ADVERTISING & MARKETING

Where an agency is taxed depends on where the work is performed and where the entity is resident. A UK limited company pays UK Corporation Tax on its profits, while a US LLC or corporation is taxed under IRS rules. If you have clients or a permanent establishment on both sides, the US-UK tax treaty helps allocate profits and prevent the same income being taxed twice.

Advertising and marketing are generally treated as services supplied where the customer belongs. For a business customer based in the US, the place of supply is usually outside the UK, so UK VAT is typically not charged. Rules differ for consumer clients and for digital advertising, so evidence of the customer’s status and location matters. Confirm treatment with an adviser before invoicing.

In the UK, the off-payroll working rules (IR35) can require the engager to assess whether a contractor working through their own company is effectively an employee for tax purposes. Medium and large businesses generally hold that responsibility. Getting status assessments wrong can create PAYE and National Insurance liabilities, so agencies should document each engagement carefully.

Ordinary advertising and campaign production costs are usually deductible business expenses in both jurisdictions when incurred wholly for the trade. In the UK they reduce Corporation Tax profits; in the US they are typically deductible under IRS rules. Certain film, animation, or video content may qualify for specific creative reliefs, so it is worth reviewing production spend against available schemes.

Payments to talent, models, and influencers may trigger withholding, reporting, and VAT considerations depending on where they are resident and where they perform. US-source payments to non-US persons can face withholding, while UK payments may involve PAYE or self-employment reporting. Treaty relief can reduce withholding where the recipient qualifies. Structuring contracts clearly helps determine the correct treatment.

There is no single right answer—it depends on where your clients, staff, and revenue sit. Opening a foreign entity or branch can create a taxable presence, payroll obligations, and transfer pricing requirements between related companies. We model the Corporation Tax, US federal and state tax, and treaty implications before you incorporate so the structure fits your growth plan rather than creating avoidable filings.