[Joe Strummer]

A German friend wants to set up a Limited Company as opposed to a GmbH. He will remain in Germany and sell products here but the company will be registered in the UK with a UK address and bank account. There are a number of advantages, for instance it's faster to set up than a GmbH, cheaper and you don't have to be a member of the IHK etc. Anyway it all sounds too good to be true but can anyone tell me what the potential drawbacks are?

[Adi]

AFAIK you have to file a tax return each year in the UK (because it's a UK-registered company). It should be a small price to pay...
BTW, You can get an 'off-the-shelf' GmbH - there are companies that set up these shells beforehand to speed-up the process considerably, so you don't have to wait a long time. The killer with a startup GmbH is the requirement to keep €25K on hand all the time.

[mandrax]

I'm set up as a UK Ltd. and have been operating over here for the last 4 years and have yet to come across a drawback

My wife has set up Ltds for several germans we know and they seem to be quite happy as well.

[RMA]

There was a fairly extensive discussion on this recently, which you should be able to dig up with a search.

Basically there's no problem (I ran that way for about five years in the early '90s). Since it's started to become more popular, it does seem to be attracting a slightly negative image.

You do need to file annual returns in the UK and you should be aware that the penalties for non-compliance are substantial!