1. ITax presentation Expanding a business into the UK San Francisco – September 19, 2013 Presented by – Christopher Owens Tax Partner, nortons UK

2. ABOUT THE SPEAKER Christopher Owens, Tax Partner, nortons UK Christopher has specialised in tax since 1980. He spent 11 years with EY where he looked after the Thames Valley office’s largest owner managed businesses with international subsidiaries. Following this he went on to become senior corporation tax partner at Brooking Knowles and Lawrence, a mid-tier UK firm, advising shareholders on exit planning, handling tax on company sales & purchases and continuing to deal with international companies. At nortons he heads up the tax practice and spends much of his time assisting US companies set up in the UK. Nortons is a founder member of an association of independent accounting firms called NIS Global and has a team of specialist advisors who set up and manage international projects.

3. 3 Rates of UK taxation What is a taxable presence Branch or subsidiary Transfer pricing Employees Taxation of non-domiciliaries TODAY’S SESSION www.nisglobal.com

4. 4 RATES OF UK TAXATION: CORPORATE www.nisglobal.com 200730%201224% 2008-201028%201323% 201126%201421% ?2015?20%

5. 5 Income Tax Personal allowance for most£9,440 (withdrawn at £100,000) RATES OF UK TAXATION: PERSONAL 2013-14 www.nisglobal.com 1-32,01020% 32,011 – 150,00040% Over 150,00045%

6. 6 National Insurance (Social Security) on earnings (usual rate) RATES OF UK TAXATION: PERSONAL 2013-14 www.nisglobal.com EMPLOYEE Primary threshold£7,755- Upper earnings limit£41,45012% Earnings above £41,4502% EMPLOYER Earnings above £7,69613.8%

7. 7 An office or place of business Part of an employee’s home Exempt PEs:- Article 5 of the DTT, storage, display or delivery of goods, collecting information, agent of independent status WHAT IS A PE (PERMANENT ESTABLISHMENT? www.nisglobal.com

8. 8 Branch is less formal, accounts on public record US intermediate holding company UK Limited company can ring fence liabilities Costs/hassle of ceasing – there is an entity BRANCH OF THE US OR A SUBSIDIARY? www.nisglobal.com

9. 9 Commercially driven – who is making sales? Buy/sell Cost plus METHOD OF REMUNERATING THE UK PRESENCE www.nisglobal.com

10. 10 TRANSFER PRICING www.nisglobal.com WORLDWIDESmallMediumLarge Employees<50<250 AND EITHER Sales OR <euros 10m <euros 50m Gross Assets<euros 10m <euros 43m

11. 11 Essential to obtain separate VAT advice A tax on supplies (not payments/profits) UK Standard rate 20% UK Zero rate 0% UK Registration limit £79,000 For goods, importer of record important Customs duties separate to VAT A BRIEF OVERVIEW OF VAT (SALES TAX) www.nisglobal.com

12. 12 Goods in free circulation Goods & services different B2B and B2C different Applies to US companies making supplies in UK Documentation/systems A BRIEF OVERVIEW OF VAT (SALES TAX) www.nisglobal.com

13. 13 Work permits Social security Pension contributions Insurances Typical benefits – automobile life cover pension scheme holidays EMPLOYEE ISSUES www.nisglobal.com

14. 14 Deduction from profits on exercise Consider cost in UK accounts Payroll requirements NIC joint elections STOCK OPTIONS - COMPANY www.nisglobal.com

15. 15 US scheme – unapproved for UK purposes Income tax + national insurance EMI scheme – can be sub-plan <250 ‘ees worldwide <£30m aggregate gross assets w/wide Max value £250k per employee STOCK OPTIONS - EMPLOYEE www.nisglobal.com

16. 16 Residence rules changed from April 2013 Remittance basis UK > 7/9 years £30,000 UK > 12/14 years £50,000 Duties performed in the UK taxable NON-DOMICILED INDIVIDUALS (non-doms) www.nisglobal.com

17. 17 Consider split pay if no need to remit to UK Take an overview of employee’s total liability Payroll obligation in overseas territory? PE in overseas territory? DUTIES OUTSIDE THE UK www.nisglobal.com

18. 18 UK tax rates amongst the lowest in the EU Look beyond the headline rate Favourable social security rates and employment law 30% not uncommon elsewhere Before granting stock options to UK hires: consider EMI approved scheme and joint NI elections Buy/sell or cost plus – where are sales made? PE risk and payroll obligations caused by employees Obtain VAT advice for UK, possibly all countries selling into Consider work permits early on SUMMARY/OVERVIEW www.nisglobal.com

19. 19 ANY QUESTIONS? www.nisglobal.com

20. 20 CONTACTS www.nisglobal.com NIS Global 100 Spear Street, Suite 1115 San Francisco, CA 94105 Telephone: (415) 250-3818 NIS Global Headquarters nortons Highlands House, Basingstoke Road, Spencers Wood, Reading, RG7 1NT United Kingdom Telephone: + 44 (0)118 976 8980 www.nisglobal.com Christopher Owens (Tax Partner) c.owens@nortonsgroup.com Pete Doyle (Nortons Partner, Global Business) p.doyle@nortonsgroup.com p.doyle@nortonsgroup.com Carmen Oliver (VP HR) c.oliver@nortonsgroup.com