Transfer prices exemption in UK LTD

The below may be an interesting thread for you.

accountingweb.co.uk/any-answers/transfer-pricing-risk
All you need to know about transfer pricing also:

grantthornton.global/en/insights/articles/tr…ricing---uk/

P.S Keep in mind he may the tax advisor will likely have to report you under DAC6 depending on where he is based. As yours would be considered an aggressive tax arrangement.

https://www.offshorecorptalk.com/th...eporting-comes-into-effect-1-july-2020.29711/

Puzel12 said:

Is it really considered transfer pricing even if the company is used just to have entity that is able to receive more EU currencies and have tax residency certificate?

No not really. But what you described in your other thread was clearly profit shifting which is all part of BEPS.

Puzel12 said:

Maybe I just need to become friend with Estonian 20% because I really have no more energy with dealing with all of it UK seemed much better until I heared about BEPS and profit shifting again. That's right point, not sure why I forgot.

If you can setup Estonia company with a cheap virtual office and cheap local director working 1 day a week that would be best. You can then defer ever paying Estonia corporate tax while paying yourself a tax free salary offshore which you can later remit to Thailand. Thailand has no CFC rules so anEstonia company is of little interest to them in worst case.

Puzel12 said:

I heared many stories on this forum even about payment processor structure, and this will solve my problem, but this is all to open interpretation by taxman, isn't it?

Depending on country concerned then yes. Anti avoidance rules by tax authority can be opaque and deliberately so.

Puzel12 said:

At the same time whats bad about signing some marketing clients under uk ltd and doing work for it as us llc for 80% of revenue? 20% will be taxed in the uk then. I am okay with that. Maybe it can be profit shifting but then what's the difference between director salary and this?

Common ownership and everything I discussed in other thread is the problem. Look the reality is you will be able to get away with it and chances of getting problems from HMRC are very slim. But if they do find out you are invoicing yourself to shift profits then it could raise questions but your small fish. Your plans to shift £64k of the £80k profit to expenses would save you like £12.8k in taxes I believe. Luckily that falls below the UK's £25k threshold that they consider a serious tax offense in worst case. I would just look to the future and keep in mind changing regulation. I wiuld 100% not involve no US entity with no shell LLC in any structure.

Residency determines tax status ultimately, so you cant base erode/price transfer if you don't live in that country.

Depending on outside factors like customer base and actual product determines where tax is due.

For example (NOT ADVICE!!)

Thai resident

Digital products or consulting.

US LLC sets up and UK LTD to access market and banking.

UK can invoice on behalf of the US as an intermediary as some clients can not or will not contract with a US company (clients preference).

UK charges a fee for administration and then delivers the funds to US.

Issues that may arise

UK company receives more than £82K in payment from UK customers therefor, VAT liable. So US, bills UK clients directly.

Definition of dividend, as US LLC does not pay dividends but in Thailand they don't differentiate LLP/LLC to a LTD. Remit funds to personal account and then deliver them to Thailand the year after. That's the official way but as we know people don't follow this rule and have not had any issues (I do not condone nor advise this).

Tax status of both companies. UK LTD tax status can be applied for and fillings on profit/loss on fees remitted to HMRC and tax certificate produced for the accounting period. LLC much the same with the relevant US documents.

Martin Everson said:

P.S Keep in mind he may the tax advisor will likely have to report you under DAC6 depending on where he is based. As yours would be considered an aggressive tax arrangement.

could he win his case if advised by professionals in such an setup?

clemens said:

could he win his case if advised by professionals in such an setup?

Very low chance.

Martin Everson said:

Very low chance.

yeah I thought so already. Much of what we discuss is theoretical possible or impossible. Once we put theory into action in the real world we find out how good the idea was.