Company migration or corporate inversion—how to change tax residence in practice

The following Tax practice note provides comprehensive and up to date legal information covering:

  • Company migration or corporate inversion—how to change tax residence in practice
  • Direct emigration of a UK tax resident company
  • No double tax treaty/no double tax treaty tie breaker clause
  • Double tax treaty with tie breaker clause
  • Direct emigration—UK exit charges and obligation to notify HMRC
  • Corporate inversion of a group of companies with a UK parent
  • Redomiciliation
  • Migrating to the UK

Company migration or corporate inversion—how to change tax residence in practice

Migration involves a change in tax residence of a company. A company may decide to migrate for a variety of reasons. These may relate to its tax position in its jurisdiction of residence or its ability to claim tax reliefs under double tax treaties (DTTs). Alternatively, changes in business or management structure of a company may make it necessary or advantageous to change its tax residence.

For an explanation and comparison of the considerations when choosing a tax jurisdiction in which to locate the holding company of a corporate group, see Practice Note: How to choose a holding company jurisdiction—tax considerations.

In practice, there are different ways in which a UK tax resident company (or group of companies) might migrate from the UK (or reorganise itself so as to achieve a similar result from a tax perspective). As explained further below, these include:

  1. direct emigration—where a UK tax resident company shifts its tax residence outside of the UK, and

  2. corporate inversion—where a new, non-UK resident, holding company is inserted above the existing UK parent company of a corporate group

This Practice Note also briefly explains how and why a non-UK company might migrate to the UK by becoming UK tax resident.

The UK corporation tax exit charges arising as a result of direct emigration, and post-migration UK

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