Why a UK company?
••• London is the most important financial centre in the world. ••• Prestigious location. ••• VAT registration if trading within EU. ••• Popular jurisdiction due to its Common Law base. ••• Can (!) be sheltered from UK taxation when acting in an agency or broker capacity. ••• No withholding tax!
In certain instances, it is possible to use a UK company for the trading and provision of services without the payment of large amounts of corporation tax. This is the case where the UK company is acting solely as an agent for an offshore company. The UK company will issue invoices on behalf of the offshore company and will remit the money it receives to the offshore company in accordance with the agency or nominee agreement between the two companies. For providing this service the UK company receives a fee which could be a flat fee or a fee based on turnover or profits.
The UK company will pay tax on the profits which it makes on the fees retained in accordance with the agency or nominee agreement. This will be at the normal UK corporation tax rates.
To use this structure the following key conditions must be met: ••• The agreement must be properly executed before the UK company starts trading
••• There must be no activity in the UK other than acting as an agent, since the UK company would be taxed fully on any turnover which relates to trading in the UK. ••• The agreement must include a proper commercial fee, typically 10-12% of turnover or a fixed annual fee. ••• The beneficial owner of the offshore company may not be subject to UK taxes.
Any company <———————— Invoice ——————— UK LTD/Agent Invoice
What can we offer?
••• Formation of UK companies
••• Registered office address facilities, virtual office services
••• Company secretarial services
••• Legal and tax opinions
••• Setting up agency structures
••• Assistance in opening and managing bank accounts
••• VAT registration and VAT agency
••• Accounting, financial reporting and consolidation
••• Preparation of management and statutory accounts
Payment UK LTD/Agent ———Payment——————–> Offshore LTD/Principal <—————————> Agency agreement