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If I live in UK, but setup a corp in USA, who do I pay tax to ?

Discussion in 'Business & Tax Advice' started by del_boy, Feb 4, 2009.

  1. del_boy

    del_boy Regular Member

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    I'm planning to eventually set up a us corp because of all the tax .... "advantages" lol. But i'm living in the uk, and obviously I'll be earning from here, but it will all go into a us bank account.

    Will I have to pay tax in the us and uk ?
     
  2. Arthas

    Arthas BANNED BANNED

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    yeah if you're earning for the US business i think you will have to pay taxes to the IRS.
     
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  3. del_boy

    del_boy Regular Member

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    I figured on that, bu I'm not sure whether I have to pay any tax here (in uk) as I live here, and am earning money while I live here as a British Citizen
     
  4. toyo

    toyo BANNED BANNED

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    I think you need to pay taxes. I heard something about rich guys who moves into London/UK needs to pay like 30k to the government yearly, and they don't get taxed on their foreign earnings.

    Yes, you will be taxed, unless you have a way of hiding the cash. Overseas taxation will just be seen as an expense.
     
  5. Freddie

    Freddie Registered Member

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    del_boy,

    You should have a GOOD reason for doing what you propose.

    Chances are the "advantages" you think exist, in reality don't exist OR are NOT worth the hassle.

    If you are NOT a US citizen or a US resident or green card holder chances are you do NOT want to go ANYWHERE NEAR incorporating in the US.
     
    Last edited: Feb 4, 2009
  6. ukescuba

    ukescuba Jr. VIP Jr. VIP Premium Member

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    i grew up in the UK but hold dual citizenship, and live in the US now, I run my own business and went through a whole shebang with the taxes

    if you want to earn overseas income especially if it involves mega money and you want to do it legit - i advise you seek the proper advice from both side of the Atlantic and talk with both countries Tax people! :)

    I hadnt filled out a certain form in the UK that told them i would not be living in the country for more than 12 months and got hit with some additional tax which was BS and it was a lot of money at the time. Like i said the best thing to do is ask.
     
  7. del_boy

    del_boy Regular Member

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    well you can buy anonymous us corps, which are based in the states which have the lowest levels of tax in the US (IIRC one is Delaware ?). In the UK, if you have a UK company, you're going to pay 20% (or 18%) corporation tax, on top of that you pay NI, and personal tax, which is about 22%, but once you earn over x amount, then you get charged 40% (higher than that actually), and in 2011 that 40% or higher, is going to be much higher.
     
  8. gtford

    gtford Newbie

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    Most likely. Corporation tax/VAT/etc in the USA, income tax or dividend tax (depending how you take your earnings) in the UK. I wouldn't dump the cash in a US bank and not tell Hector in the UK - they have agreements with the IRS to share details/etc. They will find out (rather easily).

    On any taxable income you have, be it from a UK source or foreign.

    Non-domiciles. They have the option to pay a fixed sum instead of percentage based tax on foreign income outwith the UK (IIRC). Plenty of info on Google/etc about it, but I doubt it applies to the OP. He also states he lives here, which kind of answers that.

    Being based in the UK there's no need for a US corp except as a subsidiary for stuff that needs to be done in the US, in my opinion. Corporation tax in the UK is reasonable, and there's more dodges than you can think of. Take your earnings as some PAYE and mostly dividends, and you're laughing.

    What you need to do is sit down with a good tax adviser and work it out - it all depends on what you are doing, where and how (and sometimes why - CFCs etc). My company was designed and formed with tax in mind. Best to get it right from the start ;)

    (This can in no way be taken as financial advice. I am not qualified to give that. You know the drill.)
     
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  9. zoux

    zoux Registered Member

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  10. zoux

    zoux Registered Member

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    maybe set an offshore company in brithish virgin island or panama will be worth, and set you domicile outside of UK
     
  11. del_boy

    del_boy Regular Member

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  12. gtford

    gtford Newbie

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    40% over £34,800 (£37,400 after April 6th) for income via PAYE (usually).

    You take your income as dividends from your company.

    Corporation tax is currently 21% for small companies. Dividends tax is 10% low rate, 32.5% high rate (above £34,800).

    You pay tax on the company profits at 21%, then pay your dividends. First £34.800 of that (assuming no other personal income) you don't pay tax on as the 10% dividend tax is covered by the 21% tax (which is less than PAYE + NIC would have been) credit from the company. Then after the £34,800, you pay 32.5% on dividends - which, minus the 21% credit, comes to 11.5% from your pocket. 32.5% from company and you combined is still less than 40% through PAYE (and National Insurance on top of that)...

    Of course, you then have expenses accounts/etc from the company to further avoid tax, right down to having the company buy new shoes for you (uniform).
     
  13. del_boy

    del_boy Regular Member

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    what about Gordon Brown's new increase in tax from 2011 ?
    From what you said above, it should be just as easy to get round that, right ?
     
  14. gtford

    gtford Newbie

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    When there's a will, there's a way ;)

    There's always people coming up with new schemes to avoid paying tax, some work, some don't.

    The internet's quite good for it, but if it's a lot of money you're playing with, you're better off with a good tax professional. HMRC do bite back, hard.
     
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  15. del_boy

    del_boy Regular Member

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    That's what my accountant said. I used to be a contractor, and my accountant warned me about HMRC. Lol, it was IR35 this and Ir35 that, but what he did say, was to pay your self a minimum, say £1000 a month, and then make your partner the company secretary, and pay her the basic every month (£407 IIRC), and then pay the rest as a dividend to yourself. He said to make sure that there was no money left in the account.
    The problem was though, he advised to close the company down after 18months, and then rinse and repeat. This was the best way to stay under the radar, and pay almost nothing, lol. Only thing is that you dont want to get on the wrong side of HMRC.
     
  16. Freddie

    Freddie Registered Member

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    Like I said the "advantages" you think might exist in reality don't exist OR are NOT worth the hassle.

    That so-called "anonymous" corp is not as anonymous as you think or as they want you to believe!!

    If you want anonymity and are NOT a US citizen or a US resident or green card holder, LOOK ELSEWHERE.

    If you make enough and are willing and able to move you can pay roughly ZERO (depends on your business model) and enjoy a better climate.
     
  17. del_boy

    del_boy Regular Member

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    Even the ones being sold on here ?
     
  18. zoux

    zoux Registered Member

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    in the delaware state you can set up a LLC like non American and open a bank account in the corporate name, but i don't know how much corporate and personal tax you have to pay doing that, anyone know?
     
  19. helaughs

    helaughs Registered Member

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    There really isn't such a thing as an anonymous US corporation. There are names/addresses associated with those corps. If you want one anonymous go to Panama, Costa Rica or Guatamala they all have anonymous "bearer" corporations. If you get sued in the US, the court system here will take lawsuits seriously, and your identity can/will be compromised. The central American countries I mentioned won't share your information unless you have committed a crime that is punishable under their laws. I know they won't report to the IRS for tax fraud and would ignore court orders for your banking information.

    US banking laws are not friendly towards anonymous owners of bank accounts, the assumptions is that terrorists/criminals like to use them. Patriot act and know your customer rules are pretty tough in the US.

    Finally the taxes are not much better here, assuming your net profit is over $50k your tax rate is going to be 25%. Then if British laws are similar to US laws you are going to have to pay income tax on the money you take home as income. If you are a US citizen you can use an LLC/Scorp as a pass through entity and skip paying corporate taxes, not sure how it works in your country.

    I know US tax laws pretty well, studied accounting before dropping out to do internet marketing, but I have no idea about British tax laws.


    Here is a table for Corporate tax rates in the US.

    Taxable income over Not over Tax rate

    $ 0 $ 50,000 15%
    50,000 75,000 25%
    75,000 100,000 34%
    100,000 335,000 39%
    335,000 10,000,000 34%
    10,000,000 15,000,000 35%
    15,000,000 18,333,333 38%
    18,333,333 .......... 35%
     
    Last edited: Feb 6, 2009
  20. gimme4free

    gimme4free Executive VIP Jr. VIP Premium Member

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    I don't understand why you should pay more if you earn for, it's not fair in my opinion. If you spend your life working hard on things you do and work your way up to earning this money then why the hell should you be forced to pay more? Surely you have earnt it. I think everybody should be on the same rate.