Incorporating a holding company in the UK to own subsidiaries elsewhere is very a common strategy for groups with international ambitions. Off late even medium sized businesses are growing global and, therefore, the rush for locating the ideal holding company jurisdiction is on. Whilst the initial choice may be driven by fiscal motivations the consequential tax implications could be critical. At a basic level participation exemption for gains and dividends from foreign subsidiaries is the key. Each jurisdiction may have its distinctive advantages and disadvantages but other key factors like political stability, legal systems, and availability of various resources always need due consideration.
The recent tax reforms have made UK an attractive location for locating your holding company. London’s continuing reputation as the global financial centre with a mid-way time-zone between the east and the west adds to its commercial attractiveness. But despite the commercial attractiveness the complexity of UK tax laws means that adequate planning is essential. Whilst a holding-subsidiary structure within the EU could take advantage of the EU parent-subsidiary and the Interest/Royalties directives there are several other serious tax issues that need to be considered. Some of these are:
- Treatment of interests, dividends and royalties received and paid in various jurisdictions
- Tax impact for the shareholders – taxation of dividends, capital gains taxes etc
- Headline corporation tax rates in various jurisdictions
- Deductibility of interest
- Stability of the tax regime
- Anti-avoidance rules
- Thin capitalization rules
- Capital gains tax on disposals of subsidiaries
- Controlled Foreign Company (CFC) legislation
- Tax treaty analysis involving the holding company jurisdiction with other countries
- Capital taxes, stamp duty tax etc on registration and transfer of shares
- Withholding tax on various outgoing payments in various jurisdictions including the UK
In fact we could help in a variety of ways, as you plan your global expansion:
- Structure: We could advise on an appropriate structure considering the UK tax laws and the corporate governance requirements of London stock exchanges, be that PLUS, AIM or the main market
- Taxation: We could provide comprehensive tax advice, taking in to consideration the UK corporation tax acts, legislation and rules, for a group contemplating a UK holding company structure with subsidiaries based within the EU or outside
- Incorporating companies
- Opening bank accounts
- Provide company secretarial services, and advice on corporate governance rules
- Finding various intermediaries and advisors for floating your stocks on the stock markets
- Preparing your statutory accounts
- Being your authorised representative in London for liaising with various agencies.
Please contact us for a free initial consultation
