Owning a UK limited company and moving to Italy

[KP46]

Hi folks.

I really hope someone can help me here as I'm at my wit's end with all this.

I'm currently self-employed and have been for a while. Very soon, I'll be moving to Italy and becoming resident there (albeit just for a few years as I do intend to move back to the UK in time). All clients are UK based, and all income goes into my UK bank account.

My original plan was to establish a UK limited company (which has been on my to-do list even before Italy came about), and then work from Italy as an employee. So I'd pay company tax in the UK, and my own personal tax in Italy.

However, I realise now that it's not so simple. As I'll be the "brains" and decision-maker of the company in Italy, they'll consider it an Italian company and then expect that be taxed and regulated as if it were in Italy too.

So my question is, what would I have to do to consider the company independent enough to be tax-based in the UK despite myself being resident in Italy? Could I bring on board a UK-resident director so one owner is in the UK and the other is in Italy? Are there any steps I can take to make sure it's not something the authorities on either side would start to question?

I'd really appreciate any advice, thank you.

[GlobalTaxAdviser]

Hi

Glad you are switched as its a point often missed when moving overseas

Technically you are correct if the place of effective management happens from Italy then under the DTA and probably Italian domestic law the UK Company profits come into the remit of Italian Taxation.

Yes you could structure it that you do have a UK director who is managing the UK company.

Kind Regards

GTA

[KP46]

Hi

Glad you are switched as its a point often missed when moving overseas

Technically you are correct if the place of effective management happens from Italy then under the DTA and probably Italian domestic law the UK Company profits come into the remit of Italian Taxation.

Yes you could structure it that you do have a UK director who is managing the UK company.

Kind Regards

GTA

Thank you very much for the reply.

Do you know what steps I can take to ensure that this limited company is sufficiently "UK"?

I was considering bringing in a co-director who's a UK tax resident, so it would basically involve:

- UK co-owner
- UK clients
- UK income
- UK bank

The only piece of the puzzle which would ever touch Italian shores would be me, as the other co-director, and whatever salary I was paid from the company, which I'm happy to pay tax on in Italy, of course.

The stricter step would be omit myself entirely and just have a UK director managing it, but obviously being co-director of my own company would be preferable even if I do have to share it with a UK resident person.

[GlobalTaxAdviser]

Hi

You can be a director of the UK company together with another company but you ensure on a regularly basis that you visit the UK to attend "board meetings"to make key decisions affecting the UK company which is properly minuted and stamped.

I suspect this suffice for the Italian authorities that the place of effective management is UK but small chance they may want evidence what is happening in substance.

Kind Regards

GTA

[KP46]

Hi

You can be a director of the UK company together with another company but you ensure on a regularly basis that you visit the UK to attend "board meetings"to make key decisions affecting the UK company which is properly minuted and stamped.

I suspect this suffice for the Italian authorities that the place of effective management is UK but small chance they may want evidence what is happening in substance.

Kind Regards

GTA

Thank you very much for your help. That's very good advice regarding board meetings and activity. How often would you consider "regular" to be sufficient for visiting the UK to carry out business activities?

Also, apologies, could you clarify what you mean by "be a director of the UK company together with another company"?

[GlobalTaxAdviser]

Apologies I meant another director not company

Thanks

GTA

[KP46]

Apologies I meant another director not company

Thanks

GTA

Okay great. Thank you.

So would you say that if I did the following:

- Had a UK limited company with myself as a director and another UK-resident director.
- Had a UK-based office.
- Recorded all UK-based board minutes etc
- Kept all clients and company income in the UK via the UK bank account

Then I shouldn't have any problems? Is there anything else I could consider to add more substance to this?

[KP46]

Also, if anyone else has any thoughts on this I'd really, really appreciate it.

[TN]

I would check with Italian tax advisers what constitutes a permanent establishment in Italy. Some countries would say an employee in their country, even if operating from their own home, would be a PE and the profits attributable to that PE taxable.

HMRC gives some guidance on the uk position. Note section 5.

https://www.gov.uk/government/publicati ... -in-the-uk

Also if you're paying yourself from the UK company I would want to check if there is any PAYE-type withholding obligations in Italy.