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Navigating Tax Issues When Setting Up Overseas: Business Structures and Considerations

Setting up a business overseas involves navigating complex tax issues. This guide discusses various forms of doing business, including representative offices, permanent establishments, subsidiaries, and joint ventures. Each structure offers different tax implications such as local filing requirements, withholding taxes, and potential overseas tax on profits. Understanding these factors is crucial to making informed decisions about international expansion while maximizing tax efficiency. Learn from tax expert Mike Hodges for the best practices on managing these challenges.

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Navigating Tax Issues When Setting Up Overseas: Business Structures and Considerations

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  1. Tax issues on setting up overseas Mike Hodges Tax Partner mike.hodges@saffery.com 0161 200 8385

  2. Forms of doing business • Representative office • Permanent establishment • Subsidiary • Joint venture

  3. Representative office‘Dipping your toe in the water’ • Limited activities • No local filing requirements • Fees may be subject to withholding tax • UK tax on profits (with credit for withholding tax) • Payroll tax requirements

  4. Withholding tax on fees (1)

  5. Withholding tax on fees (2)

  6. Permanent establishment‘Going for a paddle’ • Fixed place of business or dependent agent • Overseas tax on profits • Unlikely to be withholding tax on fees • Overseas filing requirements • UK tax on profits (with credit for overseas tax) • Subject to election for companies • Likely to be UK and overseas tax on disposal

  7. Subsidiary‘Taking the plunge’ • Overseas tax on profits • Unlikely to be withholding tax on fees • Overseas filing requirements • No UK tax on distribution of profits to company • Unlikely to be tax on disposal by company • Incentivisation of local employees

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