Is UK Ltd automatically formed as "non-resident" if I'm not a resident of UK?

[JamesDonkey]

I'm not a UK resident, and have never visited it.
A few months ago I formed a UK Ltd. After having read a topic here, I've begun to doubt: is my LTD, or may be I myself as well, considered non resident in UK automatically, given my circumstances? Or is there an extra step which I'll have to make for this to happen, such as notifying some UK agency and checking some checkbox -- "non resident" -- there?

 

[Konstanz]

Having UK company does not mean you are resident
Residence is much more than just owning company shares

 

[Sols]

Under UK law, a company is automatically resident by being incorporated in UK and must pay full UK corporate tax.

There are circumstances under which your company can become UK non-resident, under tax treaties where the company pays tax somewhere else. There is a lot of detail that goes into something like that, so make sure you run it by an attorney.

 

[avalanche]

Under UK law, a company is automatically resident by being incorporated in UK and must pay full UK corporate tax.

There are circumstances under which your company can become UK non-resident, under tax treaties where the company pays tax somewhere else. There is a lot of detail that goes into something like that, so make sure you run it by an attorney.

Im just curious, why would anyone want a UK non resident company? I mean, won't it defeat most of the purpose of incorporating in UK? For example I think that most EMI will not like this setup from the doorstep

 

[EuroKiss]

Im just curious, why would anyone want a UK non resident company? I mean, won't it defeat most of the purpose of incorporating in UK? For example I think that most EMI will not like this setup from the doorstep

If you don’t have PE in UK you pay 0 tax. Wise works fine with this setup.

 

[JamesDonkey]

Then I've confused two notions: residency of myself and my UK Ltd.

Now it becomes: I'm not a UK resident, whereas my Ltd is.

become UK non-resident, under tax treaties where the company pays tax somewhere else.

it'll be beneficial if
a) there's a tax treaty between UK and country B
b) corporate tax in country B is 0, or at least, less than in the UK

Correct?

 

[Martin Everson]

As mentioned companies incorporated in UK are treated as tax resident in UK and must pay tax there. They can only be treated as non-resident for tax purposes if a double taxation treaty (DTA) allows for this.

Generally speaking if the company is not taxed in UK then it is taxed in place where it has a PE i.e where you will be living. DTA's are there to ensure you only pay tax in one place and not to ensure you avoid paying tax. So please read the DTA carefully or consult a tax advisor to obtain legal opinion.

Trust me its too late if HMRC approaches you later.

 

[JamesDonkey]

Generally speaking if the company is not taxed in UK then it is taxed in place where it has a PE i.e where you will be living. DTA's are there to ensure you only pay tax in one place and not to ensure you avoid paying tax.

What tax avoidance do you refer to? Paying 0% of coprorate tax, if a country where I live has this rule, and if it has tax treaty with UK too, also falls under the category of paying tax. It just 0 tax.

One would pay 0% tax of corporate tax, that is. Not avoid paying it.

 

[Martin Everson]

What tax avoidance do you refer to? Paying 0% of coprorate tax, if a country where I live has this rule, and if it has tax treaty with UK too, also falls under the category of paying tax. It just 0 tax.

Have you read your DTA? Does one exist for your country with UK? Don't make any assumptions until you check these basic facts first. Then come back here and let us know.

 

[EuroKiss]

As mentioned companies incorporated in UK are treated as tax resident in UK and must pay tax there. They can only be treated as non-resident for tax purposes if a double taxation treaty (DTA) allows for this.

Generally speaking if the company is not taxed in UK then it is taxed in place where it has a PE i.e where you will be living. DTA's are there to ensure you only pay tax in one place and not to ensure you avoid paying tax. So please read the DTA carefully or consult a tax advisor to obtain legal opinion.

Trust me its too late if HMRC approaches you later.

Correct. Just check DTA with your residence country, UK LTD can be used as a US LLC in such case (learned it very late).

What do you mean "can be used as a US LLC"?

Pretty straightforward, as a pass-through entity.

 

[fshore]

It's very simple. The UK Ltd is tax resident in the UK. If its also tax resident in another country and there is a tax treaty that says that is should only be resident in the other country, then you can contact hmrc and request that it becomes treaty non resident.
You'd need a certificate of residency (for the Ltd) from the other country for this.

 

[avalanche]

You don't have to worry about my situation, because it's none of your business, nor do you have to answer here. You always give the most secure and vague reply as an old crone who's afraid of everything

Re-read my question.

I think he got some dose of fear under your skin

People dont respond like that unless they are:
- generally emotionally unstable
- feel emotional when messaging this

 

[Marzio]

What kind of animal has deleted 2 of my posts here?

The same animal that hopefully will ban you in zero time

 

[JamesDonkey]

The same animal that hopefully will ban you in zero time

The same one? Again? No, for getting banned I'd want it to be a different one.

And I can't be banned. Only my account can be. Ahhhhaaaaa

 

[JamesDonkey]

It's very simple. The UK Ltd is tax resident in the UK. If its also tax resident in another country and there is a tax treaty that says that is should only be resident in the other country, then you can contact hmrc and request that it becomes treaty non resident.
You'd need a certificate of residency (for the Ltd) from the other country for this.

Allright.
My another question was "in what circumstance making my UK Ltd non UK resident will be worth it?" Is it when in the country B the corporate tax 0% or at least smaller than in the UK?

 

[fshore]

Allright.
My another question was "in what circumstance making my UK Ltd non UK resident will be worth it?" Is it when in the country B the corporate tax 0% or at least smaller than in the UK?

It's worth it if the company is tax resident in the other country, to avoid paying tax in both countries.

 

[GPT]

Im just curious, why would anyone want a UK non resident company? I mean, won't it defeat most of the purpose of incorporating in UK? For example I think that most EMI will not like this setup from the doorstep

I can give you multiple reasons. Ill stick to one on why the UK Ltd became so dominant for use in Europe. In 1999, 2002, 2003 the ECJ decided that "member states can no longer effectively apply the real seat theory to companies from other Member States or take other measures to avoid the circumvention of their own laws by foreign incorporation. Founders of companies can – in principle – “pick and choose” the best legal form from all Member States, a result that many policymakers and legal scholars had sought to avoid for decades."

The UK Ltd was the easiest (quickest and cheapest) to incorporate. Therefore this decision opened the door to use the UK Ltd all over Europe which consequently happened a lot in the next decade. Member states slowly started to see the side effects and adjusted local laws. Right now it's not really a benefit anymore with the exception of speed and cost.

Because of this ECJ decision you could incorporate an UK Ltd and register it for tax purposes somewhere else. HRMC needed to be informed after that as to avoid double taxation. There are some negative sides to the above as well as a registration somewhere else immediately meant filing in both the UK and somewhere else. In practice this means keeping track of filing dates and periods in two countries. So where initially it opened up doors to limit for instance liability it also meant a higher administrative responsibility and cost.

With regards to EMI not liking it. If the EMI is falling under any EU jurisdiction I don't think they will really care that much. The only request I can imagine is that they will be a little stricter on their intake due diligence as they have to run checks in more than one country for the entity.

See for background info here (there is likely more and better info, I havent spent a lot of time searching).
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2564765

 

[JamesDonkey]

It's worth it if the company is tax resident in the other country, to avoid paying tax in both countries.

But how would it become a tax resident in the country as well, if by default it's a tax resident in the UK only? Even if I myself is a tax resident elsewhere.

And you claim that if I go and stay, say, in Brazil for a while, it'd make sense to make my UK Ltd a tax resident there, that is, increase tax burden from 19% / 25% of UK to 34% of Brazil?

 

[Ready Offshore]

I'm not a UK resident, and have never visited it.
A few months ago I formed a UK Ltd. After having read a topic here, I've begun to doubt: is my LTD, or may be I myself as well, considered non resident in UK automatically, given my circumstances? Or is there an extra step which I'll have to make for this to happen, such as notifying some UK agency and checking some checkbox -- "non resident" -- there?

You can have a Ltd Company based in Uk and no problem for not resident. After Brexit, You can have some problem with bank account and more. Can it be solved.

 

[fshore]

But how would it become a tax resident in the country as well, if by default it's a tax resident in the UK only? Even if I myself is a tax resident elsewhere.

And you claim that if I go and stay, say, in Brazil for a while, it'd make sense to make my UK Ltd a tax resident there, that is, increase tax burden from 19% / 25% of UK to 34% of Brazil?

You don't chose if the company becomes tax resident in another country. It happens based on the laws in that country. For example if it's managed from that country. Then the company is tax resident in two countries, and you can use a tax treaty to make the company UK treaty non resident.