Software/hardware IP. What is the most efficient set up. UK Citz

[enpreparación101]

Hi all.

Looking for some input, I have been exploring the best possible route to reduce taxation.

Outline of our scenario: software/hardware is pre rollout at the moment. We are looking to house our IP in the most beneficial location.

Currently UK based(unable to change)
Have explored Cyprus so far.

We would look to licence this IP to the UK co and others once on the market.

Any valued input is appreciated.
Thanks

 

[Martin Everson]

Welcome aboard

Any structure you plan on setting up needs to operate at arms length from any UK entity in order to not fall foul of BEPS as HMRC will hammer you. They look for artificial profit shifting and will hit you also under GAAR if your big enough fish.

It then comes down to setting up a company in a tax friendly jurisdiction and making sure the company operates and is managed and controlled from there and meets any economic substance guidelines. Yourself and UK company want to have no involvement in the company holding the IP as shareholder, director or UBO to keep it simple.

 

[enpreparación101]

Thanks Martin. Appreciate your comments.

I was thinking a 3rd party approach would be the possible wise scenario for us.

The IP will be held overseas with no connection to the UK company it will licence to. Would it be an issue if the shareholder was a different uk Ltd with same director?

For example:

Software UK would be shareholder in Software Cyprus. Which would then licence the IP to Software UK 2?

Or would you advise it would be better another person altogether?

Thanks

 

[Martin Everson]

Would it be an issue if the shareholder was a different uk Ltd with same director?

Yes it will be as that indicates common control (director) between both entities. Hence no arms length dealing taking place.

Or would you advise it would be better another person altogether?

Find another person and keep it simple.