Taxes and Your Overseas Office

Opening a new office overseas will mean your business must comply with all the local and national regulations that may apply. Local taxes must also be taken into consideration when you are calculating the costs of operating your overseas office. The country your office will be based in can have a major impact on the levels of taxes that become due once your overseas office is open.

Planning is the key to ensuring your new overseas office can operate within the laws of the country it will be based in, and that it can afford to pay all the taxes that are due. In many cases the taxes that your UK office pays will be similar to those your overseas office will also have to pay to local and national governmental agencies.

Ensure you take expert advice before you commit resources to a new overseas office so you are in full possession of detailed outlines of every tax your business will have to pay. Remember that ignorance is no defence if your business ends up in court for what appears to be tax evasion.

Business Taxes

There are broad groups of taxes your overseas business will have to pay. These include:

• Employment taxes. If you take on staff to help your business run its overseas office, taxes will become payable on each employee, just as they are in your UK operation
• Corporate taxes. The number and level of corporate taxes your overseas office may have to pay depends on the type of business you are running, and your overall level of earnings. Consult with legal and business experts in the country your office will be based in to get a clear idea of which corporate taxes your business may have to pay
• Premises taxes. As you pay business rates on your UK office, similar taxes may be payable in the country your overseas office will be based in. These are usually set locally, so consult the agent that helped you locate your office premises for details of any taxes the office may have to pay to the local government
• Environmental taxes. There is now a plethora of legislation that links to the protection of the environment. Some of these regulations may mean your business has to pay some forms of environment tax. The type of business you are running, and the location of your overseas office will govern if your business has to pay any of these taxes.
• Excise taxes. If your office will be the base for your business to import goods into the overseas country, your office may become liable for excise duty. Only certain goods attract this tax. HM Revenue & Customs, the British Chamber of Commerce and the customs and excise services in the country your office will operate from, can give you full details of the goods that fall under excise duty, and the rates your business has to pay.
• Value added taxes. VAT is payable on certain goods in the UK. Other countries in the world have similar taxes your office may have to pay on the goods its sells. Also, if your office is based in some states in the USA, an additional ‘sales tax’ may also be payable on certain goods. It is important to understand the value added taxes your overseas office may have to pay as this can have a crucial impact on your pricing.

The above tax categories are just some of the main ones your overseas office may come into contact with. Many European countries may have other additional taxes your overseas office would have to pay in order to stay in business.