UK Ltd or LLP what's the best and how to pay less tax?

[erni]

I want to setup a UK LTD but also read a little about the LLP - as I understand LLP was used to be anonymous back in time but isn't that any longer because of the new rules where everyone owning more than 5% shares have to be registerd!

Now I wonder, how easy is it to manage a UK company from abroad? What I'm lookin at to get answered is, company registration and VAT is clear, but how much tax does a foreign owned UK LTD pay in taxes and is it better to setup a UK LLP?

Any help would be great!

 

[CaptK]

UK LTD is tax resident on its own so therefore liable for tax. There are‌ exceptions if it's a subsidiary but that becomes complicated.

LLP can be used as a‍ tax free entity so long as the directors are not UK residents and no income⁠ is derived from the UK.

 

[Perry8]

A UK Ltd pays normal corporate tax. The tax rate in the UK is currently‌ 19%

A UK LLP is a tax transparent entity, so it is not taxed as‍ such in the UK. Instead, the partners are taxed on their share of the income/surplus⁠ according to the partnership agreement. If the partners are foreigners they are, as a general⁤ rule - but not always, not taxed in the UK but rather in their country⁣ of residence.

You are correct that it is not very suitable if privacy is important,⁢ because an LLP has to file its UBOs to the Companies House.

The interesting part︀ with the LLP is that in many ways it is a hybrid between a company︁ and a partnership, so it opens up a couple of great tax planning options. The︂ simple version is that many countries regards a LLP as a company/corporation tax wise since︃ it has limited liability. If you combine this with structuring your LLP in such a︄ way that it resembles a corporation in the UK, local tax authorities in some countries︅ can - under certain conditions - accept that payments from the LLP to a (company)︆ partner is classefied as dividends.

 

[CaLViN]

LTD pays taxes at a rate of %19.
LLP pays no taxes with foreign shareholder‌ companies located in banana islands BUT then you will not be able to open a‍ proper bank/emi account for an LLP which means it is useless.
Noone wants to work⁠ with shady companies anymore..

 

[Perry8]

Agree. But, that is, of course,⁤ not how you structure it. The secret is in the partnership agreement and which countries⁣ the partner companies are in. An LLP setup is not good for privacy though, so⁢ if that is a major concern use some other jurisdiction than the UK.

 

[Marzio]

Can you name some of those countries?

 

[Fajosst]

Ok, a UK LLP with an offshore company as a member is not a good‌ idea to get a bank...but what about a UK LLP with two members (normal people)‍ from countries outside the EU? Wouldn't it be easier to get a bank account while⁠ avoiding taxes?

 

[JohnLocke]

Interesting questions, let's get some input from the experts, I don't believe you‌ can avoid taxes if you insert yourself as members, you will be taxed in your‍ home country at some point!

 

[Perry8]

Denmark, Sweden, Norway,‌ Germany, to name some high taxed countries. But, note that this do not mean that‍ payments will always be classefied as dividends to partners in these countries. It will depend⁠ on the situation.

 

[Perry8]

In general, as long as the LLP does⁤ not have a UK resident partner (person or if the partner is a company then⁣ a UK resident director of that company), you will struggle with a UK bank account.⁢

A UK LLP with offshore companies as partners will get an EMI account in Europe.︀ The same applies if the partners are individuals based ouside of the EU - unless︁ you are based in a restricted country.

True. An individual member will be taxed in their︄ country of residency. But, if you live in a country with a territorial tax system︅ like Thailand, Panama, Costa Rica to name a few, you will not be taxed.

 

[Fajosst]

Yes, but particularly in my case I⁠ do not pay taxes (legally) in my country. brazilians who do not live in Brazil⁤ and inform this situation to the IRS do not pay taxes to Brazil. And I⁣ am currently not resident in any country, I live traveling and depending on tourist visas...⁢

About bank account I believe Swissquote, Dukascopy and some digital banks/EMI like Revolut (maybe not︀ this one) or TW can consider an LLP application with non-resident members. Traditional banks really︁ should not accept me.

 

[Skipper]

You can get a TW account⁤ with an LLP, right? I believe that's still the case.

 

[CaLViN]

Who cares about TW ? You can get a TW account even with fake dark‌ documents so it is not the case here.

 

[Skipper]

Most people‍ care lol. For third-world foreigners like myself not raking in big bucks (several thousand a⁠ month) and running a US LLC or UK LLP, TW and Mercury are basically our⁤ only two choices depending on where you decide to incorporate. Nothing wrong with that either,⁣ plenty of people on here from what I've read that make high five or six⁢ figure amounts every month through either of them. And I don't know where you read︀ you can open a TW account with fake documents, because you can't. Their process is︁ strict now, to the point where they verify you with ITIN or SSN if it's︂ a US LLC (or even personal IDs and what not if they have a suspicion).︃ Even if you somehow manage to open one, you'll get shut down rather quick if︄ you're not legit.

 

[Fajosst]

About TW, it's possible for a US LLC, so‍ I suppose it's also possible for a UK LLP

 

[Perry8]

Yes, TW accepts UK LLPs, also with foreign partnes.‍

 

[coq]

How did you manage to open an account‍ with Mercury? Are you an "US Person"?
I opened a foreign-owned US LLC, and Mercury⁠ didn't like that my business wasn't performed in the US nor for US markets.

 

[Skipper]

Still haven't opened⁠ one, will do so at the beginning of 2021. Still undecided whether to go for⁤ US LLC or UK LLP. Most of my customers will be from the US, which⁣ I suspect is the reason Mercury rejected you since they felt you'd just be using⁢ their services without having any serious US involvement.

 

[coq]

That seems to be one of the main reasons. But if I do get US involvement,‍ then I must pay US taxes.

 

[D0naldDuck]

What if︁ the UK LLP's partners are US LLCs? How hard is it to get proper banking︂ then?