Do I Need a Local Entity to Sell Abroad? A Guide for UK Companies

When a UK company starts selling internationally, the instinct is often to either stay entirely 'cross-border' to save cost, or to rush into setting up a local subsidiary to look 'official'. Neither is always right.

This guide outlines the common structures for international sales. Note that this is general commercial information and does not constitute legal or tax advice. You must consult qualified professionals and check current GOV.UK guidance for your specific situation.

Evans Sales Consultancy helps businesses build the commercial side of these structures. A market entry project starts from From £3,950 + VAT per month + 2.5% commission, helping you validate the market before you commit to the cost of a local entity.

1. Selling Direct (Cross-Border)

You sell from your UK company, invoice in GBP or local currency, and ship from the UK. This is the lowest-cost entry point but can be a barrier for buyers who do not want to deal with imports, duties, or long lead times.

2. Using Agents and Distributors

In many cases, the distributor or agent is the 'local entity'. The distributor buys the goods and handles all local compliance and tax. This is often the most sensible first step for a UK SME, as it offloads the administrative burden to a local expert.

3. Branch vs Subsidiary

• Branch: An extension of your UK company. It is simpler to set up but usually creates a 'Permanent Establishment', meaning your UK company may be liable for tax in that country on the branch's profits.
• Subsidiary: A separate legal entity (e.g., a US Inc or a German GmbH) owned by your UK parent company. It provides better liability protection and is often preferred by large local customers who only want to contract with local companies.

4. The Employer of Record (EOR) Model

If you need a local salesperson but do not want to set up a company yet, an EOR (like Deel or Remote) can 'employ' them on your behalf. They handle the local payroll and compliance, while you manage the employee's daily work. This is a common middle ground for high-growth tech firms.

Decision Drivers

Next Steps

Before you incorporate, validate. Use the first six months to prove there is enough demand to justify the £5k-£15k annual cost of maintaining even a simple local subsidiary. Many companies find that a well-managed distributor network removes the need for a local entity entirely.

For more on market selection, see our guide on how-to-research-a-new-export-market.