| Páginas no tópico: [1 2] > | Running a foreign company from the UK Tópico cartaz: Mark Weatherall
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I am currently living in Taiwan with my Taiwanese wife. We have a limited liability company in Taiwan (under my wife’s name). We invoice our clients and get paid through the company, which then pays us both a monthly salary. Our clients are a mixture of Taiwanese academics wanting translation and editing services and translation agencies in various countries (including UK, EU, China, US, etc.). Basically, I do all the translations, and my wife does admin, marketing etc.
We’re pl... See more I am currently living in Taiwan with my Taiwanese wife. We have a limited liability company in Taiwan (under my wife’s name). We invoice our clients and get paid through the company, which then pays us both a monthly salary. Our clients are a mixture of Taiwanese academics wanting translation and editing services and translation agencies in various countries (including UK, EU, China, US, etc.). Basically, I do all the translations, and my wife does admin, marketing etc.
We’re planning on moving back to the UK in the near future, but we want to keep this Taiwanese company running, mainly because our Taiwanese clients need an official invoice from a Taiwanese company to claim reimbursements from their research funds to use our services.
However, I’m not sure if there would be any issue doing this for clients in the UK/EU since I will be based in the UK. Or maybe I should register as self-employed in the UK to directly bill non-Taiwanese clients and continue to bill Taiwanese clients through our company in Taiwan? This would also have the advantage of not having to do two international remittances to get paid, but we might end up having to pay more income tax in the UK since all of the income would be under my name.
Also, how would expenses work if we continued to operate our Taiwanese company? The UK and Taiwanese rules for allowable expenses are quite different. I’m assuming that Taiwanese company rules for expenses would apply, but would HMRC view such payments as income?
Many thanks!
[Edited at 2022-12-30 08:36 GMT] ▲ Collapse
| | | | Tom in London
Reino Unido
Local time: 21:40
Membro (2008)
italiano para inglês
I'm no expert but I I get the impression that the kind of operation you describe (if I've understood this correctly this would be using a foreign company as a way of avoiding tax in the UK, and for no other purpose) would attract the interest of HMRC. You should consult a UK accountant before you go any further.
[Edited at 2022-12-30 08:40 GMT]
| | | | Mark Weatherall 
Taiwan
Local time: 05:40
Membro (2013)
chinês para inglês
CRIADOR(A) DO TÓPICO | Thanks for the reply! | Dec 30, 2022 |
If HMRC view an arrangement like this as using a foreign company to avoid tax, even though we clearly have a large part of our business from Taiwan, then I would just set up business in the UK for all my non-Taiwanese clients. However, we need to keep the Taiwanese company. Otherwise, we will lose all of our Taiwanese clients (and they are direct clients, so much more lucrative for the business). Maybe we will need to set up a branch office in the UK? I will check this with a UK accountant.
<... See more If HMRC view an arrangement like this as using a foreign company to avoid tax, even though we clearly have a large part of our business from Taiwan, then I would just set up business in the UK for all my non-Taiwanese clients. However, we need to keep the Taiwanese company. Otherwise, we will lose all of our Taiwanese clients (and they are direct clients, so much more lucrative for the business). Maybe we will need to set up a branch office in the UK? I will check this with a UK accountant.
[Edited at 2022-12-30 08:49 GMT] ▲ Collapse
| | | | Agneta Pallinder
Reino Unido
Local time: 21:40
Membro (2014)
sueco para inglês
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| UK partnership perhaps | Dec 30, 2022 |
Instead of just being a self-employed individual in the UK for your non-Taiwanese business, you might consider setting up a partnership with your wife (who, I assume, will continue to be responsible for the admin side). This way the profits from the partnership gets divided between the two of you when you make up your tax returns.
But, like others, I strongly advise you to find a good UK accountant - one who has an interest in supporting small businesses - to get help with working o... See more Instead of just being a self-employed individual in the UK for your non-Taiwanese business, you might consider setting up a partnership with your wife (who, I assume, will continue to be responsible for the admin side). This way the profits from the partnership gets divided between the two of you when you make up your tax returns.
But, like others, I strongly advise you to find a good UK accountant - one who has an interest in supporting small businesses - to get help with working out a set-up that is right for you. ▲ Collapse
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Samuel Murray
Holanda
Local time: 22:40
Membro (2006)
inglês para africâner
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Mark Weatherall wrote:
I’m not sure if there would be any issue doing this for clients in the UK/EU since I will be based in the UK. Or maybe I should register as self-employed in the UK to directly bill non-Taiwanese clients and continue to bill Taiwanese clients through our company in Taiwan?
I have no knowledge of UK law, but as far as I know, there is no restriction on both being an employee of a company *and* working for yourself as a self-employed person. However, I suspect there will be a lot of additional administration (in both the UK and Taiwan) for being employed by a foreign company and having foreign employees.
Having a company in Taiwan while living in the UK and then making your UK clients clients of the Taiwan company may look like a type of attempted tax evasion, so it may be safer to work for UK clients in your capacity as a self-employed translator.
Another thing you can consider is to stop being an employee of the Taiwanese company, and be a freelance translator for them instead. This would mean that you would submit invoices to the Taiwanese company (and your wife would earn a profit as the owner of the Taiwanese company). Would it satisfy your Taiwanese clients if the Taiwanese company is the translation agency but the actual translator(s) is/are not in Taiwan?
| | | | Mark Weatherall
Taiwan
Local time: 05:40
Membro (2013)
chinês para inglês
CRIADOR(A) DO TÓPICO
Having a company in Taiwan while living in the UK and then making your UK clients clients of the Taiwan company may look like a type of attempted tax evasion, so it may be safer to work for UK clients in your capacity as a self-employed translator.
Would this also apply to non-UK clients? UK clients are only around 10% of my business. Apart from Taiwan, most of my clients are in the US, China, and EU countries. If necessary, I could stop working for my UK clients without impacting my business too much.
Another thing you can consider is to stop being an employee of the Taiwanese company, and be a freelance translator for them instead. This would mean that you would submit invoices to the Taiwanese company (and your wife would earn a profit as the owner of the Taiwanese company). Would it satisfy your Taiwanese clients if the Taiwanese company is the translation agency but the actual translator(s) is/are not in Taiwan?
The Taiwanese clients don’t care where I am as long as they can get the official invoice for reimbursement that only companies in Taiwan can issue.
Invoicing the Taiwanese company sounds like a good option and would avoid having to enroll in Taiwan’s health and labour insurance, which are mandatory for employees (although I’m not too sure how this works if you aren’t resident in Taiwan). The only possible issue is that the company would have to pay 18% withholding tax on the full amount of my invoices since I will be a non-resident foreigner. This won’t apply to my wife as she is a Taiwanese citizen. However, I guess this won’t be a problem as I could write it off against UK tax.
| | | | Mark Weatherall
Taiwan
Local time: 05:40
Membro (2013)
chinês para inglês
CRIADOR(A) DO TÓPICO
Agneta Pallinder wrote:
Instead of just being a self-employed individual in the UK for your non-Taiwanese business, you might consider setting up a partnership with your wife (who, I assume, will continue to be responsible for the admin side). This way the profits from the partnership gets divided between the two of you when you make up your tax returns.
But, like others, I strongly advise you to find a good UK accountant - one who has an interest in supporting small businesses - to get help with working out a set-up that is right for you.
Thanks, I will look into that. The main issue is we need to issue invoices to Taiwanese clients through our Taiwanese company, so we will need to keep the company running in some form (perhaps combined with a UK branch, being directly employed by the Taiwanese company while living overseas, or invoicing it as a UK sole trader or partnership?)
| | | | Tom in London
Reino Unido
Local time: 21:40
Membro (2008)
italiano para inglês
The more I think about this, the more complicated it becomes. You really do need an accountant. It will cost you money, but it's essential.
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| Wrong place to ask | Dec 30, 2022 |
You need a specialist tax accountant. You’ll only get unsupported opinions here.
One thing I will say is that you can’t simply invoice everything to your own company as a sole trader, as you will still be considered an employee by HMRC.
Obviously everyone can own and run a business abroad, but the tax side will depend partly on the relevant tax treaty, and it’s all going to be very complicated I should think, and HMRC aren’t always very helpful. Good luck!
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check with immigration that your wife can actually enter and live in the UK...
| | | | Dan Lucas
Reino Unido
Local time: 21:40
Membro (2014)
japonês para inglês
Giovanni Guarnieri MITI, MIL wrote:
check with immigration that your wife can actually enter and live in the UK...
Dear God, yes. Well, I mean the short answer is that you can't check in advance, you have to apply and hope, but the conditions relating to ensuring that your dependent/s do not become a burden on the state are quite stringent, and it takes time.
Dan
| | | | Mark Weatherall
Taiwan
Local time: 05:40
Membro (2013)
chinês para inglês
CRIADOR(A) DO TÓPICO
Dan Lucas wrote:
Giovanni Guarnieri MITI, MIL wrote:
check with immigration that your wife can actually enter and live in the UK…
Dear God, yes. Well, I mean the short answer is that you can’t check in advance, you have to apply and hope, but the conditions relating to ensuring that your dependent/s do not become a burden on the state are quite stringent, and it takes time.
Dan
This can be satisfied with £62k of savings which we have. I know the visa can take 24 weeks to process, but we’re not in a hurry. The main issue is going from Taiwan which taxes small businesses very lightly to the UK tax regime while continuing to maintain our presence in Taiwan to serve Taiwanese clients.
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Tom in London
Reino Unido
Local time: 21:40
Membro (2008)
italiano para inglês
Mark Weatherall wrote:
------The main issue is going from Taiwan which taxes small businesses very lightly to the UK tax regime while continuing to maintain our presence in Taiwan to serve Taiwanese clients.
So long as you keep in Taiwan what you earn in Taiwan, and pay Taiwanese tax on it, you are probably OK.
But if you transfer any of those earnings into UK banks, the tax inspector would probably want to know where the money came from.
| | | | Dan Lucas
Reino Unido
Local time: 21:40
Membro (2014)
japonês para inglês
Mark Weatherall wrote:
The main issue is going from Taiwan which taxes small businesses very lightly to the UK tax regime while continuing to maintain our presence in Taiwan to serve Taiwanese clients.
Sounds like you have it all under control. My apologies for inadvertently beginning to lead the thread in another direction - perhaps some residual anxiety caused by my experience when applying for visas for my own family when in Tokyo. (That was not bad per se, just stressful.)
With regard to the main topic, I too would advise you to seek professional advice, given that it seems impossible to circumvent the requirement to maintain the company in Taiwan. Of the suggestions I have read so far, the one that strikes me as most practical is for the Taiwanese entity to pass orders on to you as an overseas freelancer.
However, as a freelancer with only one client, this might have ramifications under IR35. I would have a poke about on the UK business forums, as the general level of understanding of the UK's approach to SME (and contractor) accounting and taxation seems to be higher over there.
Regards,
Dan
| | | | Samuel Murray
Holanda
Local time: 22:40
Membro (2006)
inglês para africâner
+ ...
Tom in London wrote:
So long as you keep in Taiwan what you earn in Taiwan, and pay Taiwanese tax on it, you are probably OK.
I disagree. If you are a resident of the UK, you should declare your worldwide income in the UK.
https://www.gov.uk/tax-foreign-income
https://www.gov.uk/tax-foreign-income/taxed-twice
But perhaps I misunderstand what Tom means... after all, one might call profits and dividends "income", and maybe that is what Tom means.
Income (either as a self-employed person in the UK or an employee of a foreign company) and profit (as the owner of your company) may be taxed in different ways and in different places.
Ordinarily, it would have made sense to me that you would not pay any UK tax on your foreign company's profits, since a Taiwanese business would be taxed in Taiwan, and that only on the withdrawals and/or dividends that the company pays you would be considered income in the UK. However, GIYF (Google is one's friend), and now it appears to me that if the UK tax authorities consider your Taiwanese company to be "operating in the UK" (which seems reasonable, since both its owner and all of its employees are in the UK), they may tax the business' profits in the UK as well.
But if you transfer any of those earnings into UK banks, the tax inspector would probably want to know where the money came from.
True. However, you should not hide any of your worldwide income from the UK tax authorities. The fact that "income" doesn't end up in a UK bank account doesn't mean that it's not income and that you don't need to declare it.
After all, when clients make payments into my PayPal account (outside of my country of residence) or into one of my foreign bank accounts, I still declare it as my income, regardless of whether the actual money actually gets transferred into a bank account in my country of residence.
Dan Lucas wrote:
However, as a freelancer with only one client, this might have ramifications...
True. You may be able to avoid this by making sure the Taiwanese company is not your only or main client.
[Edited at 2022-12-30 18:15 GMT]
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