Limited Liability Partnership (LLP) is a limited partnership registered in England, created by two or more shareholders, established under the Limited Liability Partnership Act 2000, Limited Liability Partnerships Regulations 2001 and Provisions of the Companies Act 2006. The main feature of a limited liability partnership is that the liability of all its shareholders is limited, similar to the liability of participants in a regular limited liability company (Limited Company)
The taxation of this legal entity occurs on the basis of partnership, that is, in a “transparent” manner. This means that the income of the partnership itself (including income from capital gains) is not subject to separate taxation, but is taxed only in the income of each of the shareholders (partners).
In particular, it follows from this principle that if the participants in such a partnership are not residents of the UK and do not have a residentship, and its activities are not conducted in the UK and there are no sources of its income, the partnership’s income is not subject to taxation under British law. Thus, this legal entity operates practically in an “offshore”, that is, tax-free mode. This makes the UK LLP in many ways the ideal tool for international tax planning.
Naturally, in the case we are considering, the income of participants is also not taxable in the UK. However, they may be taxed in accordance with the laws of the country where they are the tax residents. Therefore, in practical schemes it is usually advisable to use offshore companies registered, for example, in the BVI or Anguilla, as participants in a partnership.
Here are some essential features of a British limited partnership.
- The name includes an indication of the form of organization – “LLP”.
- Lack of minimum capital requirements.
- Transparent taxation.
- The liability of participants is limited by their contributions.
- At least two shareholders (partners). They are not required to be resident in the UK. May be legal entities.
- At least two designated members. Their functions are similar to those of directors and the secretary of a regular company.
- Significant organizational flexibility.
- Registered by the Companies House.
- Submits administrative and accounting reports annually.
LP doesn’t have any directors, secretaries or shareholders. Despite this, the partnership participants have the full right to appoint professional managers who will manage the partnership on behalf of the partnership partners with limited liability. A limited liability partnership (partnership) is an independent legal entity and is endowed with the same rights as a limited liability company. A limited liability partnership has the right to carry out any type of activity permitted by law, for which a special permit is not required.
In any LLP signatories are individuals acting on behalf of partners, and nominal partners of LLP are offshore companies. Such a structure implies that partners, and not the company itself, are subject to taxation, therefore, they are not subject to double taxation treaties, since they are not residents of England.
LLP, like a regular limited liability company, provides three types of reports.
- Annual Return. Contains information about the registration address and partners of the company. The report is submitted every 12 months from the moment the company is organized and 28 days are allocated for its submission.
- Annual Accounts. Contains information about the financial activities of the company. The first time the report must be submitted within 10 months from the end of the reporting period. By default, the reporting period is defined as the end of the month following the month of the anniversary of company registration. Significant fines are charged for late submissions.
- Tax report. Offshore companies, we submit a report showing that the participating companies and the partnership itself did not operate in England. The report is submitted on the basis of the beneficiary’s declaration drawn up in a special form.
Services provided by theAgent
- Partnership Registration(LLP) at the UK Registration Chamber. Obtaining a Certificate of Registration.
- Legal address. The legal address of the Partnership (LLP) must be in the UK.
- Agreement of partners. Partnership (LLP) is required to have a legally binding agreement of partners.
- Services of a nominee partner (company).