Scotland is a part of the United Kingdom, a leading global financial and business centre and an important jurisdiction for international tax planning. The UK is known internationally as a jurisdiction with a standard level of taxation. However, the Scottish law provides the opportunity for registration and operation of companies with a zero tax rate by means of a Limited Partnership (LLP).
Since the enactment of the Limited Liability Partnerships Act 2000 (LLPA 2000) it has been possible for partnerships to incorporate with limited liability in much the same way as limited companies.
A Scottish limited liability partnership (SLLP) is a unique vehicle. Although it has been around for over a century, the SLLP has been used in recent times for modern business purposes such as private equity and property investment fund structures.
Advantages of the Scottish Limited Liability Partnership (LLP)
What makes a Scottish LLP so attractive to fund managers, promoters and investors, both domestic and overseas?
– A Scottish LLP with foreign partners and which does not carry on business in the UK is not liable for tax in the UK; partners can be EU or NON-EU physical person, companies from EU or offshore companies of any kind;
– Under British tax law, a LLP is not regarded as a taxable person in its own right (and accordingly, is not required to obtain a taxpayer registration number in Scotland (UK)), but the profits derived by a LLP are taxable in the hands of its partners according to their country of residence, in the proportion of their interests in the LLP;
– LLP is not liable to taxation in Scotland (UK), and if the source of income, partners and a company’s place of management are outside the UK, LLP is not obliged to submit any declarations to the HMRC, but should submit annual report to the Registrar of Companies;
– The legislation on Scottish LLP companies does not consider a status of shareholders;
– There is no paid up capital in a LLP Company;
– Scottish LLP companies with non-resident partners are not regarded as resident for tax purposes in the UK and therefore are not entitled to take advantage of international Double Taxation agreements concluded by the UK with other countries. In this way, the assets or profits of a LLP can, without any additional tax liability, be reflected on its annual financial statements, which can be called up for inspection when incorporating subsidiaries or obtaining a bank loan, for example;