For branches there is a tax charge where the branch is located and a tax charge where the main company is located but double taxation relief also comes into play. Under the UK tax legislation. UK resident companies can elect to have all their foreign branch profits exempt from UK Corporation Tax. This is an irrevocable election. This proposal aligns the tax treatment of foreign branches with those of foreign subsidiaries.
The formation of a separate limited company or a subsidiary will avoid this double exposure to tax.
You should be aware that the formation of a separate Irish company which is under the same control as the UK company will be classed as an associated company. This will not impact on the rate of tax payable, however professional advice should be sought to ascertain the impact on any inter-company transactions.
Group companies are only entitled to audit exemption if the combined group fulfils at least two of the following criteria;
- Balance sheet total not exceeding €4.4m
- Turnover not exceeding €8.8m
- Employees not exceeding 50