There may be benefits to running a business through an overseas company.
There are several benefits that may be obtained by running your business through an overseas company, including:
- The reporting requirements in overseas jurisdictions may be significantly reduced in comparison to the UK requirements. This may result in lower set-up and maintenance costs.
- Non-resident companies in some countries are not required to publish financial information or the details of directors and shareholders, giving confidentiality and anonymity to these individuals. Most offshore financial jurisdictions will only reveal this information to a third party if criminal or terrorist activities are suspected.
- There may be tax advantages to an offshore company. Offshore companies are only subject to UK tax on their profits arising in the UK. Even UK source dividends paid to an overseas company should be free of tax.
Offshore Companies for UK Permanent Tax Residents
However, for UK permanent tax residents setting up an overseas company, these tax advantages are likely to be minimal due to increased anti-avoidance legislation, essentially making the company transparent for tax purposes so that the individual is taxed on the company’s profits. In addition, where overseas companies are controlled and managed from the UK then they are generally treated as UK resident, therefore fully subject to UK tax.
Offshore Companies for Temporary UK Residents and Non-Domiciled Individuals
For temporary UK residents and non-domiciled individuals, an overseas company can help to keep a UK business from becoming UK tax resident when the individual does, ready for when they move back overseas.