Readers’ forum: Italian job

A client who intends to carry out consultancy work in Italy. The sales in a 12-month period will exceed the VAT registration threshold. I am satisfied there is no need to VAT register the business in the UK because all the work will be carried out in Italy.

I would usually register the business as a limited company with the sole director and shareholder receiving salaries and dividends to be taxed in the UK subject to tax residency status and claiming double taxation relief if applicable. Corporation tax would also be paid in the UK. However the Italian accountant is insisting that the business be set up as a sole trade otherwise the company will have an establishment in Italy and will be liable to pay company tax there. On the other hand my understanding ...