Moving to Finland but keeping LTD

[Martin Boober]

Hi folks,

After searching and reading the forum I am still unsure on my question.

I am a contractor running own Ltd company for the last 4 years in England. It is working well for myself and my wife who is a Company secretary and second shareholder. No issue on that side so far.

However our family want to relocate to Finland to settle there permanently. Unfortunately none of us knows Finnish\Swedish and so it would be quite an issue to open Limited company in Finland. Also it is not cheap and of course not that tax efficient as in UK.

So ideally we want to use an UK Ltd if this could be still 'safe' and tax efficient to do. We have a trustable person in UK who could be a new Director.

Is there any workable and safe way to keep this or create new Ltd in the UK with a new Director and us as two shareholders? So that we could have on the one side Ltd which is controlled in the UK and so paying all taxes there and on another side my family who are tax residents in Finland receiving foreign dividends from the UK company and paying all personal taxes here in Finland.

That is what we thinking however it is very optimistic knowing that both HMRC and Vero might look on these differently

[SueEllen]

People in Finland speak good English plus the Finns, like other Nordics, publish English business and tax advice pages which you can find by Google.

In short it isn't tax efficient or a good idea to use a UK limited company abroad. Use a Finish one.

[Martin Boober]

People in Finland speak good English plus the Finns, like other Nordics, publish English business and tax advice pages which you can find by Google.

I do not have any communicational issue here but running a company is different than having a small talk to someone. Having experience of running a company in UK I know that it is not that simple as reading blogs in the internet.

In short it isn't tax efficient or a good idea to use a UK limited company abroad. Use a Finish one.

May I ask if this is a general answer or you are speaking on particular example from my original post? Thanks

[BlasterBates]

If you intend to commute to work in the UK then it makes sense. You would be paid a UK salary and dividends which you would declare in the UK, pay tax on and declare also in Finland. However if your work is to be in Finland, then you would need to register your UK Ltd in Finland and there would be no tax to pay in the UK.

[SueEllen]

I am typing on a phone so it's a pain to post long messages.

The Nordic countries including Finland tax pages are published by their various taxmen. They publish them in English because very few people in the world speak Finnish, Swedish etc. They expect people coming to work in the country to obey the tax regulations and as English is widely spoken they publish English translations.

The advice I gave you is specific to Finland but if you were moving permanently to another Nordic country the advice would be the same. This is to stop you having to make declarations twice in the UK and Finland to the tax office, Companies House and equivalents.

Oh and even if you were coming to work in England but lived permanently in Finland I was informed by a contact to have a Finnish registered company NOT a UK one. This is due to their strict tax regulations.

[Martin Boober]

If you intend to commute to work in the UK then it makes sense. You would be paid a UK salary and dividends which you would declare in the UK, pay tax on and declare also in Finland. However if your work is to be in Finland, then you would need to register your UK Ltd in Finland and there would be no tax to pay in the UK.

I do not have work done from a single place and it would be either short trips to the other countries working there on-site or remote. I do not have any on-site job done in Finland before and unlikely will have it here in the future.

I should ask the following questions from the beginning to be clear:

1) If my UK LTD is controlled from the UK by a single Director - I assume the Company has to pay all the corporate taxes and VAT etc. in the UK and has no obligations in the other countries.

2) As individual I will be a tax resident in Finland only and will pay taxes on the overseas dividends I receive as a shareholder.

Any ideas on the above? Appreciate your help.

[Martin Boober]

I am typing on a phone so it's a pain to post long messages.

The Nordic countries including Finland tax pages are published by their various taxmen. They publish them in English because very few people in the world speak Finnish, Swedish etc. They expect people coming to work in the country to obey the tax regulations and as English is widely spoken they publish English translations.

The advice I gave you is specific to Finland but if you were moving permanently to another Nordic country the advice would be the same.

Thanks for that. I do agree with you that there are lots of info in English and this is a big help however it is not enough for running a Company and still lots of official pages are in the official languages only etc. I would first try to use my LTD for the first few years and prepare myself to open a local company without any hassle.

This is to stop you having to make declarations twice in the UK and Finland to the tax office, Companies House and equivalents.

Oh and even if you were coming to work in England but lived permanently in Finland I was informed by a contact to have a Finnish registered company NOT a UK one. This is due to their strict tax regulations.

This is what I hope to avoid if the Company will be running by UK Director? That is what I have read in another threads so that is what is my main question.

[BlasterBates]

I do not have work done from a single place and it would be either short trips to the other countries working there on-site or remote. I do not have any on-site job done in Finland before and unlikely will have it here in the future.

I should ask the following questions from the beginning to be clear:

1) If my UK LTD is controlled from the UK by a single Director - I assume the Company has to pay all the corporate taxes and VAT etc. in the UK and has no obligations in the other countries.

2) As individual I will be a tax resident in Finland only and will pay taxes on the overseas dividends I receive as a shareholder.

Any ideas on the above? Appreciate your help.

Sounds quite complicated as you mentioned you will be working in different countries, in this case your company is not being controlled in the UK, it will be controlled in whatever country you are working in. However assuming that you travel to the UK to carry out most of your work and that you spend no more than a week or two in different countries, so justifying your stay in different countries as business trips then you simply continue to run your Ltd as before, and tax it in the UK. You will have a UK salary and dividends in the UK which should be declared in the UK and then declared in Finland as well. The Finnish tax authorities will take into account tax paid in the UK.

You need advice from a UK accountant and from a Finnish accountant.

On a general note being tax resident in Finland does not exempt you from tax in other countries. Residency means you are taxable on all of your worldwide income in that country, but you still pay tax as a non-resident in other countries where you have an income.

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.

[m0n1k3r]

I run a company in Sweden, and Finland is not much different.

If you hand over the keys to the new director just before moving then they will easily see through that and 'deem' that you are still in control of the company and that it is therefore resident in Finland, and it is then up to you to prove them wrong.

If you will remain a director of the company yourself then it will become resident in Finland, unless the Articles clearly state that two directors must sign everything together, and you can provide evidence of travelling to the UK to take part in the management of the company.

If the company is resident in Finland, you must register it as a foreign branch, maintain separate bookkeeping etc. It is a bit cheaper than setting up a Finnish company from the start, but also involves more administration.

I would suggest setting up a new Finnish company as a subsidiary of your UK company. Use the Finnish company to trade within Finland and the UK company in the UK. Be prepared for a (negative) surprise if you intend to take a low salary and high dividends regardless of the structure you go for. Research and take tax advice on how to best structure your income. In general, you must have a quite high salary first before you can take dividends with any meaningful benefit, or else that dividend will be re-classified as disguised salary.

Also bear in mind that even the smallest companies are a bit more 'corporate' than in the UK, subject to many of the same rules including audit as larger companies.

[Martin Boober]

You need advice from a UK accountant and from a Finnish accountant.

I do agree, but first I want to get a bit of understanding on the topic. As I do not know personally any adviser who will advise me on this I need to be able to judge those advises myself.

On a general note being tax resident in Finland does not exempt you from tax in other countries. Residency means you are taxable on all of your worldwide income in that country, but you still pay tax as a non-resident in other countries where you have an income.

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

That's a fair point as I am paying 7.5% on Dividends above the threshold and I would need to show those to the Finish authorities to be excluded from those I will pay on the Foreign dividends in Finland.