starting a small business in the UK to trade in Europe?


D

davide.lapin

Hi,

I'm a US citizen working in the US as an IT consultant. Recently,
through a friend, I was approached to do some consulting for a German
and an Italian company. The work would be in the form of strategic
advice (a "non tangible" product) that I would give from the USA. The
rub is that these companies want to be invoiced from an EU business
(with an European VAT id, etc) not from the US.

(1) What is the simplest way of invoicing a Euro company from Europe?

If I understand correctly, I could establish *one* UK limited co, from
which I could bill for *all* future EU work. If it matters, the
proposed UK ltd would have no employees at all and no UK clients.

(2) What would be the tax implications of setting up a UK ltd?

Would I collect VAT and remit it to HMRC? Would the UK company's
turnover be taxed according to company tax in the UK or would the
revenues pass through untaxed and I would then pay tax on them in the
US?

(3) Would it make any difference if the director and share holder of my
proposed UK ltd were me (a natural person) or my US company through
which I trade?

Any pointers to useful documentation would be much appreciated, as well
as recommendations for accountants who understand this kind of
situation. (I prefer DIY, but I recognize that paid advice is certainly
useful for bootstraping the process!)

Many thanks.
 
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J

Jonathan Bryce

I'm a US citizen working in the US as an IT consultant. Recently,
through a friend, I was approached to do some consulting for a German
and an Italian company. The work would be in the form of strategic
advice (a "non tangible" product) that I would give from the USA. The
rub is that these companies want to be invoiced from an EU business
(with an European VAT id, etc) not from the US.

(1) What is the simplest way of invoicing a Euro company from Europe?
Type it out in MS Word.
If I understand correctly, I could establish *one* UK limited co, from
which I could bill for *all* future EU work. If it matters, the
proposed UK ltd would have no employees at all and no UK clients.

(2) What would be the tax implications of setting up a UK ltd?

Would I collect VAT and remit it to HMRC? Would the UK company's
turnover be taxed according to company tax in the UK or would the
revenues pass through untaxed and I would then pay tax on them in the
US?
It would be taxed in the UK. You may also have to pay tax in the US on the
profits, depending on the rules there.
(3) Would it make any difference if the director and share holder of my
proposed UK ltd were me (a natural person) or my US company through
which I trade?
Not in the UK. US rules may be different.
 
D

davide.lapin

Jonathan said:
It would be taxed in the UK. You may also have to pay tax in the US on the
profits, depending on the rules there.
Hi Jonathan,

Thanks for your reply.

There's something unclear to me about your answer. Are you assuming
that the putative UK company would keep all the profits?

Would it be possible for my US company to rebill my UK one since the US
one would actually be carrying out the service?

If I did this, the profits on the books of the UK one would be minimal,
as it would be just a "reseller" of my services.

Thanks again for your comments.

-D
 
P

Peter Saxton

Hi,

I'm a US citizen working in the US as an IT consultant. Recently,
through a friend, I was approached to do some consulting for a German
and an Italian company. The work would be in the form of strategic
advice (a "non tangible" product) that I would give from the USA. The
rub is that these companies want to be invoiced from an EU business
(with an European VAT id, etc) not from the US.
Did you ask them why?
(1) What is the simplest way of invoicing a Euro company from Europe?
Being a self employed business.
If I understand correctly, I could establish *one* UK limited co, from
which I could bill for *all* future EU work. If it matters, the
proposed UK ltd would have no employees at all and no UK clients.
You don't need a UK limited company. Unless your German and Italian
clients wish you to be. Check if they want you to wear a pink suit
with a pizza in one pocket.
(2) What would be the tax implications of setting up a UK ltd?
You'd have to pay corporation tax of 19%.
Would I collect VAT and remit it to HMRC?
Yes.

Would the UK company's
turnover be taxed according to company tax in the UK or would the
revenues pass through untaxed and I would then pay tax on them in the
US?
The former.
(3) Would it make any difference if the director and share holder of my
proposed UK ltd were me (a natural person) or my US company through
which I trade?
No.

Any pointers to useful documentation would be much appreciated, as well
as recommendations for accountants who understand this kind of
situation. (I prefer DIY, but I recognize that paid advice is certainly
useful for bootstraping the process!)
http://www.companieshouse.com/

http://www.hmrc.gov.uk/

If you plan on DIY then spend ten years learning before setting up the
business or expect to get it wrong and pay for the consequences.

An alternative is to use a UK accountant.
 
D

davide.lapin

Peter said:
Unless your German and Italian clients wish you to be. Check if they want you to wear a pink suit
with a pizza in one pocket.
:cool: still giggling... Best of Usenet?
The former.
OK. Can the US company rebill the UK one for all but say 5% of the
turnover, thus reducing the UK one's booked profits to almost nil?
(The whole purpose of the UK company is to be a pink-suited
pizza-pocketed *reseller*.)
An alternative is to use a UK accountant.
I reckon I'd better take the hint.

Ta,
-D (who lived for many years in the UK once upon a time and still has
fond memories of real *irony*)
 
P

Peter Saxton

:cool: still giggling... Best of Usenet?


OK. Can the US company rebill the UK one for all but say 5% of the
turnover, thus reducing the UK one's booked profits to almost nil?
(The whole purpose of the UK company is to be a pink-suited
pizza-pocketed *reseller*.)
Yes, as long as it's unreasonable, but presumably you work for the US
company and the UK company is using your services.
I reckon I'd better take the hint.

Ta,
-D (who lived for many years in the UK once upon a time and still has
fond memories of real *irony*)
You'd have problems preparing the accounts without an accountant.
 
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