LLP for non-residents

[SueEllen]

No, they won't come after me and they've stated it black on white:

https://www.gov.uk/tax-foreign-income/residence

Non-residents only pay tax on their UK income - they don’t pay UK tax on their foreign income.

On tons of UK law firms' websites you can find this confirmed. Also here for example:

UK LLP Taxation, UK LLP Tax Advantages, 0% Tax for Foreign Partners

The point myself and other posters are making is while the UK taxman, HMRC, won't care about you because you are both resident and working in a foreign jurisdiction, the taxmen in the foreign jurisdiction(s) will care about your income.

Tax and individual/company structures across the EU let alone the world aren't harmonised. So while you are welcome to set up a company anywhere within the EU (or world) , the taxman/taxmen of the countries you reside and work in will be interested in taxing your income.

So for example, I can reside and work in Norway and work through a UK limited company but the Norwegian taxman will expect me to pay any taxes liable to them under their tax law. In the case of Norway they tax company income for very small companies as personal income.

[AtW]

I think you may have mis-read. LLPs are the same in Scotland and England.

It's actually called LP (Limited Partnership) - not LLP: LIMITED PARTNERSHIPS IN SCOTLAND | Brodies LLP

The reporting requirements for LPs in Scotland much more lax, I've come across with it when I was investigating some foreign fraudsters who used it and it turned out that they are not obliged to file more or less anything other than formation papers. Made their life easier for sure.

[SueEllen]

I read about Scottish LLPs but they are much more expensive to incorporate and seem to bring no real benefit over UK. I already have experience with the UK banking system, accountants, and HMRC so I feel very comfortable doing business there.

Your post above indicates you seriously need to do much more research about company structures, personal tax and company tax.


Scotland is part of the UK.

However there are different legal jurisdictions within the UK e.g. England and Wales, Scotland, and Northern Ireland. In he vast majority of cases the legal structures and laws mirror each other, so they are exactly the same. There are however there are some differences and these difference can be important.

To get proper help from people I suggest you state the country you reside in and the countries you think you will work in. This is because many posters on this board have contracted abroad and have worked out safely (or otherwise) how to get around the tax issues.

[Iliketax]

It's actually called LP (Limited Partnership) - not LLP: LIMITED PARTNERSHIPS IN SCOTLAND | Brodies LLP

The reporting requirements for LPs in Scotland much more lax, I've come across with it when I was investigating some foreign fraudsters who used it and it turned out that they are not obliged to file more or less anything other than formation papers. Made their life easier for sure.

There are very different reporting requirements for LPs (whether English or Scottish) v LLPs. But comparing an LP to an LLP is like comparing a car to a carp.

[AtW]

There are very different reporting requirements for LPs (whether English or Scottish) v LLPs. But comparing an LP to an LLP is like comparing a car to a carp.

From reporting point of view and level of HMRC's involvement LPs in Scotland (maybe also England but I don't know about it) could suit foreigners better than English LLPs with much higher levels of disclosure and submitting tax returns for all partners to HMRC

[TheGrave]

The point myself and other posters are making is while the UK taxman, HMRC, won't care about you because you are both resident and working in a foreign jurisdiction, the taxmen in the foreign jurisdiction(s) will care about your income.

Tax and individual/company structures across the EU let alone the world aren't harmonised. So while you are welcome to set up a company anywhere within the EU (or world) , the taxman/taxmen of the countries you reside and work in will be interested in taxing your income.

So for example, I can reside and work in Norway and work through a UK limited company but the Norwegian taxman will expect me to pay any taxes liable to them under their tax law. In the case of Norway they tax company income for very small companies as personal income.

Ha, sorry, I was missing the point, obviously. Believe me, I make sure I'm not spending more than 183 days in the countries I work and most importantly I can prove it if a dispute is raised. But even then take a really good look here:

EU - Abroad on short assignments (max 2 years) - Your Europe

To brief it: if you manage to get an A1 from HMRC (or your relevant taxman) you can work as much as you want under foreign EU jurisdictions with zero chance of becoming a tax resident (the 2-year period can get extended), get full health benefits in their country as you are a permanent employee there. The problem is that in order to obtain an A1 you should be able to show at least 25% of your profits received from local clients. For me it's a huge problem as I can't get anyone in my country to partner with so that he brings 25% of what I make but for you guys in the UK it shouldn't be a problem. Find a UK contractor you trust, form an LTD or LLP or whatever you want, get an A1 and work wherever you please by keeping your social security in the UK and health benefits in both places.

As for Scottish LLPs - not having to file tax returns is a relaxation for your accountants, not yourself. If you have a legit business and the taxman comes after you it doesn't make any difference. It's just a matter of how much abuse these LLPs can take before legislation gets changed.

[stek]

Ha, sorry, I was missing the point, obviously. Believe me, I make sure I'm not spending more than 183 days in the countries I work and most importantly I can prove it if a dispute is raised. But even then take a really good look here:

EU - Abroad on short assignments (max 2 years) - Your Europe

To brief it: if you manage to get an A1 from HMRC (or your relevant taxman) you can work as much as you want under foreign EU jurisdictions with zero chance of becoming a tax resident (the 2-year period can get extended), get full health benefits in their country as you are a permanent employee there. The problem is that in order to obtain an A1 you should be able to show at least 25% of your profits received from local clients. For me it's a huge problem as I can't get anyone in my country to partner with so that he brings 25% of what I make but for you guys in the UK it shouldn't be a problem. Find a UK contractor you trust, form an LTD or LLP or whatever you want, get an A1 and work wherever you please by keeping your social security in the UK and health benefits in both places.

As for Scottish LLPs - not having to file tax returns is a relaxation for your accountants, not yourself. If you have a legit business and the taxman comes after you it doesn't make any difference. It's just a matter of how much abuse these LLPs can take before legislation gets changed.

You've got this all wrong! Suggest you read up about this 183 day rule, tax residency and domicile. Are you all EU citizens? You must be actually....

What's the end result of all this jiggery pokery going to achieve? It's tax avoidance isn't?

[Iliketax]

I make sure I'm not spending more than 183 days in the countries I work

So how many days will you (or your partner) spend in the UK?

[SueEllen]

Ha, sorry, I was missing the point, obviously. Believe me, I make sure I'm not spending more than 183 days in the countries I work and most importantly I can prove it if a dispute is raised.

It doesn't work like that as Stek has indicated.

The 183 day rule only really works if you are a large company and even then it doesn't always apply to individual company employees or officers who are sent to work in a particular jurisdiction. Some jurisdictions such as France will tax you personally from day one regardless of what individual or company structure you work through in another EU country.

Firstly no UK contractor who isn't closely related to you or has known you since childhood, so you are like a relation, will agree to go into business with you as it simply isn't worth their while. Secondly even if they are related to you, human nature for close relations is to protect them from trouble the main exception is when people hate their spouse/partner and know the relationship is breaking down.

[stek]