By Company Registrations Worldwide, 7th Feb 2020
Brexit day has finally come to pass on 31st January 2020, the event is likely to bring about a major change to political and economic scenarios in Europe. Setting up a UK Company could prove to be a profitable move for international investors.
Under the UK–EU Withdrawal Agreement, the UK has now entered an 11-month Brexit transition period. With several trade deals and economic treaties being drawn up and redesigned, one thing remains clear the UK will no longer be part of the EU. When the UK’s exit is complete it will be able to exist as a separate economic entity with its own taxation that is not liable to that of the EU.
Setting up a UK company could be advantageous for many reasons. Read on to find how to save money via tax benefits.
Brexit Transition Period
The Brexit transition period will last until 31st December 2020. During this time the UK will remain part of the security cooperation agreements and economic institutions of the EU. There will be no change in trade relations as the UK will continue to be a part of the EU single market and member of the customs union. The rights of citizens will remain unaffected; citizens will maintain freedom of movement within the EU’s member states and there is no requirement to obtain working permits/visas.
The UK must follow current EU law and rulings of the European Court of Justice, however, UK ministers will no longer be permitted to attend or vote at European Council meetings. The is to be treated a member by all EU states until the end of the transition period.
What are the Benefits of Setting up a UK Company
There are many reasons why international investors choose to register a company in a foreign country without physically relocating. A UK Company acts as a vehicle to carry out international trade, serves as a launching point to further maximize business and can also be used as a way to reduce tax spending. It’s a completely legitimate option and a smart move if done with the help of expert legal advice and help.
When the Brexit transit period is over and UK is no longer a part of the EU, UK registered companies owned by international investors will be considered offshore accounts and will be taxed based on the local laws of the UK and not the operator’s home country or the EU taxation laws.
The UK corporation tax exemptions for foreign permanent establishments can be availed and effectively used to lower taxation on business spending.
UK Corporation Tax & Double Taxation Relief
All UK companies are considered UK residents under the incorporation rule. The rate of the UK corporation tax is around 17% and will be applied to any establishment registered there. But the company can avail of certain exemptions on global income and gains in the form of the Foreign Branch Profits Exemption thus allowing a double taxation relief.
This exemption can be claimed when the following conditions are met:
- A small UK company will be eligible for this exemption only if the payer is a resident of a qualifying territory. However mid to large-sized companies do not have this restriction. The definition of micro, small and large enterprises can be found in relevant laws.
- The foreign branches must be located in a country that has a double taxation agreement with the UK.
UK company non-resident directors
The UK government have removed various bureaucratic measures to implement a simplified process for setting up a company. UK company non-resident directors are permitted; there is no requirement to live in the UK when acting as a director of a UK company. To set up a bank account, the director may be required to visit the UK and physically attend a meeting with the bank. However, travel would not be required in cases where the UK bank has a branch in the director’s home country and when anti-money laundering procedures are met.
We highly recommend that you seek expert advice when setting up a UK Company. The consultants at Company Registrations Worldwide can assist you to incorporate a UK company and meet the ongoing filing requirements compliant with UK law. We make the entire process as quick as possible and we can provide taxation guidelines to ensure the company doesn’t overpay. Please contact our team on +353 1 6874518 or submit an enquiry here.