UK Accountant for German Business Owners
For a German company, the first UK question is almost never the tax rate. It is subsidiary or branch — and it is a decision that is difficult and expensive to reverse. We advise on it before you commit, then run everything that follows.
Subsidiary or branch — the decision that actually matters
A UK limited company (a subsidiary of your German parent) and a UK permanent establishment of the German company itself are not variations on a theme. They are taxed differently, they file differently, and they carry very different transfer pricing consequences.
Broadly: a subsidiary is a separate legal entity with its own limited liability and its own corporation tax return, and it can be sold, financed or wound up on its own terms. A branch is your German company operating in the UK — the same legal entity, with the parent exposed, and with a set of questions about how much profit is properly attributable to the UK activity.
Which is right depends on your profit profile, your treaty position, whether you expect UK losses in the early years, and what you intend to do with the UK business in five years’ time. It is a decision to take before incorporation, not after.
The UK–Germany treaty, and why it is worth watching
The relationship is governed by the 2010 UK–Germany Double Taxation Convention, as amended by the 2014 and 2021 Protocols. It is a modern, generous treaty: it removes source taxation on interest and on royalties, and it provides reduced rates on dividends where the recipient is a corporate holder with a sufficient shareholding.
It is also, unusually, a treaty with a stated future. The Joint Declaration accompanying the 2021 Protocol records both governments’ intention to renegotiate the convention in light of the UK’s departure from the European Union. German owners who structured a UK holding on the assumption that today’s position is permanent should be reviewing that assumption rather than filing it away.
The same applies across the German-speaking market — with a trap. If your adviser is working from the 1969 UK–Austria convention, they are working from a treaty that HMRC removed as no longer in force in October 2025. The instrument that governs Austria is the 2018 convention, in force since March 2019.
Transfer pricing between the parent and the UK entity
Once a German group has a UK subsidiary, the intercompany relationship becomes a tax question in both countries. Management charges, financing, IP licences, shared services and the pricing of goods between the two entities all have to be set on arm’s-length terms and documented — and both HMRC and the German authorities have an interest in the answer.
This is the area where German groups most often arrive at us having done something reasonable but undocumented. Reasonable and undocumented is not a defence.
- Intercompany pricing policy and documentation
- Financing and thin capitalisation
- Management charges and shared services
- IP licensing between parent and UK entity
- Permanent establishment risk assessment
- Treaty claims under the UK–Germany convention
The ordinary work, done properly
Structure is the interesting part. Compliance is the part that generates penalties. We are appointed as your agent with HMRC and Companies House, so the deadlines sit in our calendar rather than yours.
- UK company formation and Companies House identity verification (ACSP)
- Corporation tax registration and CT600 filing
- VAT registration and returns
- UK payroll and PAYE for UK staff and secondees
- Bookkeeping, management accounts and year-end statutory accounts
- Confirmation statement and Companies House compliance
All of our work is carried out in English — the language of UK business, HMRC and Companies House — with professional German translation available so that nothing is lost.
See also: UK accountant for Germany · German-language hub · Austria · Switzerland · Set up a UK company from abroad
Frequently asked questions
Should my GmbH set up a UK subsidiary or a UK branch?
It depends on your profit profile, your treaty position, whether you expect early-year UK losses, and your longer-term plans for the UK business. A subsidiary is a separate UK company with its own limited liability and its own corporation tax return; a branch is the German company operating in the UK, with the parent exposed and profit attribution to resolve. The choice is difficult to reverse cheaply, so it should be taken before incorporation.
Is there a double taxation agreement between Germany and the UK?
Yes — the 2010 UK–Germany Double Taxation Convention, as amended by the 2014 and 2021 Protocols. It removes source taxation on interest and royalties and reduces the rate on dividends for qualifying corporate holders. The Joint Declaration accompanying the 2021 Protocol also records both governments’ intention to renegotiate the convention following the UK’s departure from the EU.
Can a German national be the director of a UK company?
Yes. There is no residence or nationality requirement to be a director or shareholder of a UK limited company. Since 18 November 2025, identity verification at Companies House is a legal requirement — TaxDigit is an Authorised Corporate Service Provider and can carry it out for you remotely.
Do we need transfer pricing documentation for our UK subsidiary?
If there are transactions between the German parent and the UK entity — management charges, financing, IP licences, shared services, goods — they must be on arm’s-length terms, and both tax authorities can ask you to demonstrate it. Reasonable but undocumented pricing is not a defence. We prepare the policy and the documentation.
Do you speak German?
Our team works in English, which is the language of UK business, HMRC and Companies House, and the language in which your UK filings must be prepared and defended. We provide professional German translation so that everything we do is explained to you clearly in German.
We already have a UK company. Can you take it over?
Yes. We take on existing UK entities regularly, and the first thing we usually find is unfinished Companies House identity verification and undocumented intercompany pricing. We are appointed as your agent with HMRC and Companies House and bring the position up to date.
Get the structure right the first time
A fixed annual fee, agreed up front. British technical work, explained clearly.
Tax, treaty and Companies House references last reviewed July 2026 against gov.uk and HMRC guidance. General information, not advice on your specific circumstances.