Romanian micro company invoicing UK LTD.

[TechGeek]

I serve IT services and need UK LTD as my business presence.

I was thinking about invoicing my clients using UK LTD. That means I can also deduct any expenses in the UK and invoice the remaining balance from the Romanian SRL, so there is not much profit tax to pay in the UK.
Then I would have to pay either 1% or 3% in Romania... and obviously we then have dividend tax / WHT which I haven't explored yet. I am happy to reinvest money within the company and pay it out whenever ready.
It seem to me that it is possible to pay out dividend to Cyprus non-dom and pay 0% WHT / dividend tax... however it's only applicable for non-micro companies. Would it be then possible to eventually move away from micro setup in order to pay out preferable dividend? Anyway 5% tax, also sounds good enough.

Speaking of LTD + Romanian combination, is is something that can be applied in practice or is it rather sketchy?
Are there any better ways to optimize taxes with UK LTD? 20% corporate tax is rather harsh.

 

[KDX]

I serve IT services and need UK LTD as my business presence.

I was thinking about invoicing my clients using UK LTD. That means I can also deduct any expenses in the UK and invoice the remaining balance from the Romanian SRL, so there is not much profit tax to pay in the UK.

This sounds like BEPS (Base erosion and profit shifting - OECD BEPS). No-go.

 

[avalanche]

This sounds like BEPS (Base erosion and profit shifting - OECD BEPS). No-go.

Unless your services to UK company are real and justified by tailored contracts

 

[TechGeek]

Loud and clear. Thanks for your help. Final question comes back to WHT / dividend tax. Is there any other alternative to Cyprus for relatively low dividend payout burden?

 

[KDX]

Loud and clear. Thanks for your help. Final question comes back to WHT / dividend tax. Is there any other alternative to Cyprus for relatively low dividend payout burden?

Your companies will be tax resident where YOU are tax resident in, so these setups will not work at all unless you have enough substance or have researched into some kind of schemes that allow you to do this.

 

[TechGeek]

Are you quoting CFC or any different rules? I am billing UK clients, naturally it make sense to have UK company. Does that imply I need to live in the UK?

 

[cyprusbanker]

Are you quoting CFC or any different rules? I am billing UK clients, naturally it make sense to have UK company. Does that imply I need to live in the UK?

No you don't need to live there!

 

[KDX]

Are you quoting CFC or any different rules? I am billing UK clients, naturally it make sense to have UK company. Does that imply I need to live in the UK?

I'm not just quoting CFC rules but Permanent Establishment and tax residency rules.

You will have to look at your own country's tax rules because they will apply to this company that you are talking about.

 

[orangekangaroo]

Are you quoting CFC or any different rules? I am billing UK clients, naturally it make sense to have UK company. Does that imply I need to live in the UK?

For the community to help you, it helps if you could state your residency or if you are willing to move for residency.

 

[clemens]

For the community to help you, it helps if you could state your residency or if you are willing to move for residency.

agree, it is important to know if you are willing to relocate, if you are not your nationality is important. Certain countries have certain tax, CRS and FATCA in place.

 

[aragon]

From his questions referencing Cyprus, it sounded like he was considering moving his personal tax residence to Cyprus, but asking what alternatives there are.

 

[JohnLocke]

Unless your services to UK company are real and justified by tailored contracts

Documentation is obvious important in this case, agree.

 

[clemens]

you may hire an accounting firm in the UK to help you with all of it, I don't believe you to get huge troubles doing so unless we are into millions of euros