Question: US Citizen Resident in the UK

[Stephen83]

Hi all, I've been lurking and decided to join up. I'm already really impressed with the wealth of knowledge I'm seeing exchanged here. I have a rather specific situation and I've spent a lot of time trying to find a solution.

Stats:

• UK Resident employed paying UK Income tax (higher income bracket)
• US Tax: Eligible for both Foreign Earned Income Exclusion and Foreign Tax Credits
• Want to Start a company doing online commerce, serving customers in the US, EU, and other countries.
• Want to minimize tax exposure legally operating from a respected jurisdiction with a bank acouunt compatible with most major ecommerce platforms (Amazon, eBay, Shopify, etc.)
• Desire low maintenance fees and minimal admin requirements.

Because I make a good income now, I'm just trying to keep the profits from the new venture reinvested for growth. I may hire people, but on a freelance and commission basis to start. Ultimately, I want to build this business out to replace my current job and then potentially live abroad in SE Asia or back in the US. So I'd like an option that takes into account both of these potential outcomes in the event I can no longer remain in the UK.

I understand that this is a lot to consider. I welcome any advice or referrals to trusted professional resources by the forum. Thanks!

 

[negon]

Well, you want to check with an local CPA to see if you can live in the UK and build a business abroad without to get taxed personally from the income of the company! Most often that's the problem people face! Otherwise you would likke to setup the company with nominees and real office so you may (or may not) be able to convience the local tax office that this company is controlled and managed abroad.

 

[Stephen83]

I've actually tried that, but the CPAs I've spoken to have knowledge specific to one country. I'm hoping to get advice from someone who understands nuances of both the UK and the US, since I need to approach this in a way that is compliant with both. CPAs I've spoken to are knowledgeable in one or the other and/or don't have clients trying to use offshore methods creatively. I'll keep looking and post my findings here.

 

[Stephen83]

Okay, so I've spoken to a few CPAs here in the UK. Considering I still make a salary here it's looking like a UK Limited Company is the way to go for legitimacy for both the US and the UK. I can effectively be taxed at the UK's lower corporate tax rate without suffering self employment tax or the US corporate tax rates. The taxation treaty between the US and UK covers dividends so there shouldn't be double taxation. Albeit, for all of this to work there is some setup involved with the IRS, which I'm still clarifying.
I asked about another potential setup using an offshore companies in a UK Limited Liability Partnership. I'm thinking I could even just use one offshore company and make my foreign spouse the other partner. However, one CPA that specializes in US tax told me this would create problems for me with the IRS. Of course he wouldn't tell me why unless I committed to doing business with him. But I can't see how it's an issue if I fully disclose my role in the company and make all the proper filings. I think I'd like to talk to talk to a proper offshore specialist. If I can use a UK Limited Company, why can't I use another? I suppose I could operate using the UK Limited Company until later and then transfer the business to an offshore company after physically relocating offshore. Has anybody done it this way and if so, would you recommend it?