Understanding Why and How British Limited Companies register Branch Operations Abroad
All British limited companies are deemed tax resident in The UK unless covered by a Double Taxation Treaty (DTT) – It is a common misconception that UK companies trading outside the UK do not need to adhere to UK domestic company laws. This is not true, ALL British companies need to maintain British accounts, make submissions to the Inland Revenue/Revenue Commissioners and reply to standard statutory enquiries from The Companies House/Companies Registration Office. However, if for example the British limited company has a branch/succursale/zweignniederlassung in Germany then the zweignniederlassung under the DTT will be subject to German taxes but controlled by British laws. Thus, if the UK Company does not trade in UK but has an active branch in Germany only German taxes will apply. In this scenario, the following “options” would be required:
- The appointment of an accountant plus the maintenance of accounts for the German zweignniederlassung’s which must be maintained and submitted to the Inland Revenue at the end of each financial year (The Form is known as a CT600 Form).
- The completion and submission of the Annual Return Form 363 (Included in the Full Secretarial Service)
- The apostilling and translation of the UK limited company legal documents (known as the Memorandum and Articles of Association) into German for submission to the German authorize registering the zweignniederlassung
Using Managed British Limited Companies to trade Directly with Europe
Such companies are used by Continental Europeans because apart from the low cost of registering a UK [Irish limited companies are more expensive but not nearly as expensive as registering a German gessellschaft mit beschrankter (Gmbh)] limited company the UK also has much lower corporate taxes (starting from around 20% p.a.) and social taxes. Again, such trading companies cannot be discriminated against in Germany or other parts of the ECU but to be accepted they must show MANAGEMENT & CONTROL in the UK and for example NOT GERMANY. To do this the company must be registered for VAT and be really managed in the UK by, for example, our in-house accountants. This service legally requires us to operate a UK bank account and make quarterly VAT returns to the Government (Customs & Excise). Cost wise, a FULLY MANAGED UK company will cost a few thousand Pounds each year but can save tens of thousands compared to running a German Gmbh or French Sarl.
Anti-avoidance provisions and the benefits of using Managed and Controlled British Limited Companies
Unlike tax havens, it is very difficult for French, German or other investigating tax authorities to discriminate against properly managed British companies for the very simple reason that both are highly respectable European Union countries. The only issues that can technically be raised relate to proving that there is a genuine business reason other than simple tax mitigation – Obviously, this burden can normally be easily satisfied due to the importance and size of the countries involved but it cannot be over-stressed that full and proper management must take place in the UK to derive these benefits.
Apart from Cyprus, the Republic of Ireland and Malta the UK is unique in using the corporate friendly common law system..
Double Taxation Treaty Network
The key benefit is that the UK has perhaps Europe’s most extensive and favourable tax treaty network and includes treaties with virtually every country in the World that is part of a tax treaty network. However, with the UK’s EU membership ceasing in 2019 the benefits of key EU Directives such as the Parent Subsidiary Directive 90/435 (which avoids any withholding taxes on intra EU dividend payments) and 03/49, which does the same for interest and loans, will sadly no longer be available.
ADMINISTRATION & ACCOUNTANCY SERVICES
Managed UK Limited Liability Company
The key service offered by the SCF Accountancy & Law is that of a fully managed UK company where-by we can register your Company, act as the daily legal and accountancy administrators, liaise on your behalf with HMRC, Company House, maintain the registered office, company minutes and in fact everything necessary to provide you with a fully functional VAT registered UK limited liability company including quarterly VAT returns, online banking, management and meeting rooms etc. – In fact, our UK services are totally bespoke according to your needs.
Our Range of Fully Managed Company Services
- The appointment of a qualified accountant to act as Company Secretary;
- The opening up of a bank account for your company with access provisions agreed by SCF, the bank and of course the beneficial owners;
- A Full Management Agreement setting out the rights and obligations of all parties;
- The provision of a London registered office address for service of process and official mail;
- The application and obtaining of a UK VAT number for your company;
- The maintenance of all requisite company minutes, ongoing companies’ registration office submissions, annual returns and AGM preparation;
- The annual submission of the Annual Assessment of Tax Form;
- The management of the company’s VAT submissions, payments and VAT reclamations on a monthly or quarterly basis;
- The maintenance of the company’s accounts supported by a quarterly ready for the submission to HMRC including the corporate tax calculation. Accountancy will be maintained in either SAGE or Quick Books format;
- The appointment, if required or appropriate, of auditors;
- Advice on general UK tax mitigation and the company’s maintenance by a dedicated company accountant
Set-Up & Annual Maintenance Fees
Please see separate SCF Accountancy & Law UK Managed Company Fee Quotation
The Fully Managed UK Company & Trading Office Package (Optional Extra)
This Package is identical to the Fully Managed UK Company Package save that it includes SCF providing the day-to-day trading, telephone answering, website management (if required), order reconciliation, invoice issuing and trading office facilities for your UK company operation which can be made bespoke to your exact needs all at a fraction of the cost of setting up and maintaining you own office in London. For more details please contact an SCF Consultant