How is intellectual property dealt with when expanding overseas?
Intellectual property (“IP”), such as trademarks and know-how, will often be some of the most valuable assets held by the business.
These will be integral to the generation of profit by the business across various jurisdictions.
A key consideration will be where these assets are held. It is acceptable for these assets to be held in a holding company in an appropriate and tax efficient jurisdiction. Operating companies in, perhaps, higher taxed jurisdictions could pay a licence fee for the exploitation of the IP. Usually, such a payment will be tax deductible for the paying company.
Local tax rules must be taken into account, and also the provisions of any double tax treaties and other international tax considerations.
Of course, there are other considerations. Many jurisdictions, including the UK’s own attractive regime, offer tax incentives to encourage research and development (“R&D”). Such reliefs should be considered from every angle when devising a structure.
What are the tax issues of moving employees overseas as part of growth plans?
Expanding your operations overseas will impact your tax and reporting requirements in respect of local and globally-mobile employees.
For example, if you hire from the local market, what are your duties relating to payroll?
For UK employees deployed overseas, tax residence will need to be clarified and resulting implications for tax liability, including payroll withholding and employment taxes, and ensuring employees avoid double taxation.
Tax planning will help ensure payroll withholding and remittance obligations in the overseas location are met.
An additional area of complication is employee share and incentive schemes. Operating such schemes across borders without effective tax planning could raise excessive or unfavourable tax bills.