Can I do a Starbucks?
Discussion
Under the Self Assessment system, the general rule is that all your income from all sources goes on the return. Therefore, if you have self employed income (which is where royalty income generally goes) it would be entered in the "Self Employed" section of the tax return.
All this is changing in a few years but for the moment that's how it's done.
All this is changing in a few years but for the moment that's how it's done.
And don't forget, if it is a genuine royalty payment, it is a tax deductible cost in the company - so the company saves some Corporation Tax too.
OK - you may need to justify to HMRC why you consider it a royalty payment rather than a distribution of profit - so you had better have all sorts of paperwork to back it up.
I can see companies starting to pay a lot more "rent" to their directors as well.
OK - you may need to justify to HMRC why you consider it a royalty payment rather than a distribution of profit - so you had better have all sorts of paperwork to back it up.
I can see companies starting to pay a lot more "rent" to their directors as well.
I suppose you could sell the rights to the company too, making it a capital gain for you and an asset purchase for the company
The true Starbucks way would be for your Ltd to lend money to a Gibraltar co that then loans money to a Luxembourg company in exchange for shares. The lux company would then buy the rights from you and your Ltd would pay the royalty to the lux company
Not recommended for many UK tax residents...
The true Starbucks way would be for your Ltd to lend money to a Gibraltar co that then loans money to a Luxembourg company in exchange for shares. The lux company would then buy the rights from you and your Ltd would pay the royalty to the lux company
Not recommended for many UK tax residents...
JPJPJP said:
I suppose you could sell the rights to the company too, making it a capital gain for you and an asset purchase for the company
The true Starbucks way would be for your Ltd to lend money to a Gibraltar co that then loans money to a Luxembourg company in exchange for shares. The lux company would then buy the rights from you and your Ltd would pay the royalty to the lux company
Not recommended for many UK tax residents...
What does this achieve? Doesn't sound like a great structure to me. The true Starbucks way would be for your Ltd to lend money to a Gibraltar co that then loans money to a Luxembourg company in exchange for shares. The lux company would then buy the rights from you and your Ltd would pay the royalty to the lux company
Not recommended for many UK tax residents...
SB et al are US headed and plan around Sub Part F (CFC) and relied on what has now been ruled to be state aid by Lux and the Netherlands.
I have no idea what it achieves, nor do I know the exact details of the Starbucks global corporate structure and associated agreements.
AIUI US corps aim to keep as much international profit as possible in jurisdictions that are taxed lower than would arise if the profits arrived back in the US.
How they go about that in the face of the current and future efforts to make that harder to achieve remains to be seen.
AIUI US corps aim to keep as much international profit as possible in jurisdictions that are taxed lower than would arise if the profits arrived back in the US.
How they go about that in the face of the current and future efforts to make that harder to achieve remains to be seen.
JPJPJP said:
I have no idea what it achieves, nor do I know the exact details of the Starbucks global corporate structure and associated agreements.
AIUI US corps aim to keep as much international profit as possible in jurisdictions that are taxed lower than would arise if the profits arrived back in the US.
How they go about that in the face of the current and future efforts to make that harder to achieve remains to be seen.
The structure you described does not result in a UK tax saving. It probably accelerates tax. AIUI US corps aim to keep as much international profit as possible in jurisdictions that are taxed lower than would arise if the profits arrived back in the US.
How they go about that in the face of the current and future efforts to make that harder to achieve remains to be seen.
SB et al use US tax DEFERRAL structures. And they relied on favourable rulings on IP income in the likes of Lux and the Netherlands. The UK CFC rules are far tricker to circumvent than the US rules, and that's why the same structures would not work for a UK headed group, to save UK CT.
Alpinestars said:
The structure you described does not result in a UK tax saving. It probably accelerates tax.
SB et al use US tax DEFERRAL structures. And they relied on favourable rulings on IP income in the likes of Lux and the Netherlands. The UK CFC rules are far tricker to circumvent than the US rules, and that's why the same structures would not work for a UK headed group, to save UK CT.
But, but, but...the people on the Television said the nasty people at Starbucks were bad people and cheated on their tax....SB et al use US tax DEFERRAL structures. And they relied on favourable rulings on IP income in the likes of Lux and the Netherlands. The UK CFC rules are far tricker to circumvent than the US rules, and that's why the same structures would not work for a UK headed group, to save UK CT.
Alpinestars said:
The structure you described does not result in a UK tax saving. It probably accelerates tax.
SB et al use US tax DEFERRAL structures. And they relied on favourable rulings on IP income in the likes of Lux and the Netherlands. The UK CFC rules are far tricker to circumvent than the US rules, and that's why the same structures would not work for a UK headed group, to save UK CT.
it was never proposed as a way of saving UK taxSB et al use US tax DEFERRAL structures. And they relied on favourable rulings on IP income in the likes of Lux and the Netherlands. The UK CFC rules are far tricker to circumvent than the US rules, and that's why the same structures would not work for a UK headed group, to save UK CT.
in fact it was explicitly stated that it wasn't recommended for most UK taxpayers
I have watched with interest as Reckitt Benckiser (UK headed) has set up a Dutch company to run its purchasing through and wondered how that will progress.
JPJPJP said:
it was never proposed as a way of saving UK tax
in fact it was explicitly stated that it wasn't recommended for most UK taxpayers
I have watched with interest as Reckitt Benckiser (UK headed) has set up a Dutch company to run its purchasing through and wondered how that will progress.
Purchasing is very different to IP planning. Typically purchasing hubs are set up in low tax territories like Ireland and certain Swiss cantons, but require rock solid substance in those territories, and arms length pricing so as not to fall foul of transfer pricing rules. They rely on arbitrage in tax rates as opposed to more sophosticated planning. The Netherlands is an unusual place to do this because of the relatively hight CT rate. in fact it was explicitly stated that it wasn't recommended for most UK taxpayers
I have watched with interest as Reckitt Benckiser (UK headed) has set up a Dutch company to run its purchasing through and wondered how that will progress.
PurpleMoonlight said:
I personally own the original artwork which my Ltd uses on its letterhead and other literature/folders.
I never have before, but can I charge it a licence fee for doing so?
If so, how would I justify a market rate and what tax will be liable on it.
Are you a director? Did you design the artwork after you became a director? If yes/yes, then pretty good chance the company as good as owns the IP rights in the artwork, not you. You won't have anything worth licensing. I never have before, but can I charge it a licence fee for doing so?
If so, how would I justify a market rate and what tax will be liable on it.
Greg66 said:
Are you a director? Did you design the artwork after you became a director? If yes/yes, then pretty good chance the company as good as owns the IP rights in the artwork, not you. You won't have anything worth licensing.
I suspect he, as I, prepared all documents/logos etc prior to actually registering the company..... Uh-huh.
Eta: so if the Co doesn't own the IPRs (and it is an "if" notwithstanding the timing), and the director does, the Co already has a licence to exploit them which is free. So the question becomes how does the director, who has to act in the best interests of the company in preference to his own interests, (a) justify an increase in the licence fee from nil to X, and (b) justify X as the market rate when it was previously nil.
Eta: so if the Co doesn't own the IPRs (and it is an "if" notwithstanding the timing), and the director does, the Co already has a licence to exploit them which is free. So the question becomes how does the director, who has to act in the best interests of the company in preference to his own interests, (a) justify an increase in the licence fee from nil to X, and (b) justify X as the market rate when it was previously nil.
Edited by anonymous-user on Sunday 10th January 21:10
Gassing Station | Business | Top of Page | What's New | My Stuff