UK-resident incorporating in Singapore without drawing from it?

[Roamer]

Citizen of a great EU country, yet resident in the UK for years now. Will move myself to Singapore (or HK) in a couple of years. I want to move my UK limited company there this year or so, and close the UK one.

• Business model is Amazon Associates and Ads
• Yearly profits before taxes at £150/200k
• Sole shareholder, sole director, sole employee
• Several freelancers from around the globe

Moving the company to Singapore now would make me save on taxes:

1. Lower corporate tax
2. No dividend tax

However, because I am residing full-time in the UK and I am the sole employee, the company's corporate tax residency would be in the UK – where its central management and control is exercised.

But, what if I just don't draw any dividends for the next two years and live off my reserves? Couldn't I then draw a big pay day in two years when I definitely move to Singapore/HK myself?

As per corporation tax, what would be the process if HMRC started an enquiry? With a DTA, they would need to agree with Singapore/HK what's the company's tax residency and only then knock at my door, no?

 

[fr33d0ml1fe]

If you closed the UK company, move to SG, and ran the company on SG company, what connection does that have to do with the UK?

 

[James Turner]

You should take a look at Controlled Foreign Company (CFC) rules which will impact you whether you withdraw from the company or not as long as the control is held within the UK.

Citizen of a great EU country, yet resident in the UK for years now. Will move myself to Singapore (or HK) in a couple of years. I want to move my UK limited company there this year or so, and close the UK one.

• Business model is Amazon Associates and Ads
• Yearly profits before taxes at £150/200k
• Sole shareholder, sole director, sole employee
• Several freelancers from around the globe

Moving the company to Singapore now would make me save on taxes:

1. Lower corporate tax
2. No dividend tax

However, because I am residing full-time in the UK and I am the sole employee, the company's corporate tax residency would be in the UK – where its central management and control is exercised.

But, what if I just don't draw any dividends for the next two years and live off my reserves? Couldn't I then draw a big pay day in two years when I definitely move to Singapore/HK myself?

As per corporation tax, what would be the process if HMRC started an enquiry? With a DTA, they would need to agree with Singapore/HK what's the company's tax residency and only then knock at my door, no?

 

[Roamer]

If you closed the UK company, move to SG, and ran the company on SG company, what connection does that have to do with the UK?

I would not move myself to SG for two years. So the company would be incorporated in SG, my UK LTD would be shut, but I would myself remain in the UK for two more years.

 

[nomad999]

the company would be considered tax resident of the UK and pay corporate tax there unless you have PE somewhere else aka offices + employees.

 

[heliotrope]

It is mandatory to have a Singapore-resident director for a Singapore company. No ifs, no buts. (That can be you and/or a nominee).

 

[Roamer]

the company would be considered tax resident of the UK and pay corporate tax there unless you have PE somewhere else aka offices + employees.

But Singapore may think the company is residing in Singapore, so how does this gets solved between UK's taxman and SG's? The double taxation agreement says that they should decide between themselves I believe, but do I need to "action" that somehow or should I pay to SG until (and if) UK's taxman asks for details about the SG-incorporated company?

 

[LoveMyLife]

But Singapore may think the company is residing in Singapore, so how does this gets solved between UK's taxman and SG's? The double taxation agreement says that they should decide between themselves I believe, but do I need to "action" that somehow or should I pay to SG until (and if) UK's taxman asks for details about the SG-incorporated company?

As long as you will be living in the UK, singaporean company will be a tax resident in the UK.
You will pay UK corporate tax, although company is registered in Singapore.
You will have to file corporate income tax in UK and in Singapore also.
But tax paid in UK is also calculated as credit towards singaporean corporate tax. Singaporean corporate tax rate is lower than that in the UK. So you will in reality file corporate tax rerturn in UK and Singapore, but you will pay a corporate tax in the UK only. Because corporate tax paind in the UK will be in a higher amount than corporate tax in Singapore and by using a corporate tax credit in Singapore based on tax paid in the UJ, there will be no tax payable in Singapore.
Once you move to Singapore, singaporean company will be no more a UK resident and you will file a corporate income tax in Singapore only and you will pay a corporate tax from singaporean company in singapore only. But just after you really move there.

 

[Roamer]

As long as you will be living in the UK, singaporean company will be a tax resident in the UK.
You will pay UK corporate tax, although company is registered in Singapore.
You will have to file corporate income tax in UK and in Singapore also.
But tax paid in UK is also calculated as credit towards singaporean corporate tax. Singaporean corporate tax rate is lower than that in the UK. So you will in reality file corporate tax rerturn in UK and Singapore, but you will pay a corporate tax in the UK only. Because corporate tax paind in the UK will be in a higher amount than corporate tax in Singapore and by using a corporate tax credit in Singapore based on tax paid in the UJ, there will be no tax payable in Singapore.
Once you move to Singapore, singaporean company will be no more a UK resident and you will file a corporate income tax in Singapore only and you will pay a corporate tax from singaporean company in singapore only. But just after you really move there.

Got it, thank you!

 

[Lau84]

As long as you will be living in the UK, singaporean company will be a tax resident in the UK.
You will pay UK corporate tax, although company is registered in Singapore.
You will have to file corporate income tax in UK and in Singapore also.
But tax paid in UK is also calculated as credit towards singaporean corporate tax. Singaporean corporate tax rate is lower than that in the UK. So you will in reality file corporate tax rerturn in UK and Singapore, but you will pay a corporate tax in the UK only. Because corporate tax paind in the UK will be in a higher amount than corporate tax in Singapore and by using a corporate tax credit in Singapore based on tax paid in the UJ, there will be no tax payable in Singapore.
Once you move to Singapore, singaporean company will be no more a UK resident and you will file a corporate income tax in Singapore only and you will pay a corporate tax from singaporean company in singapore only. But just after you really move there.

I'm in a similar situation. Can someone please clarify what would happen if there were 2 shareholders (owners) in the company, one residing in the UK and the other one in Singapore? I'm trying to understand how this works...

 

[LoveMyLife]

I'm in a similar situation. Can someone please clarify what would happen if there were 2 shareholders (owners) in the company, one residing in the UK and the other one in Singapore? I'm trying to understand how this works...

It is not important who is shareholder. Important is from where the majority of resolution or majority of the work is done. Where is residing compamny director? Where will company have its headquarter in real? (Not a paper one)

 

[Lau84]

Hi, thank you so much for your response. The company will export goods from China to Australia so I guess the majority of the work will be carried out in Australia (warehousing and sending to the goods to the final customer). However I am located in Hong Kong and will be dealing with the providers, logistics, as well as creating the website and marketing campaigns, which is a fair amount of work as well. None of the goods are ever entering Hong Kong (they will be shipped from Shanghai to NZ through a freight forwarder). I guess I need an expert to know how to structure the company correctly? would it be preferable to create 2 different companies? (one for logistics and marketing and another one for warehousing?). Any other feedback you may have greatly appreciated!

The company director is located in Hong Kong. Headquarters (if possible) in HK

 

[heliotrope]

But Singapore may think the company is residing in Singapore, so how does this gets solved between UK's taxman and SG's? The double taxation agreement says that they should decide between themselves I believe, but do I need to "action" that somehow or should I pay to SG until (and if) UK's taxman asks for details about the SG-incorporated company?

Most of this thread is science fiction.

Again, *you cannot open a Singapore company without having a Singapore-resident director.*

Questions about where management and control is exerted continue to apply, but at least start from the basic reality.

One thing Singapore is not short of is efficiency. Instead of posting on an anonymous forum, why not email their tax office directly? You'll get an opinion (possibly a binding ruling) very quickly.

Final thing, both jurisdictions are not tax offices you want to mess around with. Especially Singapore.