The treaty non-resident UK Ltd. - the best-kept offshore secret?

[daniels27]

1. Nominee directors in UAE and Hong Kong are much more expensive than UK nominee directors. Also, they are more intrusive.
2. Outside of the UK, outside of Cyprus, and other jurisdictions like these ones it is difficult to find good, reliable nominee directors.
3. If the HMRC comes after you, they will ask you to prove that your company pays Company income tax in the country of the director
4. You must report your CIT in the currency of the country where you pay the CIT. In our example: Hong Kong Dollar (=£0,10) or UAE dirhams (=0,079).

If the goal is to pay tax in Hong Kong or UAE at lower rates than UK and you are actually living there and not in UK, it will most likely work. You may even consider a private letter ruling. I am aware of companies that did this, not with UK but other two countries.

If you start using nominee directors, you will most likely run into troubles once you have an audit. The tax guys in Europe are known to audit companies at the place of management and ask questions to the directors. If you have some random dude there, it will cause troubles.

If you do not report or pay tax in Hong Kong, it will be considered tax evasion in the UK and not Hong Kong. This is also one of the reasons why foreigners doing business in China always pay full amount of tax there while the locals are less tempted to pay the full amount. Also beware that even Hong Kong tax audits and investigations are no longer just on paper, they actually start chasing your tax. Hence, I do not think that not paying tax in UK and then claiming offshore in Hong Kong will work very well. This because the conditions to claim offshore most likely contradict the requirements of the DTA to not pay tax in UK.

The currency is generally not a problem. You must simply convert your profit, turnover, etc. to the local currency at rates given by the tax authorities. Hong Kong recommends to keep the books in the relevant currency, which may be USD or something else. I would recommend you too. Imagine, you have 10M GBP assets and do little trade. If your books are in HKD, your profit or loss goes up and down each year just based on the fluctuating exchange rate, distorting your real profit. If your books are in GBP, your profit is what you actually earn.

Also note that for the case in Hong Kong, you will get around the mandatory CPA audit.

 

[anotherone]

But which country is it being taxed at low rate?

1.
For example, I think that Montenegro 9%, Hungary 9%, Bulgaria 10%, Bosnia 10% and North Macedonia 10% are interesting.

Montenegro: tax treaties

Tax treaties and related documents between the UK and Montenegro.

www.gov.uk

Macedonia: tax treaties

Tax treaties and related documents between the UK and North Macedonia.

www.gov.uk

But, I think about a practical issue here. I think it is easy to find a nominee director in the UK. UK nominiee directors understand the position as nominee directors but then, it is much more difficult to convince someone to become a director in these low rate countries. I think it is the number one problem because these nominee directors would be responsible for the Corporate income tax reporting duty in their country of residence.

2. About VAT.
Foreign companies can register for VAT in the UK to collect and deduct UK vat for distant selling for instance. So, i guess it is possible.

 

[mytoofood]

I think it is the number one problem because these nominee directors would be responsible for the Corporate income tax reporting duty in their country of residence.

money talks bulls**t walks! Why would it be difficult to buy a person in one of the mentioned countries? you can buy everyone there.

 

[daniels27]

But, I think about a practical issue here. I think it is easy to find a nominee director in the UK. UK nominiee directors understand the position as nominee directors but then, it is much more difficult to convince someone to become a director in these low rate countries. I think it is the number one problem because these nominee directors would be responsible for the Corporate income tax reporting duty in their country of residence.

If you want, I will be your director in North Macedonia if you want. I will register and be there until I get the passport. But you will find locals who can do it for you for very little money, trust me. Just a matter if you have access to the right people.

 

[EliasIT]

Just a matter if you have access to the right people.

and you have access to the right people ?

 

[daniels27]

and you have access to the right people ?

Where? North Macedonia, I have not yet found anybody that I would trust and invest money. Do you know somebody there? I would be willing to invest there and have a residence to get a passport.

 

[I'mRobot]

He is not off topic, let me explain you why.

In order to be non resident, you could choose a UAE or HK director (Article 5 (permanent establisjment) & 7 of Double tax treaty with UAE and HK) so that your UK company should pay Corporate income tax in UAE (9%) or HK (up to 15%) rather than UK. I prefer HK to UAE because HK law is based on UK law because of common history.
But then, you must open a business bank account for your UK company. You could open a Wise business bank account but then, don't forget your director isn't a resident of UK or EU. It is a resident of UAE or HK. We may wonder, what could happen in this case?

okay, thank you, and sorry to say so, I realize it is my fault