Uk Source Income definition? Uruguay resident selling to UK.

[NeilTreasure]

Hi Guys

I recently moved to Uruguay and i run a consulting business that is currently a UK Ltd. The nature of my contracts there mean i need a UK entity however i have no employees and actually dont do any work inside the country anymore physically and have zero employees there. I was trying to look deeper into the definition of "UK Source Income" because i was wondering if i switched to an LLP would i still be taxed on that income by the UK?

i do the same business in the USA via an LLC and dont pay any income there, so i was wondering if using he LLP strucutre in the UK could provide the same outcome. I am a British Citizen but have recently become non domiciled over the last 2 years.

Any advice would be appreciated.

 

[Marzio]

i was wondering if i switched to an LLP would i still be taxed on that income by the UK

Yes if you have UK customers.

 

[NeilTreasure]

Ok Thanks, I might have to either use an Irish LLP in that case my understanding is that could be tax free.

 

[Barney2201]

Can your US LLC not invoice your UK Ltd for services rendered?

 

[Marzio]

I might have to either use an Irish LLP

AFAIK irish LLP can be used by very specific business types like law firms instead you can use a LP but you will lose limited liability of the general partner and if you think about using a foreign LLC as general partner they will require to register LLC in Ireland.

In other workds it's not a good idea.

Registration of a non-EEA national as partner.

Where the general partner is a non-EEA/non-Swiss national who intends to come to Ireland to establish a business that general partner will require the permission of the Minister for Justice and Equality to do so. Evidence of the permission of the Minister must be submitted along with the form. Such evidence can include a GNIB card (certificate of registration) or Green Card/Green book (front and back).

If, the general partner or limited partner is a company, but is not registered on the Irish register, the form should be accompanied by:
(a) A certified copy (and where required authenticated copy) of the Charter, Statutes or memorandum and articles of the company, or other instrument constituting or defining the constitution of the company (in the original language);
(b) A copy of the certificate of incorporation of the company;
(c) A copy of any certificates of incorporation of any name changes of the company;
If the documents above are not written in Irish or English language a certified translation is required. If, however, the general partner is a company not on the Irish register, regard should also be made to Part 21 Companies Act 2014 and the requirements of foreign limited liability companies to register a branch.
https://www.cro.ie/Registration/Limited-Partnership
Why don't you bill your UK customers with your US LLC?

 

[Barney2201]

I'm guessing the OP has the same issue I have...

I.e. Needs to bill UK clients from a UK company not international.

I am Sark tax resident so no income tax but cannot a register a company on Sark.

Maybe the US LLC is the right way forward as cheap to incorporate / run and could bill the UK company for profit extraction.

Interested to know if the OP has fully ditched their domicile, I believe that's pretty rare (in comparison to not being Uk resident)...

 

[Marzio]

Needs to bill UK clients from a UK company not international

If that was the case why he asked about irish LLP?

 

[Barney2201]

Good point!

Probably because most UK clients wouldn’t be too bothered about paying an Irish company as it’s all part of the Common Travel Area and is not perceived to be offshore…

Maybe the OP can enlighten us….

 

[NeilTreasure]

Hi Guys, sorry for the lack of response alot of good input here, I wanted the Irish LLP because alot of UK people barely consider ireland a seperate country. Obviously legally it is and in reality it is but with it being next door and northern ireland being part of the UK the idea of using a pass through in Ireland offers many benefits.

One of the major ones is that many Irish banks also allow GBP accounts so i could essentially have set up in ireland operated as a pass through, had a similar reputation in terms of country and not arroused any suspicion or issues along with any contracts between the too countries being more easy to enforce if any issues arrived. A US LLC in the mind of many Brits is a very different thing.

I have uk clients and need an entity for that part of the world but paying a large amount of taxes to that country makes me feel sick.

Also I have friends and contacts i could use as a partner in the irish LLP i wouldnt need to use a company and those friends also reside in countries that dont tax foreign income so it could potentially still be an option i think.

 

[Marzio]

Also I have friends and contacts i could use as a partner in the irish LLP

If you have friends and contcts from ireland the first thing you should ask is which businesses are allowed to form a LLP in Ireland.

 

[johnwickert]

UK source income refers to income that arises from within the UK, such as profits earned from a business activity conducted within the country, rental income from UK property, or employment income from a UK-based job.

As a non-resident, non-domiciled individual, you would typically only be taxed in the UK on income that arises from UK sources. If you switch to an LLP, your income may still be considered UK source income if it is derived from work performed in the UK. However, if your work is conducted solely outside of the UK, and your LLP has no presence or operations within the UK, then your income may not be considered UK source income.

You may want to consider structuring your business in a way that maximizes tax efficiency while minimizing your tax liability.