UK LLP as a payment processor (UAE) ?

[SasuT]

Hello,
I have a UAE company in free-zone. Stripe UAE works fine but.. fees are too high.

My idea is to form a UK LLP (or LTD) and receives Stripe EU (or Square) payments on Wise.

Then, I send directly the funds to my UAE company.

So the UK LLP/LTD makes no profit, as the funds go directly to the UAE company.

Is is something possible? If so, what should I do exactly? I guess it's not this easy to just send the funds from UK LLP to UAE company

 

[Sols]

Yes, it's possible and can be done while taking out nearly any profit in the UK company. It's important that the UK company is owned by the UAE company.

It's important that there is an agreement between the UAE and UK companies that clearly define the arrangement. A good lawyer should be able to help you draft such an agreement.

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This is the probably the answer to your question.

 

[Nomado]

Sols said:
It's important that the UK company is owned by the UAE company.
Click to expand...

Why ? Is it so there is no need to justify the money transfers between the two entities with an invoice ?

If the UK company is totally independent from the UAE FZ, is this setup still possible (withdraw most funds from the uk ltd) ?

 

[Dandyline]

Nomado said:
Why ? Is it so there is no need to justify the money transfers between the two entities with an invoice ?

If the UK company is totally independent from the UAE FZ, is this setup still possible (withdraw most funds from the uk ltd) ?
Click to expand...

Should work with a Agent + Principal agreement.

Interested to hear this as well.

 

[Sols]

Nomado said:
Why ? Is it so there is no need to justify the money transfers between the two entities with an invoice ?
Click to expand...

Transfer of funds from a subsidiary to a parent are not subject to the same kind of regulations as transfer of funds from an unrelated company to another.

Nomado said:
If the UK company is totally independent from the UAE FZ, is this setup still possible (withdraw most funds from the uk ltd) ?
Click to expand...

I'm sure it's possible if you're small enough and no one cares, but it doesn't scale.

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This is the probably the answer to your question.

 

[Nomado]

Any reason why the UK tax office will not find it a bit weird that the funds are withdrawed without having paid 25% corporate tax on it ?

I have a uae freezone.
I'm thinking of setting up a uk ltd and use it as a merchant of records for my EU customers sales (digital product), and pay EU vat through it.
So it would mean that the digital product sold is own by the freezone and that the uk ltd is just ''a reseller'', in that way most of the sale income (minus the eu vat) is technically sent back to the freezone.
But I have concerns on how the uk tax office will react to this setup.

If the uae freezone is clearly stated as editor in the legal page of the website selling the digital products, do you think that's enough ?

Last edited: Feb 1, 2024

 

[Sols]

Nomado said:
Any reason why the UK tax office will not find it a bit weird that the funds are withdrawed without having paid 25% corporate tax on it ?
Click to expand...

Companies don't pay tax on how much money flows through them. They pay tax on profits.

As long as you pay tax on the profit made by the UK company, you're good.

Nomado said:
I have a uae freezone.
I'm thinking of setting up a uk ltd and use it as a merchant of records for my EU customers sales (digital product), and pay EU vat through it.
So it would mean that the digital product sold is own by the freezone and that the uk ltd is just ''a reseller'', in that way most of the sale income (minus the eu vat) is technically sent back to the freezone.
Click to expand...

No, not a reseller.

A reseller's profit is (rather over simplified) the value of sales minus cost of goods.

A payment agent's profit is tied to the payment processing cost or small margin of the value of sales.

Toggle signature
This is the probably the answer to your question.