Expanding overseas remains high on the agenda for UK businesses looking to scale up. Increasingly, companies are moving forward with international expansion at earlier stages of the business lifecycle in an effort to attract new customers and develop new markets, gain access to suppliers, better serve UK customers with global operations and achieve scale cost savings. Where a UK business has plans for expanding overseas, tax issues and opportunities are almost certainly going to arise. Scale up companies seeking to do business overseas need to understand, and prepare for, the risks of conducting international business – including overseas tax planning and compliance. But rules and regulations vary by jurisdiction, and they are constantly changing. We worked with a scale up technology business to support their international expansion into the US and helped them prepare for the increased regulatory requirements they would face so that they could focus on delivering growth.

International expansion was a key objective in the growth strategy of a high growth technology company we worked with to help navigate the international requirements they were facing. We worked with this business to understand the objectives behind their plans for international growth and expansion to develop a strategy that reflected the key jurisdictions they were looking to explore.

Expanding internationally and into new overseas markets brings a broad range of tax issues to consider not only from a UK perspective but wherever an entity chooses to operate across the globe, the local tax authority will also be seeking a tax contribution.

Some of the initial areas we considered include:

  • Will the same profits be taxed twice in the different jurisdiction or can this be avoided where double tax treaties exist in the markets you are expanding into?
  • How are intercompany transactions affected? Are there any exemptions or do transfer pricing rules apply for small, medium sized entities overseas?
  • Are there sales tax implications in the overseas jurisdiction?
  • How can profits be brought back efficiently to the UK?

Our work included developing a detailed understanding of their business to design an overseas operating model that: 

  • was aligned to their commercial strategy; 
  • complied with international and local tax requirements;
  • avoided double taxation on profits;
  • minimised withholding taxes on repatriated profits;
  • maximised the benefit of UK relief such as R&D tax credits and patent box. 

We advise on the full range of international tax issues and other matters relating to expanding overseas. This will include designing international group structures; managing profits across borders; identifying suitable jurisdictions in which to hold intellectual property; advising on movement of staff between jurisdictions; and advising on how funds might be returned to shareholders.

If your business is entering into new markets, arrange a free initial call with our team to explore what you should be considering.

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