Tax issues for bond issuers
Tax issues for bond issuers

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

  • Tax issues for bond issuers
  • Loan relationships
  • Special rules if the bond is issued to a connected party
  • Withholding tax
  • Stamp taxes
  • VAT
  • FATCA and FTT

Tax issues for bond issuers

IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marks the end of the Brexit transition/implementation period entered into following the UK’s withdrawal from the EU. At this point in time (referred to in UK law as ‘IP completion day’), key transitional arrangements come to an end and significant changes begin to take effect across the UK’s legal regime. This document contains guidance on subjects impacted by these changes. Before continuing your research, see Practice Note: What does IP completion day mean for Tax?

When a UK resident company decides to issue a bond in order to raise debt finance, it should, among the many other commercial and legal issues that arise, consider the tax consequences for it of choosing the bond route, from issuing the bond in the first place, the ongoing servicing of the bond and redeeming (ie repaying) the bond at the end of its life. The main issues that will arise, and which are summarised in this note relate to:

  1. loan relationships

  2. withholding tax

  3. stamp taxes, and

  4. VAT

A bond issuer will also need to consider the impact of certain international developments such as Foreign Account Tax Compliance Act (FATCA) and the potential implementation of the EU financial transactions tax (FTT) (for which, see: FATCA and FTT below).

The taxation of bondholders will also be important for the

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