B2B contracts and tax residency: what changes after relocation

Contracts don’t move, people do

Most B2B contracts are surprisingly static. They survive office moves, country changes, and even company restructurings. Tax residency, however, changes how those contracts are interpreted by tax authorities.

After relocation, the key question is not “is the contract still valid?” but “does the contract still reflect reality?”

If it does not, risk accumulates quietly.

Where income is really earned

From a tax perspective, income follows activity, not signatures.

Authorities look at:
- Where the work is performed.
- Who controls delivery and quality.
- Where key decisions related to the contract are made.

If a contract says one thing but daily operations say another, the operational reality will usually win.

Personal contracting vs. company contracting

Relocation often exposes a structure that was tolerated before.

If you contract personally:
- Your new residency directly affects taxation.
- Withholding tax exposure may change.
- Social security obligations can shift.

If you contract through a company:
- Management and control become relevant.
- The company’s tax residency may be questioned.
- Existing agreements may need clarification around representation and authority.

The contract itself may not require changes, but the risk profile does.

Governing law and dispute resolution suddenly matter

Many founders ignore governing law clauses until something goes wrong.

After relocation:
- Enforcement may become more complex.
- Certain clauses may be harder to defend in practice.
- Courts or arbitration forums may feel less “neutral” than before.

This does not mean contracts must be rewritten immediately, but it is often a good moment to standardize future agreements.

VAT, withholding, and invoicing mechanics

Relocation rarely changes the service, but it can change the tax treatment.

Common friction points:
- Reverse charge eligibility.
- Withholding tax clauses that were never enforced before.
- Invoice wording no longer matching your status.

These issues tend to surface during audits, not during day-to-day operations.

Permanent establishment risks hide in plain sight

A contract alone does not create a permanent establishment, but combined with behavior, it can.

Risk increases if:
- You routinely negotiate or conclude contracts in a specific country.
- Clients perceive you as locally present.
- Decision-making authority is not clearly documented.

Small operational habits can outweigh carefully drafted clauses.

When contracts should actually be updated

Not every relocation requires amendments.

Contracts usually deserve updates when:
- The contracting party changes (you vs. your company).
- IP ownership or licensing assumptions no longer hold.
- Payment flows or tax clauses no longer match reality.

Otherwise, internal documentation and process changes may be enough.

A better way to think about post-relocation contracts

Instead of asking “what do I need to change?”, ask:
- What does this contract imply about where I work?
- What assumptions does it make about control and responsibility?
- Would this still make sense to an auditor reading it years later?

Contracts are evidence. After relocation, you want that evidence to be boring and consistent.

Closing perspective

Relocation rarely breaks B2B contracts, but it often exposes misalignment between paper and practice. The safest approach is not aggressive rewriting, but thoughtful alignment: contracts, workflows, and tax residency telling the same story. When they do, relocation becomes a structural improvement rather than a source of long-term risk.