UK tax resident with UK Ltd planning a move to Thailand - What are my options?

[tnt500]

Hi all,

I recently discovered this forum and have been reading a lot of great posts but still struggling to figure out the best way forward. My situation:

- Currently a UK tax resident planning to become a non-resident for the 23/24 tax year.
- I have 2 UK limited companies that sell goods online in North America and UK. I take a basic salary and dividend from 1 of them right now.

The tentative plan at the moment is to move over to Thailand where I believe tax on personal income is 0% if you don't bring the money into the country in the same calendar year. (can you just deposit the money into your UK bank account?).

I'm looking for the best location to move the companies to in order to reduce the corp tax liability. UAE and Hong Kong seem to keep coming to the top of the list - would these be the best options? I really don't want the setup/accounting/maintenance to be too difficult or complex, and ideally very light on any physical paperwork (online ok). I don't mind paying the right professionals to take care of everything if it means reducing the burden on me to the minimum. I'm not necessarily looking for zero corp tax but I would like to significantly reduce it whilst not adding too much complexity to my operation.

It's important to be able to access Shopify Payments & PayPal, and ideally have access to the Wise borderless account (or something similar) to receive payments in multiple currencies.

Any suggestions or pointers would be really appreciated.

 

[luap]

If you can pass the UK statutory residence test as non-resident, you can likely use a US LLC to keep things simple, depending on your income. Take out your profits from the LLC to whatever bank account you like.

Run the test here: Guidance ”“ Guidance ”“ GOV.UK

 

[Marzio]

kjc500 said:
Any suggestions or pointers would be really appreciated.
Click to expand...

I would dissolve one UK LTD and form a UK LLP with yourself as a partner with 100% share of the profuts and the other UK LTD as a (dormant) partner.

UK LLP is tax transparent so when you remit money in Thailand after one year you'll pay 0% tax.

The grey are around this strategy is that if you do all the work yourself from Thailand you are creating a PE in Thailand so Thai tax administration could ask you to pay taxes there.

If you aren't a one man shop operation and you delegate at least some of the work to freelancers to help you, i'd say you risk is nearly zero.

 

[wellington]

kjc500 said:
Hi all,

I recently discovered this forum and have been reading a lot of great posts but still struggling to figure out the best way forward. My situation:

- Currently a UK tax resident planning to become a non-resident for the 23/24 tax year.
- I have 2 UK limited companies that sell goods online in North America and UK. I take a basic salary and dividend from 1 of them right now.

The tentative plan at the moment is to move over to Thailand where I believe tax on personal income is 0% if you don't bring the money into the country in the same calendar year. (can you just deposit the money into your UK bank account?).

I'm looking for the best location to move the companies to in order to reduce the corp tax liability. UAE and Hong Kong seem to keep coming to the top of the list - would these be the best options? I really don't want the setup/accounting/maintenance to be too difficult or complex, and ideally very light on any physical paperwork (online ok). I don't mind paying the right professionals to take care of everything if it means reducing the burden on me to the minimum. I'm not necessarily looking for zero corp tax but I would like to significantly reduce it whilst not adding too much complexity to my operation.

It's important to be able to access Shopify Payments & PayPal, and ideally have access to the Wise borderless account (or something similar) to receive payments in multiple currencies.

Any suggestions or pointers would be really appreciated.
Click to expand...

You should be fine, having said that, will the bank for the business(s) be a UK Corp bank or UK Personal account?

Back in the day, we could use a personal account strictly for business (used solely for) and there would be no issues, these days UK Companies 'advised but not legal process, just rule breaking' to have a corporate account (where LLP/LTD etc)

There is no clarity when its a offshore company (the UK clarity is a rule, that the company is registered with Companies House).

Historically you could deposit the funds, wait till the next tax year then move from account to account -> then Thailand.

As Thailand is territorial based this is un-taxable (Thai's work abroad and remit funds into Thailand which helps the economy, and provides liquidity for EU/GBP/USD etc pegging at a central bank level).

You may have issues with Payment providers (if living in Thailand - risk profile may rise for the company as the BO).

 

[tnt500]

luap said:
If you can pass the UK statutory residence test as non-resident, you can likely use a US LLC to keep things simple, depending on your income. Take out your profits from the LLC to whatever bank account you like.

Run the test here: Guidance ”“ Guidance ”“ GOV.UK
Click to expand...

Pretty sure I will pass the test but will double check. A US LLC would keep things simple indeed, but I'm pretty uninformed about US taxes. If I register in say, Delaware, what taxes would I need to pay? I think Amazon already deduct sales tax when I make a sale in the US now.

 

[tnt500]

Marzio said:
I would dissolve one UK LTD and form a UK LLP with yourself as a partner with 100% share of the profuts and the other UK LTD as a (dormant) partner.

UK LLP is tax transparent so when you remit money in Thailand after one year you'll pay 0% tax.

The grey are around this strategy is that if you do all the work yourself from Thailand you are creating a PE in Thailand so Thai tax administration could ask you to pay taxes there.

If you aren't a one man shop operation and you delegate at least some of the work to freelancers to help you, i'd say you risk is nearly zero.
Click to expand...

I need both companies as they serve different brands. Let's treat them separately...

So I make 1 LLP that contains my LTD and myself as partners. Not sure how the LTD would be dormant as that is the one making all the money? Or can I just assign dormant status to it and say all profits are immediately diverted from the LTD to myself?

I am a 1 man band effectively but occasionally outsource bits and bobs. I'm less worried about the Thai side of things to be honest but good to know anyway.

 

[Marzio]

kjc500 said:
Not sure how the LTD would be dormant as that is the one making all the money?
Click to expand...

LTD is there only to satisfy the 2 partner requisite of LLP.

All the income is generated by the LLP.

You can even dissolve the LTD and add a US LLC as the second partner, maybe is even better so you can serve north American clients with a company that they are accustomed to.

 

[CyprusLawyer101]

You can change the place of management and control from the UK to Thailand. The UK has an arduous process for this , with exit taxes for capital assets and corresponding compliace work, but it might be a good option in your case.

Last edited: Mar 14, 2023

 

[tnt500]

Marzio said:
LTD is there only to satisfy the 2 partner requisite of LLP.

All the income is generated by the LLP.

You can even dissolve the LTD and add a US LLC as the second partner, maybe is even better so you can serve north American clients with a company that they are accustomed to.
Click to expand...

Ah ok - so you switch all transactions to go to the LLP then? Get bank accounts in the LLP's name etc? And then the LTD becomes dormant and all profits the LLP makes pass straight to me in my personal UK bank account. In the following calendar year I can then simply transfer funds from my personal account in the UK to my account in Thailand?

If this is what you're saying, it sounds almost too easy. Is it completely above board or would there be any advantage to having a US LLC as partner instead of the UK LTD? I don't have my head around the reporting requirements of an LLC and would prefer to stick with my current accountant in the UK, but only if this is above board.

CyprusLawyer101 said:
You can change the place of management and control from the UK to Thailand. The UK has an arduous process for this , with exit taxes for capital assets and correspodning complaince work, but it might be a good option in your case.
Click to expand...

I didn't know this was an option. I thought all UK LTDs were taxed in the UK regardless of where they are managed. Do you know anywhere I can read some more about this?

Also, I just read this:

"Any non-UK source profits or gains made by an LLP will not be subject to UK tax, except in so far as its members are UK resident individuals or companies."

Does this mean that my profit in the UK will still be taxed as normal? Only internationally derived profit is tax free? It's a little confusing.

Last edited: Mar 14, 2023

 

[Marzio]

kjc500 said:
Ah ok - so you switch all transactions to go to the LLP then? Get bank accounts in the LLP's name etc? And then the LTD becomes dormant and all profits the LLP makes pass straight to me in my personal UK bank account. In the following calendar year I can then simply transfer funds from my personal account in the UK to my account in Thailand?
Click to expand...

Yes, that's the plan.

kjc500 said:
If this is what you're saying, it sounds almost too easy. Is it completely above board or would there be any advantage to having a US LLC as partner instead of the UK LTD? I don't have my head around the reporting requirements of an LLC and would prefer to stick with my current accountant in the UK, but only if this is above board.
Click to expand...

If you don't care about serving north American clients with a LLC then you can use your UK LTD as the second parner.

On of the problems with LLP without UK resident partners is that you'll encounter problems when trying to open a business bank account.

To solve this issue you can open your LLP bank account while you are still UK resident and then change the partner address once you move to Thailand.

 

[luap]

You won't have any tax issues in the US if you don't already (ie no US presence, offices, staff etc etc).

The US LLC or UK LLP work almost the same, except the UK LLP requires 2 partners, whilst the US LLC allows just 1 member (+ banking is easy with Mercury or Wise). If you go the route of the UK LLP, you'll likely need a US LLC or alternative company as the 2nd partner anyway - so just skip the LLP and setup a US LLC.

As long as you pass the UK statutory residence test, your only issues would be in Thailand, but they don't seem to care, they just want you to spend some money there.

 

[Marzio]

luap said:
just skip the LLP and setup a US LLC
Click to expand...

I don't think it's a good idea for him bcause:
1. he needs UK payment gateway to get money from his UK clients and with a US LLC you can only process $ with Stripe and PayPal while with a LLP you can process £, $, € with Stripe and £ with PayPal. Having options is better.
2. with US LLC you have to file form 5472 and while some people say it's easy there a 25K fine for filing incorrectly

All weighted i would go with UK LLP.

 

[CyprusLawyer101]

kjc500 said:
Ah ok - so you switch all transactions to go to the LLP then? Get bank accounts in the LLP's name etc? And then the LTD becomes dormant and all profits the LLP makes pass straight to me in my personal UK bank account. In the following calendar year I can then simply transfer funds from my personal account in the UK to my account in Thailand?

If this is what you're saying, it sounds almost too easy. Is it completely above board or would there be any advantage to having a US LLC as partner instead of the UK LTD? I don't have my head around the reporting requirements of an LLC and would prefer to stick with my current accountant in the UK, but only if this is above board.


I didn't know this was an option. I thought all UK LTDs were taxed in the UK regardless of where they are managed. Do you know anywhere I can read some more about this?

Also, I just read this:

"Any non-UK source profits or gains made by an LLP will not be subject to UK tax, except in so far as its members are UK resident individuals or companies."

Does this mean that my profit in the UK will still be taxed as normal? Only internationally derived profit is tax free? It's a little confusing.
Click to expand...

I believe HMRC has information on its website on the change of managment and control and the necessary procedural steps.

With respect to your other comment - this makes reference to an LLP and not a company, so I guess it is irrelevant.

 

[zzzzzz]

kjc500 said:
The tentative plan at the moment is to move over to Thailand where I believe tax on personal income is 0% if you don't bring the money into the country in the same calendar year. (can you just deposit the money into your UK bank account?).
Click to expand...

You can deposit money on foreign bank account and bring it after 1 year. You can also bring up to $20000 cash to Thailand, as that is not considered remittance.

 

[wellington]

You can also move the funds from UK -> Euro -> Currency account (Kasikn) and liquidate into THB.

Shouldn't cause a taxable event (this is how the elite visa system works).
The Gov opens Kasikorn EUR, SGD, USD, HKD accounts and these are accounts in Thailand for Foreign Currencies but they don't do any 'reporting' for conversion to THB in the same tax year as a taxable income.

Don't know why - just works that way, no GBP account though (not wildly used)

CyprusLawyer101 said:
I believe HMRC has information on its website on the change of managment and control and the necessary procedural steps.

With respect to your other comment - this makes reference to an LLP and not a company, so I guess it is irrelevant.
Click to expand...

Why would management/control need to be changed or even updated.

On Companies House you can just insert your Thai / other address and they become fully aware you do not reside in the UK.

Accounting also does that in the filing.

HMRC you should in theory update when leaving the country but most don't bother because after x period of time they are non tax resident and have a TIN for another country anyway.

UK HMRC can investigate and yeah they can ask for voluminous information but ultimately outside of commercial income and as long as the person passes the test they won't be charged tax (pretty simple / easy to prove non-residence).

 

[zzzzzz]

@wellington do you mean - Thai Elite visa team helps you open Kasikorn bank multicurrency account, and everything transfered there is not under remittance rule as it's not THB currency? Is Thai taxman interested only in bank transfers from abroad in THB currency?

 

[CyprusLawyer101]

wellington said:
You can also move the funds from UK -> Euro -> Currency account (Kasikn) and liquidate into THB.

Shouldn't cause a taxable event (this is how the elite visa system works).
The Gov opens Kasikorn EUR, SGD, USD, HKD accounts and these are accounts in Thailand for Foreign Currencies but they don't do any 'reporting' for conversion to THB in the same tax year as a taxable income.

Don't know why - just works that way, no GBP account though (not wildly used)


Why would management/control need to be changed or even updated.

On Companies House you can just insert your Thai / other address and they become fully aware you do not reside in the UK.

Accounting also does that in the filing.

HMRC you should in theory update when leaving the country but most don't bother because after x period of time they are non tax resident and have a TIN for another country anyway.

UK HMRC can investigate and yeah they can ask for voluminous information but ultimately outside of commercial income and as long as the person passes the test they won't be charged tax (pretty simple / easy to prove non-residence).
[/QUOTE/]
Helpful input. I am not much aware of the Application of the laws in practice in the UK.
Click to expand...

 

[tnt500]

Thanks all for your input - this has been very valuable. It's pretty difficult to really find any info on this elsewhere.

Marzio said:
On of the problems with LLP without UK resident partners is that you'll encounter problems when trying to open a business bank account.

To solve this issue you can open your LLP bank account while you are still UK resident and then change the partner address once you move to Thailand.
Click to expand...

Great point and noted. I have a few months to figure this out so hopefully time to get an account setup. Wise should be enough.

luap said:
You won't have any tax issues in the US if you don't already (ie no US presence, offices, staff etc etc).
Click to expand...

None of those but there's nexus with storing stock in warehouses. In any case, as Marzio says, there's a certain familiarity with dealing with a UK company and knowing what's available in terms of payment processing, keeping the same accountant etc. that makes it the preferable option if possible.

zzzzzz said:
You can deposit money on foreign bank account and bring it after 1 year. You can also bring up to $20000 cash to Thailand, as that is not considered remittance.
Click to expand...

Just to be sure, foreign means anywhere outside of Thailand right? There is no impact if this personal bank account is in the UK and then transferred to Thailand later?

wellington said:
HMRC you should in theory update when leaving the country but most don't bother because after x period of time they are non tax resident and have a TIN for another country anyway.
Click to expand...

If I proceed with the Elite visa, I'm guessing it would be beneficial to voluntarily register as a tax resident in Thailand then? That way I'd have the TIN to show HMRC that I'm a tax resident and paying taxes in Thailand but in reality the income is tax free.

 

[zzzzzz]

kjc500 said:
Just to be sure, foreign means anywhere outside of Thailand right? There is no impact if this personal bank account is in the UK and then transferred to Thailand later?
Click to expand...

Yes, foreign is meant outside of Thailand i.e. bank account in UK in GBP...etc.

 

[taoasher]

wellington said:
You can also move the funds from UK -> Euro -> Currency account (Kasikn) and liquidate into THB.

Shouldn't cause a taxable event (this is how the elite visa system works).
The Gov opens Kasikorn EUR, SGD, USD, HKD accounts and these are accounts in Thailand for Foreign Currencies but they don't do any 'reporting' for conversion to THB in the same tax year as a taxable income.

Don't know why - just works that way, no GBP account though (not wildly used)


Why would management/control need to be changed or even updated.

On Companies House you can just insert your Thai / other address and they become fully aware you do not reside in the UK.

Accounting also does that in the filing.

HMRC you should in theory update when leaving the country but most don't bother because after x period of time they are non tax resident and have a TIN for another country anyway.

UK HMRC can investigate and yeah they can ask for voluminous information but ultimately outside of commercial income and as long as the person passes the test they won't be charged tax (pretty simple / easy to prove non-residence).
Click to expand...

How important is the remittance rule?

Moving to TH and want to bring in $$ for rent & living, but it's been made this calendar year.

Worth declaring?