Running a business in the UK can raise many uncertainties regarding tax regulations – especially when it turns out that your company has a permanent, continuous, and taxable presence in a foreign country. In such a situation, the tax burden could increase significantly. However, there is a solution that can help you avoid this – preventing the creation of a „permanent establishment.”
When is avoiding the creation of a „permanent establishment” possible?
Are you destined to face increased taxation and additional accounting obligations? Not necessarily. There are several actions that increase the risk of establishing a permanent establishment, but fortunately, there are also ways to avoid double taxation – here are a few:
1. Establishing a local legal entity
The establishment of a foreign subsidiary in a European Union country creates tax benefits for your company and eliminates the risk of a permanent establishment.
Such a subsidiary operates independently of the parent company, is responsible for its own assets and liabilities, and is considered a separate legal entity.
However, it is worth noting that setting up such a company is time-consuming and costly.
2. Partnering with an international PEO
This solution is much simpler than the one mentioned above.
A professional employment organization (PEO) can become the official and legal employer for your employees, while you still manage them. Through this arrangement, the PEO is responsible for handling payroll and employee benefits.
3. Collaborating with a tax specialist in the UK
This solution allows you to receive reliable tax advice early on and foresee any potential issues as quickly as possible. A tax advisor can help protect your company from any tax liabilities related to the risk of double taxation.
When running a business in the UK, you can avoid the establishment – but you need the right skills and tools to do so.
Don’t hesitate to seek help and take advantage of professional tax advice – with us, you’ll navigate all the procedures stress-free.
