can we use a business storage unit as a permanent establishment?

[S_G_Parkinson]

I bet this question has come up before.

We are a UK based company and all shareholders are UK residents and we are registering as an LLC. The law says we need a permanent establishment in order to register. If we rent a storage unit and use it as an office, can this be legally viable as a permanent establishment?

 

[Andrew46]

Am I right in thinking you are intending to register an LLC in the USA?
A "permanent establishment" is a double tax treaty concept.
If you look at the US/UK treaty
http://www.hmrc.gov.uk/taxtreaties/in-force/usa-consolidated.pdf
there is a definition of "permanent establishment"; see article 2(a). Your unit would be an office and therefore a PE unless excluded by article 4.
When you say the law says you need a PE to register, I am not sure what you mean. Are you referring to US law?
I take it you are aware that the creation of a PE results in profits attributable to the PE being taxable in the country where the PE is located.
Or have I misunderstood your question?

 

[S_G_Parkinson]

Am I right in thinking you are intending to register an LLC in the USA?
A "permanent establishment" is a double tax treaty concept.
If you look at the US/UK treaty
http://www.hmrc.gov.uk/taxtreaties/in-force/usa-consolidated.pdf
there is a definition of "permanent establishment"; see article 2(a). Your unit would be an office and therefore a PE unless excluded by article 4.
When you say the law says you need a PE to register, I am not sure what you mean. Are you referring to US law?
I take it you are aware that the creation of a PE results in profits attributable to the PE being taxable in the country where the PE is located.
Or have I misunderstood your question?

Sorry Andrew I though that because this was called UK Business Forum it was specifically for uk businesses but I should have been more specific.

We are setting up a business and we will register as an LCC in the UK. All of our shareholders will be UK residents. In order to register we need a permanent establiahment and i was wondering if we rented a storage unit and used it as an office would that be legal under UK law?

 

[Free Lance]

I think what you mean is that you need a registered office. The other poster is correct - a permanent establishment is a tax term used to determine whether your footprint in the UK leads to UK tax. (You could have a permanent establishment without having a registered office),

To set up a UK company you need to have registered office where all official communications are sent.

If the storage unit has no facility to collect your post then no. You basically need somewhere where post can be collected on your behalf and which will display your name to visitors. Almost all law firms and accountancy firms will provide that service for a few hundred quid if that's what you need.

That address needs to be on your website, stationery, etc.

Since all your shareholders are UK based, one of them may be willing to use their address for that purpose.

(Incidentally LLC is the suffix for limited liability companies in many US states and elsewhere. The suffix used in the UK is Ltd - avoids confusion).

 

[Paul Kelly ICHYB]

I can see no reason for not using it, as long as you are allowed to in the storage contract!

It will need to be able to receive post and your company details should be clearly displayed at the location.

 

[Andrew46]

Free Lance and consultant are of course correct. I was thrown by the terminology in the OP.

 

[S_G_Parkinson]

I think what you mean is that you need a registered office. The other poster is correct - a permanent establishment is a tax term used to determine whether your footprint in the UK leads to UK tax. (You could have a permanent establishment without having a registered office),

To set up a UK company you need to have registered office where all official communications are sent.

If the storage unit has no facility to collect your post then no. You basically need somewhere where post can be collected on your behalf and which will display your name to visitors. Almost all law firms and accountancy firms will provide that service for a few hundred quid if that's what you need.

That address needs to be on your website, stationery, etc.

Since all your shareholders are UK based, one of them may be willing to use their address for that purpose.

(Incidentally LLC is the suffix for limited liability companies in many US states and elsewhere. The suffix used in the UK is Ltd - avoids confusion).

Thanks. This helped a lot. I have found a few companies in my area that will allow me to rent a virtual address where we can have our mail sent to and register the company.

Also, sorry about the confusion Andrew. I'm still learning. :redface: