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International Transfer price to non-EU country

Invoicing with the LLC in the UK, paying taxes in the UK and sending money to subsidiary. Possible?

Not sure if the question is structured correctly but here it goes.

I currently own 100% of an LLC in the UK and am exploring the possibility of turning it into an IT outsourcing company that will employ workers in Argentina. So, I will create a subsidiary in Argentina and with this structure, 100% of my invoices will be created in the UK and no money will actually be made in my subsidiary. This means that I will need to send money to the subsidiary to pay for the infrastructure and the salaries of the workers on a monthly basis. Does this qualify as a constant transfer price? In this company/business structure, is this a normal practice and not something that the HMRC will frown upon and want to slap me with fines?

I guess the main gist is: I will be invoicing here in the UK, paying corporate taxes here in the UK and then sending money to Argentina for the subsidiary expenses. Constantly. Am I stepping on any taxing/regulatory toes?

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14th Aug 2018 20:05

There is no such thing as an LLC in the UK. I believe it’s an American form of legal structure. If you don’t even know what type of legal entity you have you are at the very bottom of the learning curve.

Far from slapping you with fines, HMRC will be overjoyed that your UK entity is booking all the sales income but no costs.

What does the accountant to your UK entity have to say about your business model?

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By scorp
15th Aug 2018 10:19

Sorry about the LLC thing. I'm looking into doing the same thing but in the US so information overload made my mind a bit blurry.

My accountant here in the UK is strictly knowledgable in contractor stuff so I'm not staying with him for this endeavor. I should be getting set up with a bigger accountant/firm that will set up the UK company and I already have an accounting firm in Argentina ready to set up the subsidiary.

My main concern was regarding the constant usage of a financial mechanism/process to send money to the subsidiary only to cover its costs and how would this be perceived by HMRC.

On another note, double taxation will have to be looked into from the fiscal perspective in both countries, right? I mean, to avoid paying taxes both here and in Argentina.

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