We have been offered additional work by one of our clients based in America.
We currently buy advertisement space for them in Europe and we have been approached to handle their USA operation.
Would anyone be able to advise on the tax implications of buying space in the USA from the UK and then invoicing the USA?
The US Co. that will be invoiced will most likely be requesting a W-8BEN-E or 1042S from the UK Co. The US source income paid for the services maybe withheld at 30%. The UK Co. will have a 1120-F (foreign corporate tax return) filing requirement, on this form they can deduct their expenses from the income they receive from the US source amounts and will be taxed at standard US corporate rates on their US sourced income.
Key note- It is not only the source of income that triggers the filing requirement, it is that it is effectively connected US trade or business income. If UK Co. are buying US spaces as a service and selling it to the US for a profit then this is US trade or business, they do not need to have an office in the US to trigger the filing requirement.
Hope that helps!