Are you a UK contractor with your own UK Ltd Company? Are you thinking about using your Ltd Company in China for contracting work?
There are clear benefits to using your own Ltd Company, but there are also some problems that need to be addressed beforehand.
Benefits of using your own UK Ltd Company
- You’ll be dealing with a familiar tax process, provided you and the company don’t become liable for Chinese tax.
- You can claim expenses for travel, relocation, etc.
- You’ll maintain revenue continuity.
Downsides of using your UK Ltd Company
Despite these potential advantages, using your Ltd Company can incur further tax liability and cause substantial immigration and visa setbacks. Specifically, some of the downsides include:
- Creating a Permanent Establishment in China.
- Compromising your ability to take advantage of Double Taxation Treaties.
- Exposing you to additional Chinese tax rates or social costs.
- Creating UK admin work that you have to do from overseas (which can be painful)
- Necessitating the complicated administrative processes of both registering and de-registering your company within the Chinese tax system.
Using your Ltd Company in China can open you to further costs, taxes, and admin.
Possibly even more of an issue will be securing the right work permit while using your own Ltd Company. In general, you won’t be able to sponsor yourself, meaning it will be best to explore other options for your contract in China. You can learn more about permits and sponsorships in our FAQ.