Tax Query

[mburkitt]

Hi all

We are a business in London that is looking to open an office in California. All of the produce will be created in the UK. The Californian office would be for client relations only, any sales contracts will be with the UK office.

My query is regarding the tax on our employee in the US office. He is a US citizen but will be still be employed by the UK company and paid from here only.

Can you guys tell me if the employee would be liable for tax in the US at all?

Thanks!

[bd6759]

Yes. A person living and working in the USA would be liable to tax in that country.

[AmanSood]

Just to also expand, there are a few other considerations. 1) Assuming you are operating out of an office in the US and have an establishment in the US, then it's likely you would need to set up a payroll in the US and withhold taxes/FICA/medicare; 2) also there could be potential corporate tax implications for the establishment in the US and you may need to declare some profits in the US under the BEPS (Action 7 requirement). 3) If you have any of your UK employees visiting the US, then they could increase the permanent establishment risk and potentially result in them being liable to US income tax as well.