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TaxRobin, Tax Consultant
Category: Tax
Satisfied Customers: 17623
Experience:  International tax
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My business partner and I reside in different countries, UK

Customer Question

My business partner and I reside in different countries, UK and Canada. We are looking to set up an online company which is serviced based so no movement of goods and are wondering how best to do this. Would an offshore set up be easier to manage and how would the tax arrangements work. If I was a sole trader I understand that the company would be subject to capital gains in the UK as although the company was set up offshore, intellectually the business was occurring onshore. How does this work when we are in two different jurisdictions?
Submitted: 3 years ago.
Category: Tax
Expert:  TaxRobin replied 3 years ago.
Hello and thank you for allowing me to assist you.
Partnerships are usually treated as fiscally transparent entities for both Canadian and U.K. tax purposes, and are therefore not liable to tax in their own right. Instead, their members that would be liable to tax on the income of the partnership in the contracting state in which they are resident.
You would each be taxed in your own country of residence. You would not be required to have an offshore entity for this arrangement.