You’ll want to approach projects abroad much the same as any other client. Set clear boundaries, keep an audit trail and use proper contracts. But there are a few practical considerations when working internationally.
Contract jurisdiction. What is the governing law?
When working with clients outside of the UK, you’ll need to be vigilant about which country’s law governs the contract. Especially if they’re US clients.
Most professional indemnity policies exclude US and Canada jurisdiction by default, and some are limited to UK and EU disputes only. If your contract says disputes are governed by the laws of California, for example, you would need to defend yourself under that legal system and this can be expensive.
If a client signs your contract and you’re based in the UK, it will usually state disputes are governed by your local law (for example Scottish law or English and Welsh law).
This is important not just for major disputes. The law around payment disputes and intellectual property varies between countries. It’s much harder recovering money from clients abroad where the contractual jurisdiction is their local law.
You have a few options:
- Ask the client to sign your contract with UK jurisdiction
- Extend your professional indemnity insurance to cover worldwide jurisdiction
- Charge the additional premium to your client if they won’t sign your contract with UK jurisdiction
- Decline the work. This is less than ideal but if the contract value isn’t very high yet the risk is, it may not be worth it
Accepting payments from abroad
International payments used to be frustrating and expensive, but services like Wise have made it simpler.
You can set up GBP, USD and EUR accounts with Wise. This means you can accept bank transfers from clients in the UK and abroad, then convert to GBP at a competitive exchange rate.
Wise is a simple way to avoid the delays and fees associated with traditional international bank transfers.
Tax considerations
Most overseas clients won’t be charged UK VAT. While you’d exclude VAT from your invoice you still need to report the sale on your VAT return so HMRC can see your total taxable turnover.
You should also be aware of tax regulations in the country your client is based in.
The UK has tax agreements with most countries. This means you only pay tax on your earnings in the UK, but some countries require withholding tax. This is when your client’s government deducts tax before paying you. If you’re not alert to this before working with the client, it can be a nasty surprise!
If you expect this to happen you have two options:
- Account for the withholding tax in your quote
- Include a clause in your contract that states any withholding tax is the client’s responsibility (this might be a good time to use your tax helpline included in your legal expenses insurance!)
It’s good practice when working with clients abroad to apply for a certificate of residence from HMRC. This document acts as proof you’re a tax resident in the UK and double-tax treaty rules should be applied.
Some clients might request this before making payment. Since it can take a few weeks to obtain one, it’s a good idea to have this in place prior to working with clients abroad.
Working with international clients? Keep these things in mind:
- Check what law governs the contract
- Make sure your insurance still applies
- Use a low-fee international payment service like Wise
- Apply for a certificate of residence from HMRC. The client may ask for proof
