UK Amazon business expanding to USA.

Does client expand through UK Ltd or set up a USA company?

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We act for a UK limited company trading on Amazon.co.uk.  They are looking to expand to sell (a substantial amount) on Amazon.com in the USA and are asking whether it would be preferable / tax efficient to run this through the UK limited company or do they need a USA business (Delaware or elsewhere)? 

My initial thoughts with the low rate of UK Corporation Tax are to keep it through the UK but without getting a report from a CPA or advice from an international firm of UK accountants I am struggling for the correct advice. 

There are (as always) two possible scenarios from this move:

1) Extract profits back to spend in the UK.

2) Roll up all profits and keep re-investing and then possibly selling the business at a gain.

Can anybody make some suggestions please - or who to consult?

Replies (3)

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By Issabayev
22nd Feb 2019 23:21

If your goal is to bring back money to UK it is better to set up an entity in the US but use smart transfer pricing model to show no profit in US and pay corporation tax in UK.

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Replying to Issabayev:
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By Hanleymail
24th Feb 2019 01:14

Thanks - but could you explain briefly why the US company helps this please?

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By Matrix
24th Feb 2019 08:08

I expect you would need to register for state taxes in each state that you sell. There must be information on Amazon about how to do this but you will need to engage US accountants.

I also expect the business profits would only be subject to US federal tax if you have a US trade or business, but again seek advice.

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