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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
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Experience:  15years with H & R Block. Divisional leader, Instructor
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Im US resident and would like to set up a company that provides

Resolved Question:

I'm US resident and would like to set up a company that provides IT consulting. The company will have myself as director and an employee resident in the UK (not US citizen). The company will operate internationally and perform services outside of the US. I will retain a small share of the profit as the biggest part will go as salary to the employee.

Will I have to operate any tax witholding on the employee wage for social security and taxes in US?

Will I have to operate VAT anywhere?

Is there a risk that my employee will be seen as permanent established in either UK or other European countries where we operate even though he has no power of attorney?

Will I have to pay employer or employee social security in the UK?

Which state would be best incorporating in?

Any other potential issue that I'm not considering?
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.

Robin D. :

Hello and thank you for using Just Answer,
There is no SS or any withholding for US purposes on wages paid to a nonresident, non US person even if working for a US company.

Robin D. :

If your employee is working in the UK and you have a set place of business in the UK then your company could be seen as as doing business in the UK but as long as your company does not have a set physical place, no.
There are some services that are VAT related.

Robin D. :

You will not have to pay UK withholding.

Customer:

hi thanks

Robin D. :

You are most welcome

Customer:

are you sure about uk social security? there are agreements in place

Customer:

do you see any risk of being challenged on something by irs given that most of the profit will go the employee overseas with no witholding?

Robin D. :

No, I do not see an IRS problem. You will need to have the W8 BEN form completed and kept for the employee.
You would have to ask the specific UK tax question to a UK tax expert. The US side for you is clear and this is the US tax category for Just Answer.

Customer:

OK, last question. Is there a problem if the employee comes to the US on tourist trips etc? Are there any restrictions on his presence in the US (given that no-us duties arrangement)? Do I have to appeal to double tax treaty?

Robin D. :

The W8 BEN is what the UK person will complete for you and that deals with the double taxation. On that they will claim the treaty provision of not having US sourced income (they are in the UK not the US).
Their tourist trip to the US would not have an impact on their tax as long as they did not work in the US.

Customer:

ok thanks

Robin D. :

Your positive rating is always thanks enough.


 

Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7872
Experience: 15years with H & R Block. Divisional leader, Instructor
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Robin D.
Robin D.
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15years with H & R Block. Divisional leader, Instructor