---
title: "One director, two countries: where is your company really tax resident?"
description: Is your company UK tax resident? For sole directors, it often depends on where you live, not where it’s registered. And what changes if you move abroad?
---

[blog](https://esxr.co.uk/blog)

# [One director, two countries: where is your company really tax resident?](https://esxr.co.uk/blog/one-director-two-countries-where-is-your-company-really-tax-resident)

 Written by [Dean Shepherd CTA FMAAT, Chartered Tax Adviser, ~30 years experience](https://esxr.co.uk/blog/author/dean-shepherd) | Oct 27, 2026, 8:58:06 AM

Over the past few months I’ve had a run of conversations with business owners whose lives have gone international. Some have set up a company overseas, often in Dubai, while still living in the UK. Others are moving abroad and want to keep running their UK company from their new home.

Almost all of them start from the same assumption: a company is taxed where it’s registered. That’s only half true, and the other half can be expensive.

A recent tribunal case shows how expensive. In *Cogefin (Bermuda) Ltd v HMRC*, the company was incorporated in Bermuda and had Bermudian professional directors, but the First-tier Tribunal found its central management and control was exercised in the UK, making it UK resident for corporation tax purposes for many years. The tribunal decided the directors had in effect handed their decision-making to a UK-resident individual, and were asked to sign or approve things after the real decisions had already been made.

Cogefin had a whole offshore board and still lost. If you are the only director of your company, you have no board to point to at all. So it’s worth understanding how this works.

### Two ways a company becomes UK resident

UK tax law has two tests, and passing either one makes a company UK resident.

The first is incorporation. If your company was incorporated in the UK, it is UK resident under UK law, wherever you live and whatever you do.

The second is central management and control, usually shortened to CMC. A company incorporated anywhere else in the world is UK resident if its CMC is in the UK. The test goes back more than a century, to a 1906 case about a South African diamond company. The courts said that a company lives where its real business is directed from.

CMC is about the highest level of decision-making: strategy, major contracts, borrowing, investment, whether to pay a dividend. It isn’t the day-to-day running of the business. It is also a question of fact. What matters is where those decisions are actually made, not where the paperwork says they are made. 

### If you’re the only director, the company tends to live where you do

This is the part most people miss.

In a larger business, deciding where CMC sits can mean weighing up a board, its committees and a shareholder in the background. With one director, the analysis is usually much simpler. The big decisions are made by you, wherever you are when you make them.

If you set prices, sign the major contract and decide to pay yourself a dividend from your laptop at the kitchen table in Kent, that is where your company is being managed and controlled. Flying out for a “board meeting” twice a year doesn’t change it. Nor does a registered office address in a free zone or a nominee service provider. If anything, those can make things look worse, because they show that someone thought about the issue but didn’t change the reality.

### Scenario one: an overseas company run from the UK

You live in the UK, but your company is incorporated somewhere else. Perhaps you set it up because the corporate tax rate there is low, or because a client or adviser suggested it.

If you are making the decisions from the UK, the company is very likely UK resident under the CMC test. That has several consequences.

It is liable to UK corporation tax on its worldwide profits, not just on what it earns from UK customers. It should have told HMRC it was chargeable to corporation tax, filed returns and paid tax, potentially for every year since it started. If it hasn’t, HMRC can raise assessments for past years, with interest and penalties on top. In Cogefin, the tribunal found no reasonable excuse for failing to notify HMRC and held that the loss of tax was brought about carelessly. A careless finding matters, because it lets HMRC reach back six years rather than four.

The other country may also treat the company as resident. In that case a double tax treaty may decide which country wins. If the treaty awards residence to the other country, UK law then treats the company as non-UK resident for corporation tax. But not every country has a treaty with the UK, and Bermuda has no comprehensive treaty with the UK, so Cogefin had no treaty protection to fall back on.

Even if the company isn’t UK resident, it can still have a UK permanent establishment, and so a UK tax bill, if you are habitually doing its business and concluding its contracts from here.

Then there’s you personally. You’re UK resident, so the dividends you take are taxed in the UK anyway. Separate anti-avoidance rules can also tax you directly on the income of an overseas company you have set up. The “0% company” rarely delivers the result people hope for while its owner lives in the UK.

### Scenario two: a UK company run from abroad

You’re moving overseas and want to keep your UK company, perhaps because your clients are here, or because it has a track record and a bank account you don’t want to lose.

Under UK law, nothing changes. A UK-incorporated company stays UK resident wherever its director lives.

But your new country may have its own view. Many countries, including the UAE under its corporate tax regime, treat a foreign company as resident there if it is effectively managed from there. If you’re running the company from Dubai, it may be UK resident because of where it was incorporated and also UAE resident because of where it’s effectively managed. That’s dual residence, and the treaty has to resolve it.

Treaties don’t all resolve it the same way. Older treaties often award residence to the country where the company’s “place of effective management” is. Many newer ones, including the UK’s treaty with the UAE, don’t decide automatically at all. Under the UK–UAE treaty, HMRC and the UAE Ministry of Finance must negotiate case by case, which can take years. Until they agree, the company is shut out of most treaty benefits and can be taxed in both countries.

If the outcome is that the UK keeps the company, it carries on paying UK corporation tax on its worldwide profits, with credit for any foreign tax paid.

If the other country wins, the company has in effect emigrated. That’s a taxable event in the UK. The company is treated as selling its assets at market value on the day it leaves, and an exit charge can fall due on any gains, including on goodwill and other intangibles. It must also notify HMRC in advance and agree how that tax will be paid. Failing to do so carries penalties.

Two other traps here. Working from home abroad can give your UK company a permanent establishment in your new country, and so a tax bill there. And residence can drift back. If you spend long stretches in the UK and make the big decisions while you’re here, you can pull CMC back with you.

### And then there’s you

Your own position is a separate question from your company’s, and it needs its own planning.

Your personal residence is decided by the statutory residence test, and leaving the UK properly takes more than a one-way ticket. If you continue to draw a director’s salary or fees from your UK company, most treaties let the UK keep taxing directors’ fees, so PAYE may well continue. Dividends paid to a non-resident shareholder usually carry no further UK tax.

But watch the five-year rule. If you return to the UK within five years, dividends you took from your company while abroad can be taxed in the year you come back, to the extent they were paid out of profits built up before you left. Taking a large dividend in your first year in the sun, then returning in year four, is exactly the pattern these rules are designed to catch.

Finally, think about your National Insurance record and your state pension. Check what voluntary contribution options are open to you before you go.

### What I’d do before you move (or set anything up)

- **Decide first.** Settle where you want the company to be resident before you move or incorporate, not after HMRC asks.
- **Check the specific treaty.** Read the treaty between the UK and the country concerned, especially how it treats a company resident in both.
- **Model the exit charge.** If the plan involves the company leaving the UK, know the cost before you go.
- **Keep evidence.** Record where decisions are actually made: emails, calendars, travel records, and minutes that reflect what really happened. Cogefin was decided on the correspondence, not on the minutes.
- **Review every year.** Lives change, and residence can quietly change with them.

 

*This article is a general summary of the law at the time of writing and isn’t advice on your own circumstances.*

[View full post](https://esxr.co.uk/blog/one-director-two-countries-where-is-your-company-really-tax-resident)

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