Expanding across the Atlantic, structured before the first hire.
A subsidiary or a branch? Where does the IP sit? When does a sales rep become a taxable presence? The answers are cheap before expansion and expensive after.
Presence becomes permanent establishment
One employee closing deals from a home office can give a company a taxable presence in the other country, with corporate filings, payroll withholding and apportioned profits to follow. The treaty's PE article draws the line; structuring keeps you on the right side of it deliberately.
- Entity choice: subsidiary, branch or neither yet
- Permanent establishment risk review
- Transfer pricing between related entities
- Cross-border payroll and employee equity
Owners are taxed as well as companies
The structure that minimises corporate tax can maximise the owners' personal tax — a US LLC is transparent to the IRS and opaque to HMRC, taxed twice in the wrong hands. We structure for the whole chain, entity and owners together.
What we typically handle for you
- Entity choice memo before expansion
- Permanent establishment risk review
- Transfer pricing between related entities
- Cross-border payroll and equity plans
- 5471 / GILTI for US owners of UK entities
- US LLC treatment for UK-resident owners
- Sales tax and VAT registration triggers
- Owner-level returns alongside the corporate work
The services that usually apply
Questions we get about this
Not necessarily, but selling without one can still create a taxable presence, and state-level obligations follow their own rules.
Sales tax nexus in particular can be triggered by volume alone, entirely separately from income tax.
Through dividends, interest, royalties or service charges, each with its own treaty treatment and potential withholding.
Choosing the route deliberately usually beats defaulting to whichever is administratively easiest.
Usually the reporting penalties rather than the tax. Information return penalties are charged per form and per year regardless of tax due.
That is why structure and compliance are worth planning together rather than sequentially.
Not always, but trading without one can still create a taxable presence through permanent establishment rules.
A single employee or a habitual contracting arrangement can be enough to trigger it.
Payroll, social security and withholding all follow their own rules, and the totalisation agreement usually decides which social security system applies.
Getting an employee onto the wrong system is recoverable but tedious, so it is worth settling before the first payrun.
Owning or controlling a foreign company generally brings information reporting, and in some cases the profits are taxed to the owners before distribution.
The reporting obligations often outweigh the tax, which is why structure and compliance are worth planning together.
Related pages
- Who we help
Investors & fund holders
Investing across the US and UK: PFICs, reporting funds, withholding recovery and building a portfolio both systems tolerate.
- Service
Business & corporate tax
Cross-border business structuring: UK limited companies under US rules, GILTI, permanent establishment and expansion in either direction.
- Service
Double tax treaty relief
US-UK treaty analysis: residence tie-breakers, the pension articles and the saving clause, so each relief is claimed in the right country in the right order.
- Pillar guide
Tax specialists for US and UK
What US and UK tax specialists handle that a general accountant does not: residence tests, treaty relief, FBAR, PFICs, pensions, property and catch-up filings.
- Who we help
Founders & equity holders
Founders and equity holders across the US and UK: options, QSBS, EIS/SEIS and exits taxed on both sides of the Atlantic.
- Pillar guide
Accountants for US and UK
How to choose accountants for US and UK tax: what each credential permits, how to verify it, what drives the fee, and when you do not need a specialist.
Further reading
- RSUs across the Atlantic: when each country takes its share
A single vesting date can be taxed by two countries at once. The split depends on where you worked while the award was being earned, not where you sit on the day it lands.
- The child tax credit abroad: the refund most expat families miss
Americans abroad often owe no US tax at all - and still qualify for a refundable credit. The catch is that the usual expat election can switch it off.
- The relief every other American abroad relies on is the one you cannot use
Government service abroad has its own rules, and the headline one is a subtraction. The exclusion that shelters most expatriate salaries is closed to you.
Last reviewed . Thresholds and rates change annually — check figures against the current tax year before relying on them.
Expanding across the Atlantic?
We will map the reporting your structure creates before it becomes a penalty rather than a plan.