In England, a company 100% owned by an offshore company (type IBC) under UK law can enter into and claim an agency contract allowing it to make up to 90% of its profits. For example, the British company is created as a commercial agent for an offshore company. The UK company makes invoices/receipts, etc., and deducts a commission from the market price (e.g. B 5%). The UK company could be used to own the property (on paper) on behalf of an offshore company, with the offshore company still entitled to all uses and benefits of the property, including rents and timely sales. The UK company is the applicant and the offshore company is the beneficiaries. A commercial fee should be charged to the offshore company. It would therefore be important to note that the UK company has not been able to enter into contracts on behalf of the UK company, particularly with regard to commercial transactions. If this were the case, the income could be taxed on the offshore company in the UK. This regime is legal and refers to the “Law on Agencies”, which governs agency contracts for the representation of foreign companies. (See here) Capital No deposit or proof of share capital is required.
They should generally ensure that the beneficial title to the goods purchased is abroad, so that the UK company is not treated as a beneficiary in its own name. The UK company may have legal title, provided that the offshore company clearly retains the economic interest. The UK company could be used to provide services to clients on behalf of an offshore company where clients do not wish to trade directly with the offshore company. The British company enters into agreements on behalf of the client to purchase shoes from a Portuguese shoe manufacturer and deliver them to an Italian fashion group. It is essential to ensure that the UK company is not a permanent establishment of the offshore company and therefore operates in the UK. If that were the case, the profits of that establishment could be taxed in the United Kingdom. The structure of the Uk agency is a simple body in which a land company is a candidate or agent for an offshore client. This avoids the problems that often arise for offshore companies that operate internationally. It offers an onshore “face” with all the offshore advantages.
The main problems with the UK tax are to guarantee commercial intermediation costs and avoid the problems of permanent establishment. They must ensure that the royalties levied by the UK company are set at a commercial price for the services provided. As stated above, the distinction between agent and principal in accounts is essential, given that the core of a transaction is that the company acts as an agent, that it should, as turnover, issue in the accounts the commission it received in return for its performance under the agency agreement. the offshore company that actually provided the service does not appear anywhere in the books of company B. . . .