I am an e-commerce business, but where am I trading from?
As it becomes more common for businesses to look at markets and opportunities on a global scale and indeed structure their operations in the same way with shared resources, it becomes more and more difficult to definitively establish where the trade is actually carried out.
There are less physical indicators for a technology business; even servers are more rare as cloud based solutions are increasingly more popular, people are more mobile and more importantly have varied roles in the trade. The wider press has picked up this issue with the spotlight on the tax affairs of Google and Amazon for example but we are regularly discussing these questions with our SME clients as they face the same issues.
With any technology company structuring the business at an early stage is important for lots of reasons, where is the Intellectual property actually held, which part of the business is actually leading the research and development? Who in the organisation is negotiating and concluding contracts? In some cases who do my customers want to trade with? All these issues need to be taken into account to make sure there are no hidden tax exposures, any reliefs are maximised and the business is well prepared for any questions arising when looking for an exit.
The answers are not necessarily black and white but we would like to think we can at least help clients make an informed choice on structuring to fit the best needs of the business. In any event it is not an issue that is going to get easier going forward.