It’s not uncommon for successful businesses to naturally progress towards international expansion, whether this arises from an strategic plan to conquer select foreign geographies, from growing global demand or from an effort to improve their economies of scale.
Among the many challenges Founders face during such an endeavour, dealing with complex tax systems in foreign countries, as well as the added complexity of structuring a company and managing funds across many geographies and currencies are some of the most common. Global taxation is influenced by political and social factors and is subject to frequent legislative changes. Understanding and complying with these varying tax laws is crucial.
Our International Expansion services
Our International Expansion team can assist in navigating these complexities, helping you save on both UK and international tax by staying compliant and taking advantage of the available Schemes, including some of the specialties listed below.
International Structuring Advice
Most companies wishing to set up tax-efficient international structures will be faced with multiple decisions that will affect their businesses along the way. Our experienced team can advice you on:
- Your group structure;
- How to finance your group entities;
- Profits repatriation;
- How to deal with compliance issues (transfer pricing and thin capitalisation);
- Management of intellectual property and intangible assets;
- Point out any opportunities to tax optimise operations; and
- Recommend the best way to structure your investment in the UK and overseas.
Permanent Establishments and Company Tax Residency
A Permanent Establishment can be created by either a physical presence or a dependent agent concluding contracts in the a foreign country.
Once you have your Permanent Establishment abroad, you will also have a taxable presence that requires tax reporting. Your company may also become a dual tax resident if it is incorporated in one country but its central management and control are in another. This can lead to double taxation. Our team can help you to navigate these international expansion intricacies.
Withholding Taxes and the Double Taxation Treaty Passport Scheme
Many countries require domestic withholding tax (WHT) to be paid on certain payments made overseas, including royalties, interest, dividends, technical services and rent.
Some double taxation treaties provide for the reduction (in some cases up to 0%) of the domestic WHT rate but will require certain conditions and an application from the relevant tax authorities before the reduced rate can be applied.
We can help you to identify these opportunities and make the relevant submissions on your behalf.
Transfer Pricing
Transfer pricing refers to the prices charged between two or more entities under common control, to avoid profits being artificially increased in lower tax jurisdictions, thereby reducing the profits in the higher tax jurisdiction.
Groups failing to meet transfer pricing requirements risk may incur unforeseen costs in additional taxes, interest, penalties, and the greater likelihood of scrutiny in other areas during audit.
During a potential exit, the Due Diligence process will likely focus on whether transfer pricing requirements have been met, including a review of transfer pricing documentation. Our team will advice you on Transfer pricing, and ensure your compliance and relevant documentation are in place.
Why Finerva
Our International Expansion team and brings over 35 years of experience in guiding scale-ups through global expansion. Our team can ensure that you trust your business in safe hands and our simple and straightforward approach will help you to navigate this complex landscape, save time and ensure your compliance.
How We Work
We will set up an initial call to learn more about your company’s background and international expansion plans. Once we set up an engagement, she will be your key point of contact and oversee your project.
Many aspects of how we approach International Expansion projects differ based on our Founder’s needs, and that’s where we pride ourselves: we are able to tailor our services and understand that a one-size-fits-all approach is not effective when operating in the world of scale-ups.
Get in touch with our Tax Expert
020 3422 9800-
Adam Brodie Co-FounderAdam leads the fractional CFO team which has significant experience of capital raising, scaling, M&A and successful exits. Previously, he was a CFO and led the successful Exit to NYSE-listed Solera Holdings.
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FAQs
01. What companies do you work with?
We specialise in Limited Companies in the UK, especially in fast-growth sectors like tech, finance, consumer goods, and life sciences. Our client base includes companies backed by Angels and VCs.
02. Which countries’ tax structures can you support?
We are knowledgeable in the tax structures of the US, Canada, and Australia. Our aim is to offer specific support, so please contact us for details on other countries.
03. What does International Structuring involve?
International structuring addresses group structure, profit repatriation, and compliance with local laws, including transfer pricing and thin capitalisation.
04. What is a Permanent Establishment?
In the UK, a PE can be a fixed place of business or an agent with authority to conduct business. This can lead to dual tax liabilities.
05. When is a PE needed, and what are the risks?
A PE may occur when businesses operate internationally. Risks can include fines and increased tax exposure.
06. What is Withholding Tax?
This tax applies to payments made to overseas entities, like royalties or dividends. Double tax treaties can often reduce this tax.
07. Double Taxation Treaty Passport Scheme
This scheme provides relief from double taxation on UK source loan interest payments to certain overseas lenders.
08. What is Transfer Pricing?
Transfer pricing involves setting prices for transactions between related entities, ensuring they’re comparable to those between independent entities.
09. What are some common Transfer Pricing methods?
- Comparable Uncontrolled Price (CUP) method
- Resale Price Method
- Cost Plus Method
- Transactional Net Margin Method
- Transactional Profit Split Method
