using a uk ltd to fund an eu27 ltd venture

[m0n1k3r]

Hi all

There's a good chance I'll be forced to move to one of the EU27 countries post brexit due to my mum being here as a family member of an EEA national but likely not long enough to meet the settled status. As such I'm making plans to move business-ey stuff to the EU as much as possible so that moving life-ey stuff is less painful.
I have about £50k in my uk LTD that I'd like to use to fund an EU27 ltd to buy an investment property, ideally without turning it into dividends and paying tax first. I would also like to do something similar for an EU27 consulting ltd but that needs a lot less money so I could fund with a directors loan, i'm less bothered about that one, it's the property one I'm really hoping to fund directly from my uk consulting ltd.

So my questions. What is the most tax efficient (and of course totally tax legal, this is not a tax dodge, it's a brexit dodge) way to fund a new eu27 ltd property investment co from a uk consulting ltd? Is that even possible? I'm up for anything, redomiciling my uk ltd, an EU27 holding and waiting 2 years to pay dividends without withholding tax, whatever.
My Estonian e-residency will be with me in the next 2 weeks or so, is that the best way to open an EU27 company? I'm a Dutch citizen so maybe there's other better options?

Setting up a company in Estonia is quick and easy, but in order to set up a company bank account there you would probably have to rent an apartment there in order to convince the banks that they company is indeed based and run from Estonia. Pretty much the same as for any country these days.

The Netherlands also made changes to their company laws a while back so that it is far simpler and cheaper to set up a small company there. You'll still have to go through a notary, though.

Germany now also have their 'UG' company form, but accounting and notary fees in Germany can easily get more expensive than elsewhere. Pretty much everything in Germany is still done on paper.

Ireland is also an alternative, but in order to not have to provide a bond, you'll have to provide an EU-based address. Also bear in mind that corporation tax in Ireland can get quite high for non-trading profits (e.g. 25% or 33% rather than the 12.5% that only applies to trading profits). The authorities are however quite easy and friendly to deal with.

[simes]

Google 'Sockpuppet'

Ah. Got it. Ta.

[meridian]

I suspected the answer would be along these lines. I've checked in with my accountant (who in turn is checking in with their in house tax person) just in case there is a legit way to do this but my own googling and concise answers like yours are making me think i'll need to forget my dreams of tax efficiency and take the dividend tax hit.

On the property in a ltd point, i started looking into that as a way to keep claiming my mortgage interest as an expense on a uk rental property I own. This time around it was on the off chance I could transfer money between companies without tax to fund a purchase outside of the UK, but with that looking unlikely for the reasons you've presented i'll certainly consider the pros of making it a personal purchase rather than a ltd co one.

Thanks for the helpful answer.

If immediate timing isn't the issue (you mentioned you may need to leave the UK) then simply closing the company down and claiming ER before you leave might be another option.

[northernladuk]

Well, I must admit I am still none the wiser as to what a socky is... Can you help?

Google 'Sockpuppet'

[simes]

took me a while to figure out what a socky is.

Well, I must admit I am still none the wiser as to what a socky is... Can you help?

[tommyvn]

OP. Could you type after the quote. It's there to provide context and then you respond to it. If you type first we've then got to read more to understand what you are replying to.

Many thanks.

soz, edited my posts accordingly. unlike mx socky a few posts up i'm new to this, makes sense to keep replies below, i'll do that going forward.

[northernladuk]

OP. Could you type after the quote. It's there to provide context and then you respond to it. If you type first we've then got to read more to understand what you are replying to.

Many thanks.

[tommyvn]

Your first issue is a basic UK accounting/tax one - how do you get the money out of the UK Ltd? "Paying tax first" is a misnomer, you've already paid tax on the company's earnings and the cash is sitting in retained earnings. You could get it out by:
- Dividends to shareholders (additional tax paid by you personally depending on your total level of earnings, which you haven't disclosed)
- Loan to shareholder (BIK implications)
- Loan to related company at arms length (market rates of interest to be paid, this will be income to your UK company and may offset any gains)
- Purchase of shares in an investment vehicle company (shares sit as an asset on the company, so the EU company and any investment property is not owned by you personally)

Given the complexities in just getting the funds out, and the dependence on your personal circumstances, you really need to seek the advice of a professional accountant that is experienced in this.

And that's before even getting into whether purchasing an investment property inside a Ltd company is a good idea.

IANAA.

I suspected the answer would be along these lines. I've checked in with my accountant (who in turn is checking in with their in house tax person) just in case there is a legit way to do this but my own googling and concise answers like yours are making me think i'll need to forget my dreams of tax efficiency and take the dividend tax hit.

On the property in a ltd point, i started looking into that as a way to keep claiming my mortgage interest as an expense on a uk rental property I own. This time around it was on the off chance I could transfer money between companies without tax to fund a purchase outside of the UK, but with that looking unlikely for the reasons you've presented i'll certainly consider the pros of making it a personal purchase rather than a ltd co one.

Thanks for the helpful answer.

[tommyvn]

This guy is clearly a socky, but whose?

took me a while to figure out what a socky is. you're looking at my first and only profile on these forums.
There's a pattern with you tho, either you're the socky or you're simply an unhelpful troll, everyone except you was helpful in my original query in the brexit forum too.

[northernladuk]

This guy is clearly a socky, but whose?

He is? I don't see that.

[Eirikur]

This guy is clearly a socky, but whose?

[meridian]

Hi all

There's a good chance I'll be forced to move to one of the EU27 countries post brexit due to my mum being here as a family member of an EEA national but likely not long enough to meet the settled status. As such I'm making plans to move business-ey stuff to the EU as much as possible so that moving life-ey stuff is less painful.
I have about £50k in my uk LTD that I'd like to use to fund an EU27 ltd to buy an investment property, ideally without turning it into dividends and paying tax first. I would also like to do something similar for an EU27 consulting ltd but that needs a lot less money so I could fund with a directors loan, i'm less bothered about that one, it's the property one I'm really hoping to fund directly from my uk consulting ltd.

So my questions. What is the most tax efficient (and of course totally tax legal, this is not a tax dodge, it's a brexit dodge) way to fund a new eu27 ltd property investment co from a uk consulting ltd? Is that even possible? I'm up for anything, redomiciling my uk ltd, an EU27 holding and waiting 2 years to pay dividends without withholding tax, whatever.
My Estonian e-residency will be with me in the next 2 weeks or so, is that the best way to open an EU27 company? I'm a Dutch citizen so maybe there's other better options?

Your first issue is a basic UK accounting/tax one - how do you get the money out of the UK Ltd? "Paying tax first" is a misnomer, you've already paid tax on the company's earnings and the cash is sitting in retained earnings. You could get it out by:
- Dividends to shareholders (additional tax paid by you personally depending on your total level of earnings, which you haven't disclosed)
- Loan to shareholder (BIK implications)
- Loan to related company at arms length (market rates of interest to be paid, this will be income to your UK company and may offset any gains)
- Purchase of shares in an investment vehicle company (shares sit as an asset on the company, so the EU company and any investment property is not owned by you personally)

Given the complexities in just getting the funds out, and the dependence on your personal circumstances, you really need to seek the advice of a professional accountant that is experienced in this.

And that's before even getting into whether purchasing an investment property inside a Ltd company is a good idea.

IANAA.

[tommyvn]

You are better off posting this in the Brexit forum. This part is for accounting types wearing Jumpers with elbow patches. The guys in the Brexit forum are a lot more clued up in European policy and business.

haha that suggestion is very similar to the advice I got in the brexit forum: https://www.contractoruk.com/forums/...ml#post2620238

[northernladuk]

You are better off posting this in the Brexit forum. This part is for accounting types wearing Jumpers with elbow patches. The guys in the Brexit forum are a lot more clued up in European policy and business.

[tommyvn]

Hi all

There's a good chance I'll be forced to move to one of the EU27 countries post brexit due to my mum being here as a family member of an EEA national but likely not long enough to meet the settled status. As such I'm making plans to move business-ey stuff to the EU as much as possible so that moving life-ey stuff is less painful.
I have about £50k in my uk LTD that I'd like to use to fund an EU27 ltd to buy an investment property, ideally without turning it into dividends and paying tax first. I would also like to do something similar for an EU27 consulting ltd but that needs a lot less money so I could fund with a directors loan, i'm less bothered about that one, it's the property one I'm really hoping to fund directly from my uk consulting ltd.

So my questions. What is the most tax efficient (and of course totally tax legal, this is not a tax dodge, it's a brexit dodge) way to fund a new eu27 ltd property investment co from a uk consulting ltd? Is that even possible? I'm up for anything, redomiciling my uk ltd, an EU27 holding and waiting 2 years to pay dividends without withholding tax, whatever.
My Estonian e-residency will be with me in the next 2 weeks or so, is that the best way to open an EU27 company? I'm a Dutch citizen so maybe there's other better options?