Shifting company funds between UK & Euro LTDs
Posted: April 5th, 2021, 1:13 pm
Hi,
I am sole Director of a UK LTD (IT consulting). To spend more time with family, I will likely register a Hungarian LTD and would like to transfer retained profits from the UK LTD to the new LTD. After that, I would likely dissolve the UK LTD as I can't really see any material benefits to justify paying to keep it running (assume my clients are fine and ready to effectively "switch" suppliers). Both companies would be solely controlled by myself. The other route to take the cash out of he business - a Members Voluntary Liquidation - might appear attractive on the surface as I would likely qualify for 10% enterpreneurs tax. But I've read that MVL process typically takes 6-12 months during which time I would likely already be a non-UK tax resident. Consequently, I suspect I'd get caned for taxes on the company cash-out by the Hungarian NAV (tax office). This is why I am exploring a company to company payment. The obvious next question is how to extract that money from the HUN LTD (over time) since dividends are paid from profits and I guess this payment would not be considered a profit...
Is there a standard type of inter-company transaction that would enable this transfer to happen; i.e. funds dispersed with no expectation of repayment? If so, does it require any particular corporate structure or can they be unrelated companies but with common control?
I'm in the process of asking my accountants in both countries, but would value hearing what the norms are in this regard and in particular what questions I should be asking my accountants (they are generally good at answering the questions I ask them, but as with many things, it's knowing the right questions to ask).
Thanks in advance
-b
I am sole Director of a UK LTD (IT consulting). To spend more time with family, I will likely register a Hungarian LTD and would like to transfer retained profits from the UK LTD to the new LTD. After that, I would likely dissolve the UK LTD as I can't really see any material benefits to justify paying to keep it running (assume my clients are fine and ready to effectively "switch" suppliers). Both companies would be solely controlled by myself. The other route to take the cash out of he business - a Members Voluntary Liquidation - might appear attractive on the surface as I would likely qualify for 10% enterpreneurs tax. But I've read that MVL process typically takes 6-12 months during which time I would likely already be a non-UK tax resident. Consequently, I suspect I'd get caned for taxes on the company cash-out by the Hungarian NAV (tax office). This is why I am exploring a company to company payment. The obvious next question is how to extract that money from the HUN LTD (over time) since dividends are paid from profits and I guess this payment would not be considered a profit...
Is there a standard type of inter-company transaction that would enable this transfer to happen; i.e. funds dispersed with no expectation of repayment? If so, does it require any particular corporate structure or can they be unrelated companies but with common control?
I'm in the process of asking my accountants in both countries, but would value hearing what the norms are in this regard and in particular what questions I should be asking my accountants (they are generally good at answering the questions I ask them, but as with many things, it's knowing the right questions to ask).
Thanks in advance
-b