unless it has a permanent establishment in the other state.

Article 23 deals with double taxation. Germany generally exempts UK income that the UK may tax under the treaty but can take it into account in setting its rate of tax, and it gives a credit instead for some items, including directors’ fees. The UK gives credit for German tax on the same income. See foreign tax credit relief for how the UK credit works.

Where do you pay social security?

gov.uk guidance on National Insurance for UK workers in the EU says you need a certificate of coverage, also called a PDA1, if your UK employer sends you to work temporarily in an EU country for up to 2 years, or if you are self employed in the UK and carry out similar work temporarily in an EU country for up to 2 years. A certificate is also needed if you work in the UK and one or more EU countries at the same time. Employers apply with form CA3822 and self employed people with CA3837, and you cannot apply more than 12 months in advance.

The certificate route is for temporary work. If your move to Germany is open ended, ask HMRC which system applies before you start. See certificates and social security abroad and National Insurance when working abroad. HMRC’s NI38 guidance says that for tax years 2026 to 2027 onwards only voluntary Class 3 contributions can be paid for periods abroad.

What happens to your UK limited company?

HMRC’s International Manual (INTM120030) says a UK incorporated company is UK resident, subject to some exceptions, and that a company the treaty tie breaker gives to the other country is treaty non resident and not UK resident under section 18 of the Corporation Tax Act 2009. Article 4(3) of the UK Germany treaty treats a company resident in both states as resident only where its place of effective management is situated. If you are the only director and you run the company from Germany, review this with an adviser; see keeping a UK limited company after moving abroad. Article 5(1) defines a permanent establishment as a fixed place of business through which the business is wholly or partly carried on, and Article 5(5) adds a person who habitually exercises authority to conclude contracts for the enterprise.

Does IR35 still apply?

HMRC’s Employment Status Manual (ESM10025) says the off payroll working rules do not affect residence rules, do not apply if you would not be chargeable to UK tax or National Insurance if engaged directly, and that a non resident worker working outside the UK is unlikely to be within the UK charge. Where a medium or large client is wholly overseas, Chapter 10 does not apply and your company should consider Chapter 8. See IR35 when the client is overseas.

What are the key facts at a glance?

Question	Rule	Source
UK non residence	Fewer than 16 days, or full time work abroad with fewer than 91 UK days and fewer than 31 UK work days	HMRC RDR3
German residence	Residence or habitual abode; more than six months always counts	EStG and AO, as quoted by the CJEU
Treaty tie breaker	Article 4(2): home, closer relations, habitual abode, nationality, agreement	UK Germany convention
Relief in Germany	Exemption with progression, credit for some items	Article 23
Social security	Certificate of coverage for temporary work up to 2 years	gov.uk

How might this work in practice?

Illustration only. Tom contracts through his UK company and moves to Berlin on 1 August 2026, renting a flat on a two year lease and letting his UK house. He registers his address shortly after arriving. He has a dwelling he will keep and use in Germany, so he is resident there under section 8, and the only permanent home available to him is in Germany, so Article 4(2) would treat him as German resident. If he works full time in Germany and meets the third automatic overseas test in 2027 to 2028, he may qualify for Case 1 split year treatment in the UK.

What should be on your checklist?

• Keep a record of UK days and UK work days for each tax year.
• File P85 or the SA109 residence pages.
• Register your German address and appoint a German adviser for your first return.
• Ask HMRC about a certificate of coverage, or which system applies if the move is open ended.
• Review where the company is managed and whether it has a German permanent establishment.
• HMRC can open a check into a return after a move abroad, and the accountant’s fees for dealing with it can be insured through tax investigation insurance.

German rules change often. These points reflect sources read in November 2026, so confirm them with an adviser in Germany before relying on them.

Frequently asked questions

Does six months in Germany make me resident?

A continuous stay of more than six months always counts as habitual abode, but you can be resident sooner if you have a dwelling in Germany that you will keep and use.

Will Germany tax my UK company profits?

Under the treaty, generally only if the company has a permanent establishment in Germany under Article 7 or is treated as resident there under the place of effective management test in Article 4(3), so review how you run it.

Can I stay in UK National Insurance?

Only in the cases gov.uk describes, such as temporary work for up to 2 years with a certificate of coverage. Otherwise ask HMRC which system applies.

If HMRC opens a check into your return, tax investigation insurance pays your accountant’s fees. Solar Protect cover pays up to £100,000 with no excess; it never pays tax, interest or penalties. Read how our cover works or get a quote.

Sources

• GOV.UK: Guidance note for statutory residence test srt rdr3
• GOV.UK: manual page RFIG20150
• GOV.UK: manual page RFIG21040
• GOV.UK: Tax right retire abroad return to uk
• GOV.UK: Guidance on social security abroad ni38
• GOV.UK: manual page INTM120030
• GOV.UK: manual page ESM10025
• GOV.UK: Tax compliance checks
• GOV.UK: National insurance for workers from the uk working in the eea or switz
• GOV.UK: Tell hmrc about employees going to work in the european economic area

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 6 November 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.