What are the implications of using an overseas composite company

[Mickmanus]

What are the implications of using an overseas composite company in an EU country that shares a dual tax treaty with the UK?

The people I am talking to suggest a payment of a small UK salary around £100 a week and the rest comes to me in dividends.

The dividend is subject to 35% tax in the overseas country and because I am non resident I receive a rebate that makes my effective tax rate 4.17%, but I am credited with having paid 35% tax on the dividend.

I would like to get peoples thoughts on this because it seems plausible, does anyone work through a similar foreign structure?

Thanks in advance

Mick

[Sockpuppet]

What are the implications of using an overseas composite company in an EU country that shares a dual tax treaty with the UK?

The people I am talking to suggest a payment of a small UK salary around £100 a week and the rest comes to me in dividends.

The dividend is subject to 35% tax in the overseas country and because I am non resident I receive a rebate that makes my effective tax rate 4.17%, but I am credited with having paid 35% tax on the dividend.

I would like to get peoples thoughts on this because it seems plausible, does anyone work through a similar foreign structure?

Thanks in advance

Mick

To be fair after having read all the options I just set up my own Ltd company. Its my bank account, my control and I can do with it (within reason) as I wish. More than 4% tax but only I have access to the accounts and I can pay dividends when I wish.

[DaveB]

Seems it would only be worthwhile if your dividends take you over the top tax bracket ( about 38k ). Even then there are better ways of managing your finances without having to use overseas composites that will attract the attention of HMRC.

[Yatesy]

Hmmm.... sceptical to say the least! Just think of the back dated tax you'll have to cough up, once Hector closes in on this 'scheme' and it will be you, not the managers of the company running it that will foot the bill! Be careful!

[tim123]

Do you mean non resident in the UK or non resident in the other country.

If you are UK resident and domiciled you are required to declare and pay tax on all your world wide income.

If income received from a another county has had tax deducted in that country, generally you will receive relief based upon the tax *actually* paid, not based upon some made up amount that they say you owe, but that they let you off of paying.

HTH

tim

[Mickmanus]

My understanding of it is you pay the 35% and receive a rebate of 30.83%, because of the dual tax agreement the rebate is not taxable, but you receive a tax credit of 35% because you have paid it.

[DaveB]

I think it's worse than that. You pay the local tax and get a credit against your UK tax. If the tax you lay is a highger rate than UK then you dont get a rebate on what you paid over the odds you just dont get a tax bill in the UK.

If you are based in the UK in the top tax bracket ( 40%) and pay 35% tax on earnings via an offshore setup you are still liable for the remaining 5% in the UK.

[Mickmanus]

Do you mean non resident in the UK or non resident in the other country.

If you are UK resident and domiciled you are required to declare and pay tax on all your world wide income.

If income received from a another county has had tax deducted in that country, generally you will receive relief based upon the tax *actually* paid, not based upon some made up amount that they say you owe, but that they let you off of paying.

HTH

tim

non resident in the other country

Mick

[Emperor Dalek]

non resident in the other country

Mick

Won't help you then, Mick. As has already been pointed out, the UK operates a mondiale tax system.