Question UK tax implications for llc vs llp vs ltd

[JosephLL]

I never understood tax implications on UK side for the case of non-resident operating uk llc vs llp vs ltd and with company income sourced outside of UK.

There are multiple threads but with very conflicting info or very quickly diverging from topic. For example, this thread:

[IMG alt="neliath"]http://localhost/data/avatars/s/39/39538.jpg?1727588638[/IMG]

Thread 'UK LTD Tax on non-dom non UK sourced income'​

Aug 27, 2024
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...

• neliath
• Replies: 12
• Forum: Offshore Company

Would appreciate if someone summarizes this and also for what use-cases would uk llp/ltd/llc be more viable option then cheaper and accounting/tax wise more straightforward us llc?

 

[ilke]

The UK does not have LLCs.

A UK Ltd is a UK tax resident unless it is a treaty resident, in which it provides evidence it is paying taxes in that foreign country.

A UK LLP is a partnership, therefore it does not have its own tax residency and is not liable for UK tax unless it has a UK tax resident member. It is in most cases taxable as personal income or income from a partnership (if there is a specific tax option for such in your home country). It functions in basically the same way as a multi-member US LLC that elects to be taxed as a partnership.

A US LLC will be cheaper to set up, do accounting for, and manage than either of them. But UK LLPs with legitimate corporate members and/or low-risk natural person members is easily bankable, so it might be easier to work with than a US LLC if you're planning on having 2 or more members anyway.

 

[bubbledouble]

very well explained @ilke, thank you.