UK LTD business advise on Opening EU company

[magicraff]

Hi,

I have a business consulting company in the UK (LTD) working with a customer in Singapore providing sales development for Europe.
Due to the increase in Corp tax in UK I'm thinking about opening a company in EU. Corporate tax is incrasing from 19 % + 25 % and 7 % withdrawal tax on dividends.
I'm EU national with permanent residence in UK and will keep the UK business to operate on minimum turnover.

My questions;
1 Has anybody experience with a similar setup?
2 What are the best countires to consider for low corp and income tax on dividend? Estonia, Latvia?
3 Interested to talk to a professional adviser. Please contact me.

 

[avalanche]

2 What are the best countires to consider for low corp and income tax on dividend? Estonia, Latvia?

Why not Cyprus? Terrible news about corp tax by the way.. I'm already thinking of closing my company too

 

[magicraff]

Thanks for your reply! No issue with Cyrpus. Just starting my research 🙂

 

[fshore]

magicraff said:
Hi,

I have a business consulting company in the UK (LTD) working with a customer in Singapore providing sales development for Europe.
Due to the increase in Corp tax in UK I'm thinking about opening a company in EU. Corporate tax is incrasing from 19 % + 25 % and 7 % withdrawal tax on dividends.
I'm EU national with permanent residence in UK and will keep the UK business to operate on minimum turnover.

My questions;
1 Has anybody experience with a similar setup?
2 What are the best countires to consider for low corp and income tax on dividend? Estonia, Latvia?
3 Interested to talk to a professional adviser. Please contact me.
Click to expand...

Where do you live/are tax resident? If the UK then a foreign company would also be tax resident in a UK

 

[magicraff]

fshore said:
Where do you live/are tax resident? If the UK then a foreign company would also be tax resident in a UK
Click to expand...

I live in the UK. Based on my research it should be a country that has tax treaty with UK but apparently there are plenty. My LTD company will be still operational but on a minimum level to be most tax efficient.

 

[fshore]

magicraff said:
I live in the UK. Based on my research it should be a country that has tax treaty with UK but apparently there are plenty. My LTD company will be still operational but on a minimum level to be most tax efficient.
Click to expand...

Check the tax treaty then, to see where the new company will be tax resident.

 

[boomy]

Cyprus, Dubai, Bulgaria, Romanian Micro Company and depending on your sales volume Switzerland are to be considered at some of the countries to reduce your overall corporate tax burden.

 

[magicraff]

Thanks boomy. I will do some more research about tax treaties and between UK and this countries.

 

[JohnLocke]

There are good people around here who can help you both with Cyprus ( @CyprusLaw @CyprusLawyer101 ) and Dubai ( @Fred @Gediminas )

Just a few hints for you.

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[MarkusCostigan]

boomy said:
Cyprus, Dubai, Bulgaria, Romanian Micro Company and depending on your sales volume Switzerland are to be considered at some of the countries to reduce your overall corporate tax burden.
Click to expand...

Why not Malta?

 

[Onassis]

MarkusCostigan said:
Why not Malta?
Click to expand...

Try getting a bank account for a Maltese company owned by a UK LTD. It's hard to get one even for residents of Malta who directly own their Maltese LTD.

 

[CyprusLawyer101]

If you can demonstrate that the consulting work is carried out outside the UK then maybe a Cyprus company can be an excellent option. Let me know if you would like to discuss this further, I can PM you.

 

[magicraff]

Thanks for all the replies and bringing more light to my situation. Considering that I will remain UK tax residence and not willing to move Estonia seems to be a good alternative? Especially if I'm not taking out any money (dividends) from the company just keep it there for investment.

Any Estonian company experts in this group? 🙂

 

[fshore]

magicraff said:
Thanks for all the replies and bringing more light to my situation. Considering that I will remain UK tax residence and not willing to move Estonia seems to be a good alternative? Especially if I'm not taking out any money (dividends) from the company just keep it there for investment.

Any Estonian company experts in this group? 🙂
Click to expand...

If managed from the UK the Estonia company will be tax resident in the UK, and you have to pay the same taxes as a UK company would (even if you don't take out any dividends).

 

[MarkusCostigan]

CyprusLawyer101 said:
If you can demonstrate that the consulting work is carried out outside the UK then maybe a Cyprus company can be an excellent option. Let me know if you would like to discuss this further, I can PM you.
Click to expand...

How can you demonstrate that? Is it enough to go to Cyprus once a month for example?

 

[CyprusLawyer101]

MarkusCostigan said:
How can you demonstrate that? Is it enough to go to Cyprus once a month for example?
Click to expand...

Going to Cyprus once a month and documenting that in company's minutes, would definitely add immensely.
Of course every case must be looked at its merits. For example here the consulting is done to a Singapore customer, which immediately eliminates the risk ot base erosion in the UK i.e. taking off UK generated/sourced profits, therefore a further question is that of management and control risk. Once these questions are placed in the right order then the UK CFC rules should be looked at.

 

[JimBeam]

As long as you live in UK any company you open and operate world wide will be tax resident in UK.

You have two options:
1. Move out of UK and get residency somewhere else
2. Form a new company that will be fully owned by someone else (a foreign partner, not a nominee).

What are the amounts we are talking about monthly/annually?

 

[pfser]

magicraff said:
Thanks for all the replies and bringing more light to my situation. Considering that I will remain UK tax residence and not willing to move Estonia seems to be a good alternative? Especially if I'm not taking out any money (dividends) from the company just keep it there for investment.

Any Estonian company experts in this group? 🙂
Click to expand...

If you gonna have any questions about Estonia, please feel free to contact me. As alternative, you can also consider Georgia, there's an option to get a tax residency certificate without staying there for >183 days, but I suppose it won't help if you stay in the UK.

 

[myhand]

avalanche said:
2 What are the best countires to consider for low corp and income tax on dividend? Estonia, Latvia?

Why not Cyprus? Terrible news about corp tax by the way.. I'm already thinking of closing my company too
Click to expand...

I would go with Estonia as we have discussed around this forum many times.

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[Roamer]

I see where your head is at but don't even bother unless you're making seven-figure in profits or at least 500K GBP.

This is because whilst the snake oil salesmen will encourage you to set up another shop in a very "attractive" country, you will be the only one having to endure the burden of proving your management and control of the company is outside the UK ”“ where it has been until now.

So, flying there once a month is nice, but it's an obvious extremely unrefined tax avoidance scheme and you will get hammered at some point down the line if you remain yourself in the UK.

UNLESS... You have enough profits to have a real presence wherever you set up shop in (e.g. IoM, Cyprus, UAE). But that's costly, time-consuming, energy-draining, and yeh, COSTLY. Get a secretary, hire directors to sit on the board who are locals, and fly there regularly, and do minimal work from the UK even by email, it's just not practical nor realistic.

We've all thought of it, just do it if it's worth all the investments.

Finally ”“ let's say you do it, set up a company in jurisdiction Y, save a whole lot on taxes. Then what? Do you not draw dividends? Do you keep all that cash in a company in a jurisdiction you only go to occasionally? Maybe. Or maybe you have life plans and need to get that cash ”“ and that's taxed at home in the UK anyway.

If you are serious about this, you will need to move yourself out of this country. All I've said is if you are the sole shareholder and director. If not, and there's somebody abroad, then it's slightly more realistic and even has a real rationale.