holding company setup

[speedfluss]

I'm looking to create a holding company as a place to park various online businesses that i run such as :

1. Online stores that sell physical products in Europe ( not dropshiping )
2. Blog that sells informational products ( Digital products )
3. Website that sells services ( Such as web design/ marketing services etc .. )

Information:

1. I am a Czech Republic tax resident.
2. I don't have access to Stripe because it's not supported in Czech Republic. ( I am accepting payments via PayPal only. )
3. I want to have a company business account to receive payments from clients.
4. I want a setup that is easy to manage ( not a lot of paperwork and tax fillings etc.., )
5. Clients location depends on which website they are buying from, For online store, clients are from Europe. For other businesses mostly US and other english speaking countries.
6. I don't think 0% tax is possible due to my tax residency, so a low tax setup would be Ok too.

What would be a suitable setup for someone in my situation? which jurisdiction makes sense?

 

[John Andrews]

Not sure what's your budget and how strict is the Czech tax administration in regards to CFC rules, but I would try to set up a UK LTD or a company in Estonia and apply for a business bank account in a Czech bank. For PayPal/Stripe you can use an EMI.

 

[speedfluss]

mange38 said:
Not sure what's your budget and how strict is the Czech tax administration in regards to CFC rules, but I would try to set up a UK LTD or a company in Estonia and apply for a business bank account in a Czech bank. For PayPal/Stripe you can use an EMI.
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If i would go with UK LTD company, from what i read, i wouldn't be taxed on foreign income that's generated outside of the UK right? But what kind of taxes will i be paying in CZ since i live here, i guess the regular rate of 19% for corporate taxes?

 

[John Andrews]

speedfluss said:
If i would go with UK LTD company, from what i read, i wouldn't be taxed on foreign income that's generated outside of the UK right? But what kind of taxes will i be paying in CZ since i live here, i guess the regular rate of 19% for corporate taxes?
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The 'no taxes on foreign income' is a LLP thing, you will have to pay 19% if you have a UK LTD.

In regards to CZ, no idea, you have to speak with a Czech accountant.

 

[xzods]

@mange38 It also applies to a UK Ltd if you don't have a permanent establishement in the UK

 

[WoWNull]

xzods said:
@mange38 It also applies to a UK Ltd if you don't have a permanent establishement in the UK
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are you sure about this point? because when i speak with accountants they say all my income on the ltd is taxable for 19%

 

[John Andrews]

WoWNull said:
are you sure about this point? because when i speak with accountants they say all my income on the ltd is taxable for 19%
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Yeah xzods is wrong. This applies to foreign companies with an office (PE) in the UK and it's like that in most EU countries. However it doesn't apply to local UK companies.

If you want to "avoid" uk corp tax and only have your UK income taxed, you can use a UK LLP with two members, yourself and a dormant company (some providers offer this so you don't have to incorporate it yourself).

 

[WoWNull]

mange38 said:
If you want to "avoid" uk corp tax and only have your UK income taxed, you can use a UK LLP with two members, yourself and a dormant company (some providers offer this so you don't have to incorporate it yourself).
Click to expand...

mmm do you have some article explain this? maybe there is time for me to change my ltd to llp 😛 i have only 3 or 4 client from UK lol

speedfluss said:
don't have access to Stripe because it's not supported in Czech Republic
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for stripe, they accept you for UK LTD and they need the following.

* A UK bank account
* A UK physical address where you can receive mail (cannot be a PO box)
* A UK phone number
* A UK tax ID number
* A working website
* A Government-issued ID from any country

 

[John Andrews]

WoWNull said:
mmm do you have some article explain this? maybe there is time for me to change my ltd to llp 😛 i have only 3 or 4 client from UK lol
Click to expand...

You can keep the LTD, just make it dormant and close all accounts, you can use it as one of the partners for the LLP.

 

[John Andrews]

WoWNull said:
* A UK bank account
* A UK physical address where you can receive mail (cannot be a PO box)
* A UK phone number
* A UK tax ID number
* A working website
* A Government-issued ID from any country
Click to expand...

If he has a Czech company he probably has a website. Bank account doesn't have to be from the UK and UK phone number is easy to get (same as address because how else would you register the UK LTD)

 

[WoWNull]

mange38 said:
If he has a Czech company he probably has a website. Bank account doesn't have to be from the UK and UK phone number is easy to get (same as address because how else would you register the UK LTD)
Click to expand...

Yes, these points from stripe support btw.

 

[robinhood]

mange38 said:
You can keep the LTD, just make it dormant and close all accounts, you can use it as one of the partners for the LLP.
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But still it the llp will make income and if the uk ltd has 1% of shares you'll have to declare that and pay taxes on it so it won't be dormant anymore.

 

[John Andrews]

robinhood said:
But still it the llp will make income and if the uk ltd has 1% of shares you'll have to declare that and pay taxes on it so it won't be dormant anymore.
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(citation needed)

how would you pay out the 1% to the uk ltd if there is no LLP agreement and if the LTD doesn't even have a bank account.

if you take some time to search companies house you will find that there are plenty of LLPs with dormant LTDs as designated members.

I assume there are also cases where a member is purely there for management and isn't entitled to part of the profits.

 

[robinhood]

The members of LLP are taxed by transparency, if the LLP has an income the shareholders will have to pay taxes based on the income proportioned to their shares.

 

[John Andrews]

robinhood said:
The members of LLP are taxed by transparency, if the LLP has an income the shareholders will have to pay taxes based on the income proportioned to their shares.
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As far as I know no law permits you from specifying that a designated member has 0% share in profits.

 

[blockchain4ever]

mange38 said:
Yeah xzods is wrong. This applies to foreign companies with an office (PE) in the UK and it's like that in most EU countries. However it doesn't apply to local UK companies.

If you want to "avoid" uk corp tax and only have your UK income taxed, you can use a UK LLP with two members, yourself and a dormant company (some providers offer this so you don't have to incorporate it yourself).
Click to expand...

No xzods is correct. A non-dom non-resident company pays no tax in the UK given that:
1. It it tax resident in a country with which there is a DTA between UK and the country.
2. It does no business in UK.

 

[John Andrews]

blockchain4ever said:
No xzods is correct. A non-dom non-resident company pays no tax in the UK given that:
1. It it tax resident in a country with which there is a DTA between UK and the country.
2. It does no business in UK.
Click to expand...

He is talking about taxation of UK LTD, not foreign companies.

UK limited pays corporation tax on all income (except dividends but this is not what we're talking about here), it doesn't matter if it's UK sourced or not.

 

[blockchain4ever]

mange38 said:
He is talking about taxation of UK LTD, not foreign companies.

UK limited pays corporation tax on all income (except dividends but this is not what we're talking about here), it doesn't matter if it's UK sourced or not.
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It's simply not true. If the conditions I say are true, then it is a treaty non-resident company and pays no tax. You only have to file as a dormant company in the UK.

Please read the HMRC international manual on this.

https://www.gov.uk/hmrc-internal-manuals/international-manual/intm120070

 

[John Andrews]

Isn't a UK Limited by default resident in the UK though? This is a special case and you need to manually apply for CTA09/S18 with HMRC to get TNR status.

Last edited: Dec 5, 2019

 

[blockchain4ever]

mange38 said:
Isn't a UK Limited by default resident in the UK though? This is a special case and you need to manually apply for CTA09/S18 with HMRC to get TNR status.
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If's not difficult. I'm guessing there are 100k companies like this in the UK as it was a very cheap way of avoiding expensive audits in The Netherlands previously. I used one previously, paid GBP 200 to set one up, and given a yearly audit that would cost GBP 1000, it was a no-brainer.