UK LTD Tax on non-dom non UK sourced income

[neliath]

Hi,

I've talked to a company that's helping with opening offshore companies, and I just want to double check if what they're claiming is true.

I'm from a EU country, and I open an offshore company in Marshall islands, and then this MI company opens a UK LTD with me as a director.

They say that since the MI company is not a tax resident, place where business is being conducted is outside the UK, and all the income is from outside the UK too, I'm not liable to pay UK corporate tax. I only have to declare the UK company as dormant. Furthermore, I can spend the money using my business bank card "as I see fit".

We're talking about relatively small amounts here, like 20k € per year. The reason "why even bother for 20k" is because this additional 20k of revenue would put me in a completely different tax situation in my country of residency, I really don't want to go over the limit.


I do realize the possible problems with the taxman of my own country but currently, I'm more concerned about the tax in the UK.

 

[Xshore]

No, maybe they're confusing it with a UK LLP?

 

[neliath]

No, they were talking about LTD.

The only other mention of this specific scenario that I found is here: holding company setup

Mostly people talk about LLP, but this guy was also claiming that under these specific conditions, LTD also doesn't pay tax.

 

[clemens]

neliath said:
I do realize the possible problems with the taxman of my own country but currently, I'm more concerned about the tax in the UK.
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You will get lot's of problems if you do that with the EU taxman - you will get taxed from all income that this setup generates, there is no substance here and to what you explained.

Another thing is that if you live in another EU country and are the owner and director the control of the Company is where you live so you get taxed.

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[neliath]

clemens said:
You will get lot's of problems if you do that with the EU taxman - you will get taxed from all income that this setup generates, there is no substance here and to what you explained.

Another thing is that if you live in another EU country and are the owner and director the control of the Company is where you live so you get taxed.
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I understand where I get taxed. My question was regarding the tax in the UK.

Not sure what you mean by "another" EU country. I live in an EU country and the company is in the UK.

 

[redeye]

You risk to get taxed in the UK as well as in your home country. Chances the company get taxed in the UK are slim but it could be.

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[Marzio]

neliath said:
I'm not liable to pay UK corporate tax. I only have to declare the UK company as dormant.
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A dormant company can't generate any revenue.

As soon as it generates revenue the UK LTD will be liable for taxes in UK

 

[Xshore]

neliath said:
No, they were talking about LTD.

The only other mention of this specific scenario that I found is here: holding company setup

Mostly people talk about LLP, but this guy was also claiming that under these specific conditions, LTD also doesn't pay tax.
Click to expand...

A treaty non resident company doesn't pay tax in the UK. But then you have to document (the first year) that the company is tax resident in the other country.

 

[Marzio]

Xshore said:
A treaty non resident company doesn't pay tax in the UK.
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This is not the case because a treaty non resident company is not flagged as dormant.

He was simply misled by some idiot that induced him to think that he could run a dormant LTD from his country and since management is outside UK and no UK income is earned then LTD would be tax free.

I swear this is the first time i hear a plan as dumb as this.

You have to be a real bad muthafucker to mislead people like that.

 

[Xshore]

Marzio said:
This is not the case because a treaty non resident company is not flagged as dormant.
Click to expand...

What do you mean? A UK treaty non resident company doesn't pay tax in the UK, even thought it's not classified as dormant.

 

[Marzio]

Xshore said:
What do you mean?
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neliath said:
I only have to declare the UK company as dormant.
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I mean that he was advised to declare UK company as dormant so we are not talking about UK treaty non resident strategy.

 

[saintjohnny]

Just move to a country where you'd be happy paying or legally not paying taxes.

There's no way around it.

 

[AlicaFunk]

neliath said:
I understand where I get taxed. My question was regarding the tax in the UK.

Not sure what you mean by "another" EU country. I live in an EU country and the company is in the UK.
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how did you go about it if you don't mind to share your knowledge?

I would say relocating is the best way to avoid taxes long term, if you don't want to risk they come after you one day and ask you to pay taxes and fines.