Offshore company with substance to avoid taxation in the UK!

[uplana]

I have looked a bit at the rules that are in the UK and seen that it is easy to get a VISA today, costs around £ 655 for 5 years and there are only a few conditions that I can meet without any problems.

The rule is also that if you as a foreigner come and settle in England but get the money from abroad e.g. by lending a house in another country or having a company in another country, then they are tax free in England.

I have just researched these things with an auditing office in England so now my big question is how to set up a company e.g. in BVI, Romania or other places that have "substance" but also have to have an employee so that it can be said that it is operated in the country in question and not in the UK?


With all the talk we've had here on Offshorecorptalk, I can not understand at all that no one else knows about it or has asked about it. After all, it is a perfect and legitimate way to enjoy tax exemption for at least 5 to 10 years.

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[lory]

The 5 year tax freedom rule I didn't knew about. Interesting part is how you will setup something that the HMCR will approve for your tax freedom.

Romania may be indeed an good option, workers are cheap so office space may be, but how do you trust anyone there unless you are close body with someone?

 

[Martin Everson]

uplana said:
I have just researched these things with an auditing office in England so now my big question is how to set up a company e.g. in BVI, Romania or other places that have "substance" but also have to have an employee so that it can be said that it is operated in the country in question and not in the UK?
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You need to find provider over there that specializes in providing substance for companies i.e resident director services. I don't imagine this would be cheap as such services would normally be domain of big corporations and hedge funds etc with deep pockets but I could be wrong.

A quick google shows

http://www.mjsandassociates.com/bvi-director.html

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[lory]

Martin Everson said:
http://www.mjsandassociates.com/bvi-director.html
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something you googled or some company you know? do you have any recommendations to a serious provider?

 

[Martin Everson]

lory said:
something you googled or some company you know? do you have any recommendations to a serious provider?
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Something I quickly googled.

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[PolishCourier]

Finding anybody who offers full directorship / substance in times where money laundering is day to day problem and AML laws are so strict in a reputable jurisdiction is definately not cheap and pain in the a*s. I used to offer these kind of services but rather nobody interested in full directorship service for EUR 15000 per year, as this is real cost for this kind of setup. In case of part time worker who is not a professional director it may be EUR 500 per month but will you meet a substance test without local director.... depending on your own law of residence.

 

[stevy777]

Why not Move yourself to Isle of Man ? Better than U.K. anyway there

 

[uplana]

stevy777 said:
Why not Move yourself to Isle of Man ? Better than U.K. anyway there
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Because the UK has much more to offer, in regards to infrastructure, and much other stuff, like legal stuff, which I have made some research on.

PolishCourier said:
I used to offer these kind of services but rather nobody interested in full directorship service for EUR 15000 per year,
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That's some sort of money of course, but working on a legal project should not bring the amount that high, even though paying 1250 / month would be okay to pay for such an service.

Will have to look into it further also with the guys @Martin Everson found, if it's possible, I'm all in.

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[lacomaco]

uplana said:
I have looked a bit at the rules that are in the UK and seen that it is easy to get a VISA today, costs around £ 655 for 5 years and there are only a few conditions that I can meet without any problems.

The rule is also that if you as a foreigner come and settle in England but get the money from abroad e.g. by lending a house in another country or having a company in another country, then they are tax free in England.

I have just researched these things with an auditing office in England so now my big question is how to set up a company e.g. in BVI, Romania or other places that have "substance" but also have to have an employee so that it can be said that it is operated in the country in question and not in the UK?


With all the talk we've had here on Offshorecorptalk, I can not understand at all that no one else knows about it or has asked about it. After all, it is a perfect and legitimate way to enjoy tax exemption for at least 5 to 10 years.
Click to expand...

1. There might be special visa possibilities, with non-guaranteed results or the visa cost could be GBP655 but there are other requirements such as investing 2m GBP 🙂 Here are the different possibilities Immigration Rules
2. Maybe I am wrong, but under the non-dom system income which is not earned and not remitted to the UK remains tax-free
3. If you control and manage your BVI from the UK then even if you are a non-dom, profits of the company will be taxable in the UK. Please do not claim that BVI nominees will make all the business decisions - HMRC is not friendly with taxpayers

 

[uplana]

lacomaco said:
2. Maybe I am wrong, but under the non-dom system income which is not earned and not remitted to the UK remains tax-free
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That's exactly what I'm looking into and want to achieve. It's not easy, but somehow possible.

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[Larin]

uplana said:
That's exactly what I'm looking into and want to achieve. It's not easy, but somehow possible.
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As a UK non-domiciled tax resident you, opt into what HMRC calls claiming the remittance basis. You will find more information here: Tax on foreign income but the process for claiming remittance basis is relatively simple. However choosing whether to do it, may not be so straightforward.

There are annual charges for doing this after 7 years going up to £60k after 12 years.

And naturally, if you do remit any money to the UK, which would include using a credit card to pay for a coffee that would be taxed in the UK.

Section 9 of this document will be relevant to you: Guidance note for residence, domicile and the remittance basis: RDR1

And if you want to get even more technical: RDRM33000 - Residence, Domicile and Remittance Basis Manual - HMRC internal manual - GOV.UK or less: What is a remittance? | Low Incomes Tax Reform Group

In regards to your question about the company, what would such a company do? Is it just going to hold your assets, or will it actually do anything productive? I ask because simply holding your money in a personal account overseas would avail you of tax liability in the UK, or are you planning to receive a salary from a foreign company while living in the UK? Because the latter would mean that the income arises in the UK and tax would be due regardless of where the company is located/managed/etc.

 

[uplana]

Larin said:
In regards to your question about the company, what would such a company do? Is it just going to hold your assets, or will it actually do anything productive? I ask because simply holding your money in a personal account overseas would avail you of tax liability in the UK, or are you planning to receive a salary from a foreign company while living in the UK? Because the latter would mean that the income arises in the UK and tax would be due regardless of where the company is located/managed/etc.
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This actually answer the question in fullest. The company abroad, is the one employing me, while I will be living in the UK. For that reason no tax exception will apply, if I read you correct.

So as it stands right now, if I setup a company in the UK, register it for tax and VAT for day to day trading in the UK, but also have a offshore company where I'm employed, normal tax rules apply. Mean 19% corporate tax and by 2023 23% but if profits kept below 50K GBP it is still only 19% corporate tax. Personal tax, including social security is 30%.

hmmm, still better then what I'm used to 🙂

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[JohnLocke]

Just wondering, if you have that UK LTD and living there, how are you going to be taxed, if you by a Mercedes S550 in name of the company and drive around with it. Does someone know this?

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[Larin]

uplana said:
This actually answer the question in fullest. The company abroad, is the one employing me, while I will be living in the UK. For that reason no tax exception will apply, if I read you correct.
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Generally speaking, earned income is considered to 'arise' and be taxable in the country you are a resident of. So, if you work and earn a salary while living in the UK, it is generally taxable in the UK. Section 6 will be of interest to you: Guidance note for residence, domicile and the remittance basis: RDR1

uplana said:
So as it stands right now, if I setup a company in the UK, register it for tax and VAT for day to day trading in the UK, but also have a offshore company where I'm employed, normal tax rules apply. Mean 19% corporate tax and by 2023 23% but if profits kept below 50K GBP it is still only 19% corporate tax. Personal tax, including social security is 30%.
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I am not sure how you calculated the personal tax rate, as UK has a progressive income tax scale, but just to note, corporate tax is applied to profit and so your salary payments would be deducted from that. I.e. there is no double tax there.

@Admin - Provided you use the Mercedes for businesses purposes, it would be taxed the same way as any other asset. No VAT on purchase + capital depreciation and write-offs on payments. One thing to note is that if you use it/or have available for personal use this may create Benefit in Kind (i.e. be added as income to your salary) https://www.brooksonone.co.uk/knowl...iming-business-expenses/purchasing-a-vehicle/

 

[uplana]

Larin said:
I am not sure how you calculated the personal tax rate, as UK has a progressive income tax scale, but just to note, corporate tax is applied to profit and so your salary payments would be deducted from that. I.e. there is no double tax there.
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It is based on a monthly salary of 4500GBP paid by the UK or Offshore Ltd - may be the same.
Did the calculation with tis one
https://www.offshorecorptalk.com/threads/best-tax-calculation-tool-for-the-uk.35867/#post-195936
Looks like I was wrong if the tool is working right you only pay 25% or do I have do add something?

Last edited: Dec 15, 2021
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[Larin]

uplana said:
Looks like I was wrong if the tool is working right you only pay 25% or do I have do add something?
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Nope, that looks just about right. Do keep in mind that that includes a tax free allowance of £12,750, which would not exist should you elect to be taxed on remittance basis. But, it doesn't sound like you are looking to do that anymore.

 

[lory]

Larin said:
Nope, that looks just about right. Do keep in mind that that includes a tax free allowance of £12,750, which would not exist should you elect to be taxed on remittance basis. But, it doesn't sound like you are looking to do that anymore.
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what is your background? I have followed this thread with great interest and amazed about your knowledge.

 

[Larin]

lory said:
what is your background? I have followed this thread with great interest and amazed about your knowledge.
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I ran a company in the UK for 7 years so had to deal with a whole host of tax related issues, both corporate and personal. I also spent the last 2 years learning all I can about international taxation; various jurisdictions and the system as a whole. I just love this topic. Must have spoken to 20+ tax advisors across the globe by now.

 

[uplana]

I spoke with an attorney for immigration to apply for the skilled worker sponsorship. He want to charge 8000£ for the entire process.

On top of this the Skilled Worker and ICT Visa Application process will cost me another 4000£

It's possible for me to pay that amount, but I believe that it is overkill, and that some may have chosen a route which is more complicated then what is necessary.

Any idea about that?

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[Larin]

uplana said:
I spoke with an attorney for immigration to apply for the skilled worker sponsorship. He want to charge 8000£ for the entire process.

On top of this the Skilled Worker and ICT Visa Application process will cost me another 4000£

It's possible for me to pay that amount, but I believe that it is overkill, and that some may have chosen a route which is more complicated then what is necessary.

Any idea about that?
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For better or worse, I've had to deal with UK immigration for a while now. It ain't cheap. That being said, UK immigration lawyers are known to come up with absurdly high amounts, especially given that most of their work consists of chasing you to submit the right documents. That being said, its hard to say if what your proposed is the best route in your case, without knowing... your case. If you want to DM me, we can chat offline and I might be able to put you in touch with a few other people.