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Economic Substance in the UK

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Alina Marinich

Senior Business Consultant

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Over the recent few years, a large body of national and international regulation has been introduced to curb the activities of purely offshore companies. The principle behind this new regulatory approach is that for every legal entity an exact place of business – and with it, the country of tax residence – must be made identifiable by clear-cut criteria, which collectively are referred to as economic substance. The most salient among them are the location of a real office, which must be a rented physical space and not merely a registration address, and of employees who actually perform work duties for the company under an employment contract. In absence of these two, your business vehicle may be deemed a shell company – an “on-paper only” entity without a real business to back it up – and subjected to additional scrutiny and a higher risk assessment.

Aside from its impeccable reputation and flexible legal system, the UK provides a comprehensive choice of options for businesses of all sizes and industries to locate themselves and employ skilled staff in their operation. With our range of economic substance packages at your disposal, we will be able to provide a bespoke solution to your particular business goals and needs.

Correspondence Processing

We will be happy to take on your routine correspondence tasks and localize them at our address. This includes:

  • A PO Box address which you will be able to use and declare as your own;
  • Receiving your correspondence and notifying you of that within the first three workdays of each month;
  • Up to 5 pages of your correspondence to be scanned a month. Should you need to scan more, an additional fee will be charged at the rate of USD 10 for each extra page. The scanned documents will be provided to you via email upon availability;
  • Sending your incoming correspondence to the address you specify for us once a month.

Our fee for this service is USD 700 per year, including the monthly courier dispatch. Should you need your correspondence to be sent out more often, each additional delivery will be charged on a separate basis.

Dedicated Phone Number

A local SIM Card is a good means to ensure your access to incoming and outgoing calls within international roaming, and putting a local number on your application to a bank is always a sign of a more substantial connection to your jurisdiction than mere venue of registration. A UK SIM card can be purchased remotely and delivered to your preferred location worldwide with an express courier. The cost is USD 250, not including a courier delivery. Please note that special customs rules may apply to SIM cards depending on the country of destination.

Renting an office in the UK

Relying on our own experience and the experience of our clients, we would be glad to help you find the best-suited office for rent in London. The range of available options is immense, and this would be a really personal choice geared to the particular parameters and needs of your individual business. The fees, too, are subject to a great degree of variation dependent on size, location, amenities, and other particulars of a premise. To give you a basic idea, the rent of 14 square meters of office space may cost GBP 1 500 per month + VAT. Our own one-off fee will amount to 15-20% of the annual rent.

Please note that most landlords will require you to make an initial deposit. It normally amounts to a double size of your monthly rent fee, and kept as collateral against any possible damage to the property. Should no damage ensue over the period of rent, the deposit will be returned to you.

Staff and recruitment

Once your London office is furnished, it is the time to introduce to it your employees. We have significant experience and expertise in finding the best local talent for your business. This job is done on a strictly individual basis, and the terms and conditions will depend on what functions you would expect your new employee to perform, what qualification to have, and what work schedule to follow. For this, we will charge our one-off agency fee at the rate of 30-35% of the employee’s annual gross salary. Please note that the minimal salary in London is GPB 1 000 per month.

To make sure your relationship with your new employee is duly secured against any conflict or misunderstanding, our dedicated UK lawyers will be ready to draft a customized employment agreement. Please let us know if you are interested in this service and what terms and conditions would be of particular significance to you. Then we will calculate an individual fee and let you know of any further details or nuances involved.

Fees for our basic services

Service Name Fee (in USD, VAT not included)

Incorporation and annual maintenance

Turnkey incorporation (including a compliance fee, original corporate documents, apostilled copies of the corporate documents, and a company seal) 1 800
Annual maintenance (starting from the second year), compliance fees excluded 870
Nominee director and shareholder for one year 580
Dormant financial statement 770
Non-dormant financial statement 100 – 400 per hour, on a time spent basis
Compliance fee to be paid upon:

  • incorporation of a company,
  • renewal of a company,
  • liquidation of a company,
  • transfer out of a company,
  • issue of a power of attorney to a new attorney,
  • change of director / shareholder / beneficial owner, except the change to a nominee director / shareholder,
  • signing of documents.
350 (basic, including one individual)

+ 150 for each new individual or company in the structure, if the company is administered by ITA

+ 200 for each new company in the structure if it is not under the ITA administration

450 (for High Risk companies, including 1 individual in the structure)

100 (signing of documents)

Economic Substance

Correspondence processing for a year 610
SIM Card 250

Renting an office at an address different from the Registered Office

Our agent fee (one-off) 15-20% of the annual rent
Rent fee per month From GBP 1 500 per month

(you will also need to make a deposit equal to two monthly rent fees)

Staff recruitment From 30-35% of the annual salary
Minimal salary for a local employee GBP 1 000