Advice on launching a multi-jurisdictional company in the UK.

[Zebb]

Hello,

I have built a software with a partner from Austria over the last 2 years, we currently have 7 clients in Austria and will be going to market in the UK very soon. I would really appreciate some advice regarding which company type / structure is best suited for our current arrangement. I understand it may be hard to answer so I would be grateful if you can point me in the right direction regarding exactly what to research.

The headquarters of our company is currently in Austria as my business partner has a limited company registered there, I have not yet registered a legal entity in the UK.

My partner and I have an agreement where I get majority of the UK's profits and he gets majority of Austria's profits, if i setup a limited company in the UK and direct all UK Payments through said company, could my partner from Austria receive profits from my UK company?

I feel my question is very vague and i have lots of research to do until I know what's best. If someone knowledgeable in this area is willing to go on call with me and advise further I can pay.

 

[Bobbo]

Who owns the intellectual property of this "software"?

Where are you resident?

Where is your "business partner" resident?

What is your ownership interest in the current Austrian-based company?

You, and this business, needs advice from somebody skilled in international taxation.

 

[Ozzy]

There are so many permutations to this that it would not be possible to give you direction but @Bobbo has asked some questions that the right adviser would look for you to answer.

Making a whole bunch of assumptions; yes. UK Limited company should be fine.
A big part of the structure, and possible licencing arrangements, would be based around who or what owns the IP of the software. What you'd normally do is hold the IP within its own company, and then that company would licence the rights to sell the software to the Austrian and the UK companies. You and your business partner may then have varying share ownership of each of those to take your relevant cuts (or you have cross charging agreements with each on a revenue share basis). So many different options.

You do really need to sit down with a lawyer on this one who understands software IP licencing, and a tax adviser as mentioned by Bobbo. On one hand you don't want to spend a load of money if you haven't tested the market yet, but equally get it wrong then you're in a right pickle.

 

[eteb3]

Agree with need for professional advice.

But since you came for an informal forum take, ask your adviser about a UK LLP. it would benefit from UK jurisdiction, and could hold the IP. But since it’s tax-transparent it can encase foreign entities only and pay no UK tax; or a mixture and only the UK entities are taxed in the UK. Profit distribution is much more flexible than in a company.

I’m sure there are downsides, too.

 

[Zebb]

Who owns the intellectual property of this "software"?

Where are you resident?

Where is your "business partner" resident?

What is your ownership interest in the current Austrian-based company?

You, and this business, needs advice from somebody skilled in international taxation.

Who owns the intellectual property of this "software"?
My business partner in Austria started the project so he owns the intellectual property. I have been a contributor for a long time though.
Where are you resident?
I live in the UK
Where is your "business partner" resident?
Austria
What is your ownership interest in the current Austrian-based company?
I currently do not own any of the Austrian company and don't necessarily intend to. Our agreement is that I own the UK company and he owns the Austrian company and we share profits. I may think to move onto a parent company with subsidiaries in the future. Then the parent company can own the IP and we can both have shares

 

[Ozzy]

Ok it sounds like you are going to be, and if you don't realise yet then here goes, a reseller in the UK. You have no rights to the software, which is a shame if that wasn't what you was expecting.

So I would expect this to be done through a licencing arrangement with the Austrian company where you have your own company in the UK (no need for them to be a part shareholder) and you have the rights for the UK market in return for profits to the licence holder.

Seems pretty basic and straight forward, still get a lawyer in to get this drafted properly.

 

[Zebb]

Ok it sounds like you are going to be, and if you don't realise yet then here goes, a reseller in the UK. You have no rights to the software, which is a shame if that wasn't what you was expecting.

So I would expect this to be done through a licencing arrangement with the Austrian company where you have your own company in the UK (no need for them to be a part shareholder) and you have the rights for the UK market in return for profits to the licence holder.

Seems pretty basic and straight forward, still get a lawyer in to get this drafted properly.

Thanks very much, you guys have given me great advice & insight.

Much appreciated