Among the countries preferred for establishing a business abroad or opening a branch abroad, the United Kingdom maintains its place at the top. The most important reason for this is obviously the free market economy system introduced in the country, providing advantages to the investor. Furthermore, in the United Kingdom, capital owners are highly valued and facilitated in obtaining a residence permit.
The fact that the corporate tax rate in the UK is 19 percent and there is no minimum capital requirement to establish a limited company also makes this country attractive for investment. In addition, the UK has double tax agreements with many countries such as the Netherlands, Poland, Canada, and Germany. This provides a great advantage to investors.
To start a business in the UK, you need to follow the 3 steps below.
1- Getting the proper visa to set up a company:
It is not possible for the citizens of the rest of the world to establish a company without arriving in the UK. However, company establishment procedures in the UK can be completed by obtaining an Investor visa or a UK tourist visa. Online company formation application in the UK is only available to UK citizens.
It is possible for companies based overseas to carry out commercial activities in the UK in many different ways. The companies that want to establish a permanent business in the UK can send a senior manager to the UK with the Sole Representative Visa route. The representative can establish a branch in the country, operate on behalf of the overseas company, employ staff and engage in a wide variety of sales-oriented activities.
In certain cases, individuals may not establish a new company but only register branches in the UK with the branch registration system. Apart from these two alternatives, overseas companies can also engage in commercial activities in the UK through agency assignments, distribution agreements, partnership undertakings, or commercial agreements with companies in the UK.
Until recently, it was possible for citizens of countries affiliated with the European Union to establish a business in the UK. However, with Brexit, with the departure of the United Kingdom from the EU on 31 December 2020, this situation has changed, and various visas are currently required for this.
Citizens of other countries, who pay taxes by establishing a company in the UK and earning sufficient income, may be entitled to indefinite residence permits in the UK.
At this point, it should be noted that overseas companies are generally not subject to any permission to do business in the UK; only certain specific industries, such as Financial Services, are subject to permission from the Financial Conduct Authority (FCA).
2- Determining the legal structure of the business:
There are several different ways to set up a company in the UK. UK company types are broadly divided into three:
In addition to establishing a new company in the UK, it is also possible for an overseas company to open a branch in the UK. In order to open a company branch in the UK, an application must also be made to Companies House. Suppose an overseas company opens a branch in England to carry out its business on behalf of the company located overseas, within 1 month from the date of establishment of the branch. In that case, these documents should be sent to the Companies House:
The original articles of association of the parent company and its English translation with a sworn translator -Company’s profit-loss-balance sheet data for the last year
Additionally, an application fee of GBP 20 must be paid.
3- Opening a bank account:
After establishing your business, you will need a bank account to receive payments from your customers. There are three ways foreigners can open a business account in the UK:
Residence permit: If you live in the UK, you can take advantage of this option if you confirm the following conditions. Have been a resident of the UK for at least six months, be a property of your residence, and be different from your office address. In addition, the bank asks you for an invoice issued in your name to verify your residence. If you cannot meet all of these conditions together, you can look at the other options below.
Multi-currency account: It is a method that you can use for international bank transactions without paying large transfer fees, and you can use the money in your account between any currencies.
International banking: In this method, you can open a bank account using a valid passport, residence address, or national identity card. Many banks in the UK allow immigrants to open a business bank account.
Before determining the structure of your business activity with the UK, many important issues such as taxation and liability should be considered.