Tax issues on setting up overseas Robert Langston Tax Partner

Forms of doing business Representative office Permanent establishment Subsidiary Joint venture

Representative office 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

Withholding tax on fees (1) £ Fee100 Costs(80) Profit20 Overseas withholding 30%30 UK tax on 20%4 less credit for overseas withholding tax(4) 0 Total tax30

Withholding tax on fees (2) £ Fee100 Costs(80) Overseas withholding 30%(30) Loss(10) Loss set against other UK profits10 Reduction in tax on other UK profits2 Total tax28

Permanent establishment 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

Subsidiary 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