UK-to-EU Tax Structuring
How we build UK-to-EU corporate structures
Establishing a business footprint in the European Union from London requires physical and legal separation of assets. Since October 2022, we have helped 43 UK-registered SaaS and e-commerce companies set up their European entities. We focus on two main jurisdictions: Ireland (for its 12.5% corporate tax rate) and Germany (for local market credibility). The transition involves setting up a holding company in the UK and a subsidiary in Dublin or Frankfurt. We handle the paperwork and submit registrations to the Irish Companies Registration Office or the German Handelsregister within 14 business days. Let's look at the numbers.
Preventing unexpected withholding tax liabilities
We structure for safety, not just tax cuts. Many founders assume that opening an office in Dublin automatically resolves cross-border liabilities. To be upfront, it does not. The critical bottleneck is the withholding tax on intellectual property licensing fees between your UK parent company and the EU subsidiary. If not structured properly, you can face an immediate 20% withholding tax on internal payments. We use specific Double Taxation Treaties (DTT) signed between the UK and individual EU member states to reduce this rate down to 0% in most cases. This process requires filing Form IC1 in Ireland or obtaining an exemption certificate from the German Bundeszentralamt für Steuern.
Our 3-step setup timeline
Here is our 3-step timeline. No complex legal jargon here.
- Days 1 to 7: We draft the articles of association and internal transfer pricing agreements based on the OECD Transfer Pricing Guidelines.
- Days 8 to 21: We submit the corporate registrations and open local business bank accounts with providers like bunq or Fire.com.
- Days 22 to 28: We register your entity for VAT in the target country and hand over the compliance manual to your UK finance team.
(Heads-up: opening a corporate bank account for non-resident directors usually takes an extra 9 business days if your directors hold non-EU passports.)
Understanding the true cost of compliance
Operating an EU entity introduces ongoing annual maintenance costs. A typical setup in Ireland costs approximately €3,200 annually for local secretarial services and registered address maintenance. In Germany, a GmbH requires a minimum share capital of €25,000, of which at least €12,500 must be paid up front before registration can proceed. We help you calculate these operational overheads before you sign any paperwork. We do not use complex financial forecasting models; we show you the actual bills from our past 29 installations.
Transfer pricing rules and local tax audits
Transfer pricing is where most tax audits fail. Tax offices in both London and Frankfurt scrutinize transactions between related entities. If you transfer software development costs from your UK team to your Irish entity, you must charge an arm's length markup. We use the Transactional Net Margin Method (TNMM) to justify these markups to HMRC and local tax inspectors. This structured documentation helped all 37 of our active clients pass their regional tax audits over the last 18 months without penalty. We provide your accountants with standard templates for quarterly invoicing to keep your records clear.
Simple operations for your existing team
We do not build complicated structures that require a team of five internal lawyers to manage. We design the legal framework so your current bookkeeper can handle the monthly filings. Typically, our clients spend less than 3 hours per month on cross-border reporting after the initial 28-day setup period. If you want to review how this applies to your specific revenue model, we can map out your options during a brief discussion.