Europe is known to have high tax rates, which pushes foreigners and investors to try to find countries to incorporate with friendlier tax rates.
The problem lies when the business operates in Europe. It is more favorable to incorporate the company in a country in Europe to ease things.
In this context, a UK Agency Structure might be the solution that these businesses are looking for.
Since you need a company in Europe, incorporating a UK company can give you the presence you need. Besides, it helps you enter into agreements and deals with people you need to work or collaborate with under this company. You pay everything through the bank account of this company and receive payment as well. But, we all know that the UK’s corporate tax is 20%, which cannot be considered a low tax rate, so what are the perks?
Well, it all lies in having an offshore company in a country that is considered as a tax haven such as Delaware, for example, or Bermuda, and enter into an agreement with the UK Agency Structure called an agency agreement.
This agreement will govern the relationship between the companies. Thus, it should mention everything and, most importantly, the commercial fee paid to the agency structure in return for it acting as the offshore company’s agent.
Having done this, the taxes that the business will be eligible for is as follows:
– The UK Agency Structure being the one receiving all business income, will transfer the money to the offshore company without paying the 20% corporate tax rate imposed in the UK.
– The UK Agency will get the commission fee agreed upon in the agreement and pay taxes in the UK.
However, to be able to do this. You should keep in mind that there are specific rules that you should respect to be able to do the above mentioned:
– The agency agreement should be entered between the companies before initiating any trading activity.
– The UK agency structure cannot trade in the UK or with any UK business.
– There should be a commission fee paid to the UK Agency.
– The relationship between the two should be strictly commercial.
– The beneficial owner of the offshore company should not be subject to UK tax.
From all the above, you can understand that there are always ways to waive certain hurdles or reduce them, which is one way to enable you to operate in the EU without paying hefty taxes.
If you need help to find a jurisdiction that will be the best suit for you, feel free to visit lexyom.com and book an online consultation and take it from there.
