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Oversees billing

Oversees billing

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Highlevel - what are the advantages/disadvantages of billing overseas customers from a UK entity vs setting up a local legal entity in country? Do you have to set up a legal entity in country or can you carry on billing long term? I appreciate each country has different rules, but looking for highlevel reasons/issues - many thanks 

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By paul.benny
17th Apr 2020 16:59

It very much depends on the scale of your business and whether you are supplying goods or sevices.

A few general rules of thumb
- holding stock in a country is likely to mean that you have to register for VAT or equivalent. It probably also means that you will be considered to have a Permanent Establishment (PE) - roughly meaning you have to pay local taxes on your profits
- having employees in a country certainly means you have to deal with local payroll taxes etc. It may also mean you have a PE.

Local legal entities will add to your compliance costs (stat accounts, tax filings, etc) and they vary from country to country. For example, the Belgian authorities insist everything is completed to the €0.01; you should strictly do your bookkeeping and have the documents in Germany for a legal entity there.

If you have a legal entity or a PE, you'll need to consider transfer pricing across borders to give a 'fair' apportionment of profit between countries.

For some of the requirements - eg transfer pricing - there is much more to it than meets the eye and you are likely to need specialist advice.

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