Taxes and setting up a company in the UK

Myself & my partner have our main residency in Germany and are setting up a company (which will have a small turnover to begin with) and we want to avoid double taxation. Preferable would be just to pay UK tax because we're often back & forth. I have got advice from a UK tax advisor who said:

"If you form a UK limited company it is deemed to be a UK resident even if its shareholders or directors are non-resident. The profits of the company will be taxable in the UK subject to any provisions that may exist in the Double Taxation Agreement between Germany and the UK and subject to German tax legislation. It is quite possible that German legislation will treat a UK company as resident in Germany is its owners (Shareholders and Directors) are German residents. This was the case in the UK until 1998."

So does anyone know if the law has changed since 1998 & that from a German tax law perspective if we set up a LTD company in the UK does German legislation treats a UK LTD company as resident in Germany if its owners (Shareholders & Directors) are German residents and hence I guess be subject to German taxesas well??? (Also, just to let you know although myself and my partner have our main residency here in Germany, two of the Sharehlders would have main residency in the UK)

...So, If it we are subject to double taxation, then is there any alternatives that anyone can suggest. I have of course thought about maybe registering the company in Germany. But have no idea how to go about this or what type of company it should be, maybe a KG??? plus how much is German tax any how??

Any help of this matter would be REALLY appreciated. Thanks alot.

Regards,

Inapickle

A UK Ltd whose registered office is in the UK, but whose directorate is in germany will be taxed in germany (and probably in the UK). §1(1)Nr.1 KStG Even if the directorate is also in the UK, the income that is generated in germany will have to be taxed in germany. §2 Nr.1 KStG This doesnt mean you are going to have to pay twice the amount of taxes. To avoid that there are Double Taxation Agreements. But you will have to do your accounting twice (once according to UK and once to german standards). I dont know how much of a nuisance that would be. Maybe someone who actually owns a Ltd can say more.

The equivalent of a Ltd in germany is the Gmbh. If you are planning to start small, a OHG or even just a GbR might be enough, with the UK "shareholders" being dormant partners (assuming their only purpose is to bring some money into the business). You should discuss this with a german tax advisor. The possibilites are endless - hell you could even have a Ltd that is the general partner of a KG...

Thank you SOOO much for your advice, very helpful.

Actually, the only purpose of us considering to register it as a LTD company, (Partnership would be sufficient for our purposes at the moment) is that a LTD company is deemed to be a UK resident even if its shareholders or directors are non-resident, wheras if we formed a partnership or operated as a sole trader, as we live in Germany, it would not qualify in being a UK company and we would be liable for German taxation (which we thought would be best avoided)

SO carrying on from Freising's suggestion, does anyone out there have a LTD company registered in the UK and living in Germany??? If so, have you found doing this helpful or a nusiance and you have you wished in hinsight you'd have registered it in Germany? Saying that, does anyone know what the pro's and cons are between the two options??

Cheers for any leads!!!

Inapickle

Please be very careful before you jump in with a Ltd company. We are in this exact situation, not through choice but due to the way firms in the UK insist on paying contractors. We've done the German tax returns, for which you can pretty fairly claim many expenses and will be paying tax here. We assumed the double tax agreement would apply to the company tax returns required in the UK but it seems this is a very murky area. The accountant in the UK says we will face a very hefty bill even though huge travel/living expenses made big inroads into the income from the work. Not to mention another grand or so for doing the company accounts in the UK, even though we've done the donkey work already and forked out for the Steuerberater here. It's a real worry and we're presently researching a second opinion.
Good luck and keep us posted!

there is one major provider of services for registering Ltds for Germans or German residents and you can get a lot of information from them directly here:
http://www.go-limited.de/

Good luck,
Cheerio