Setting up overseas ― sole traders and partners

Produced by a Tolley Owner-Managed Businesses expert

Owner-Managed Businesses

Guidance

Trading in another jurisdiction involves many issues, only some of which involve taxation. Advice should be taken, not only in relation to tax but on the wider business implications.

This note deals only in broad outline with the UK tax issues relating to the self-employed generally, and then considers some issues which are specific to partners. The tax regime in the overseas country is also very important. Its specific rules, and the ways in which the two systems interact should both be explored before decisions are taken.

Is there an overseas operation?

A sole trader or partnership which is based in the UK and merely selling goods or services to customers overseas is not normally subject to foreign taxes on their profits. To be taxable the individual must generally have a permanent establishment. Different rules may apply for VAT, see the International services ― overview guidance note in the VAT module.

A permanent establishment is usually either a fixed place of business in the overseas country, or a ‘dependent agent’. A dependent agent

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