Owning a Business While Living Abroad: Tax, Structure and Compliance for Expats

For many expats, relocation is not just a lifestyle choice — it is a business decision. Some move abroad specifically to set up a business in a new market. Others already own a UK business and move their personal residence overseas while maintaining ownership. Others acquire businesses in their new country of residence. In all cases, the intersection of business ownership and international tax creates a web of obligations that demands careful, proactive management.

This guide covers the main scenarios expats encounter as business owners across international borders — UK companies owned by non-residents, setting up abroad, and the controlled foreign corporation (CFC) rules that HMRC uses to prevent tax avoidance through offshore entities.

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Scenario 1: You Own a UK Company and Move Abroad

This is perhaps the most common situation. You have been running a UK limited company — perhaps a consultancy, trading business, or holding company — and you decide to move abroad, either for lifestyle reasons or because your work takes you there. You intend to maintain ownership of the UK company.

Corporate tax position

A UK company that continues to be managed and controlled from the UK remains a UK tax resident, regardless of where its owners live. The company's profits are subject to UK corporation tax at the standard rate (25% as of 2026).

However, if you (as a director) are making all the significant management decisions from abroad, HMRC may argue that the company's place of effective management (POEM) has shifted to your country of residence. If the foreign country also claims the company as tax-resident (based on POEM), the company becomes dual-resident, with complex and potentially expensive consequences.

Practical advice: If you remain a director of a UK company after moving abroad, ensure that significant board decisions are made in the UK by UK-resident directors. Hold board meetings in the UK. Be cautious about sole-director companies — the risk of POEM moving abroad is highest where a single director makes all decisions.

Extracting money from the UK company

As a non-UK-resident, you can still receive dividends, salary, rent, and loan repayments from a UK company. Each of these has different UK and overseas tax consequences:

• Dividends: Not subject to PAYE; generally not subject to UK income tax for non-UK residents unless you are also UK-domiciled. However, your country of residence may tax dividend income — check the relevant double tax treaty.
• Salary: If you perform any work for the UK company, salary is taxable in the UK (source: the UK). If all your work is done abroad, the salary may be foreign-sourced and not UK-taxable. The facts must be demonstrable.
• Director fees: UK withholding tax may apply on director fees paid to non-resident directors; UK treaty provisions vary.

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Scenario 2: Setting Up a Business in Your Country of Residence

If you want to conduct business activity in your country of residence — whether consulting, retailing, property management, or any other trade — you generally need to establish a local legal entity or register as a self-employed trader under local law. Simply trading through a UK company from abroad often creates a permanent establishment in the host country, exposing the UK company to local corporate tax.

What is a permanent establishment?

A permanent establishment (PE) is a fixed place of business through which an enterprise carries on its activities in a country. Under OECD rules, a PE exists where:

• There is a fixed place of business in the country (an office, workshop, etc.)
• A dependent agent in the country habitually concludes contracts on behalf of the enterprise

If your activities in the foreign country create a PE of your UK company, that country has the right to tax the profits attributable to the PE. You then face both UK corporation tax and foreign corporate tax on those profits (though a credit for the foreign tax is typically available against the UK liability).

Local entity options

For most expats who intend to run a substantive business in their country of residence, the practical solution is to establish a local entity:

• Limited liability company (LLC equivalent): The most common structure in most countries
• Branch of a UK company: Simple but creates the PE issue explicitly; branch profits are still subject to UK tax
• Partnership or professional practice: Common in some professions

Local accounting and legal advice is essential. Company formation requirements, minimum share capital rules, and ongoing compliance obligations vary significantly.

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Scenario 3: HMRC's Controlled Foreign Corporation (CFC) Rules

The CFC rules are the most important anti-avoidance provision for expats who own or control overseas companies. In broad terms, HMRC can attribute the profits of a foreign company to its UK-resident shareholders where the company:

• Is controlled by UK-resident persons
• Is resident in a lower-tax jurisdiction
• Has profits that would be subject to higher UK tax if earned directly in the UK

If the CFC rules apply, the UK shareholders (even if they are individuals, not companies) are subject to UK tax on their proportionate share of the CFC's profits as if they had received them directly.

Who is affected? The CFC rules primarily target arrangements where a UK-resident individual or company sets up a foreign company specifically to accumulate profits in a low-tax jurisdiction rather than paying UK tax. If you are a non-UK-resident who owns a foreign company, the CFC rules generally do not apply — there is no UK-resident controller to attribute the profits to.

However, if you have not cleanly broken UK tax residency (a common problem — see the statutory residence test section below), you may still be subject to CFC attribution despite living abroad.

Statutory residency test and the timing trap

A common mistake is assuming that physical departure from the UK is sufficient to end UK tax residency. Under the SRT, UK residency in any given tax year depends on a detailed analysis of UK days, UK ties (family, home, work) and the automatic tests. It is entirely possible to be in the UK for relatively few days and still be UK-tax-resident under the SRT if you have several UK ties.

If you remain UK-tax-resident, your interests in overseas companies may be subject to the CFC rules, anti-avoidance attribution provisions, and full UK income tax on any dividends received.

Get advice on your SRT position before restructuring your business interests around your new non-UK residence.

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Transfer Pricing: When You Trade Between Related Entities

If you own both a UK company and a foreign company, and the two entities trade with each other (the UK company provides services to the foreign company, or vice versa), transfer pricing rules require that those transactions are priced at arm's length — the same price that unrelated parties would charge.

Undercharging the UK company (to reduce UK taxable profits) or overcharging the UK company (to inflate deductible costs) are both targeted by transfer pricing rules. HMRC can adjust the prices used in intercompany transactions to arm's-length equivalents, increasing UK taxable profits accordingly.

For small companies (below the small- and medium-sized enterprise thresholds), some exemptions from transfer pricing rules apply — but these are not automatic and the details matter.

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Practical Compliance Requirements

UK requirements for non-resident business owners

• UK company annual accounts and confirmation statement must still be filed at Companies House
• UK corporation tax return must be filed annually
• If you are a director, disclose any conflicts of interest
• UK payroll (PAYE) must operate on any UK-based employees

Overseas requirements

• Annual accounts and corporate tax returns in the country of incorporation
• VAT/GST registration if revenue exceeds local thresholds
• Employment law compliance for any local employees
• Beneficial ownership registers (increasingly mandatory globally)

Global beneficial ownership transparency

Under the OECD's Common Reporting Standard, Financial Action Task Force (FATF) standards and various EU directives, beneficial ownership information is increasingly shared between tax authorities worldwide. Structures designed to conceal ownership are both legally risky and increasingly ineffective.

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Checklist: Business Ownership for Expats

• Confirm your UK tax residency status under the SRT — do not assume departure ends residency
• Review the UK company's place of effective management — is it genuinely managed from the UK?
• Assess whether your activities abroad create a permanent establishment of the UK company
• Take advice on the CFC rules if you are setting up or already control a foreign company
• Review intercompany transactions for transfer pricing compliance
• Register any local business entity in the country of residence if required
• Maintain separate books and records for each entity
• File UK corporation tax returns and Companies House documents on time
• Comply with local corporate law, tax and VAT/GST requirements
• Review your shareholder agreement and succession planning for the business

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This guide provides general information only and does not constitute tax or legal advice. International business taxation is highly complex and jurisdiction-specific. Always seek qualified professional advice in both the UK and your country of residence before restructuring business interests across borders. Rules and thresholds are subject to change.

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How Global Investments Can Help

Running a business across international borders requires expert coordination between tax, legal, financial planning and business strategy. At Global Investments, we work with internationally mobile business owners to help them structure their affairs efficiently and compliantly, manage business risk as part of a broader wealth strategy, and plan for eventual exit or succession. Contact us for a consultation tailored to your specific business situation.