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Tax obligations for UK company with US subsidiary

US tax obligation. I need help understanding tax filing and tax liability obligations for a small UK listed company with a US sales office. The company structure is a parent group with a UK operating subsidiary and a US sales office. The majority of sales are to US companies however as the US registered company doesn't have a permanent establishment (as per our UK audit firm) in the US we can invoice sales via the UK company. Given this structure what US tax obligations do we have and what do we need to do to avoid witholding tax?

Answers

Topic Expert
Jake Feldman
Title: Managing Director
Company: Global TaxFin Advisory Group LLC
(Managing Director, Global TaxFin Advisory Group LLC) |

Hi Margaret,

Even if you don't have a PE, foreign companies often run afoul of US state nexus laws that are similar to PE concepts but US states are not bound by tax treaties, so you may have a sales tax obligation to the states you sell into. It is also generally advisable to file federal tax returns, even if taxes are not due as a fallback in case the IRS says you do have a PE. Finally, anytime you do business in a foreign country, you should seek local tax and legal advice, perhaps a member firm of your UK audit firm.

Jake

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