Can an LLP be formed as a wholly owned subsidiary of a UK company?


I'm currently researching how to go about creating a US subsidiary of a UK company. One of the people involved in the business wondered if it would be possible to use an LLP to do business in the US. In my reading about this issue, and talking to some people who know more about this than I do, I haven't come across situations where this is the case. So I was wondering, is there some reason why this would be impossible, difficult, or undesirable? The main reason for doing this would be to avoid the double taxation issue with a C Corporation, and what seems to be an uncertain tax status for US LLCs in the UK. Thanks in advance for any thoughts.

UK Tax International Partnerships

asked Oct 20 '10 at 11:20
28 points

3 Answers


Are you sure that you really need a US-Company? Are your Sales Volumes and Profits high enough?
If you could answer the questions with yes, than I recommend to talk to a lawyer and a tax advisor with experience in setting up subsidiaries between USA and UK.

IMHO no matter what legal entity you will use in the USA, you will always have to deal with taxation or how about to avoid double taxation. There is no easy way out. If you do it wrong, you will pay taxes twice.

So, better invest a bit of money in consultation, before paying tousands of pounds or dollars in taxes you would have been able to avoid.

This advice comes late, but its free ;-)
Hope it helps.

answered Jan 14 '11 at 22:17
371 points


If you mean an English LLP, then the answer is probably no. First of all, an English LLP must have two members, so you will need a second company (which could be a sub of the first).

Secondly, and this is the important bit, HMRC and the FSA have quite definite views about what you should be doing with an LLP. An LLP where not all partners are active managers is treated as an investment vehicle.

Disclaimer: Do not rely on free advice from the internet.

answered May 13 '11 at 08:33
526 points


Definitely get some advice up front. I've been through this with putting up a US subsidiary of a company based in the EU. A couple of key points, from my experience

  • You need sound professional advice, and try to get it from a professional with a certification that people in the parent country recognize: a Chartered Accountant in the UK, or that country's tax authorities will more likely trust the opinion of a CPA, something they can 'rank' or establish the credentials of over, say, a bookkeeper.
  • Get the filing status correct from the start, if the costs of hiring a professional opinion isn't prohibitive. Getting it wrong and having to pay back penalties, etc. ain't fun (been there).
  • In my experience, no matter where you are, people are provincial: US people understand the business reality through US eyes; Europeans through theirs, etc., etc. As competent, responsible, motivated, etc. as your counterparts may be, cross-border accounting issues are byzantine and awful, if not dealt with thoroughly. Since your accounting resources both speak english, have them speak. You'll have to drive your UK accounting/legal to get knowledge about this new structure - the subsidiary - and country.
  • There is a reward for setting up the subsidiary correctly: you have a functional, legitimate foothold in the US. You can sell to US customers and have a US point of contact which is valuable in some fields. If that's part of your goal,great! If that's something that's expensive for your competitors to get, a win again! If that makes you more attractive in any see where I'm going with this.

Rambled on a bit, there, but trust me, I've been through it. I'm relatively new here, but if you need more info, PM me - I think you can do that....

answered Mar 16 '11 at 02:04
840 points

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