The following Tax guidance note Produced in partnership with Ceinwen Rees of Macfarlanes provides comprehensive and up to date legal information covering:
This Practice Note considers some of the tax issues that arise when structuring a private equity acquisition that has both UK and offshore elements.
There are many reasons to use offshore entities through which to structure acquisitions, even when such acquisitions are of onshore targets. Often the structure is to accommodate investors; for example, UK resident non-domiciled investors in a UK-based fund may wish to take advantage of the remittance basis of UK taxation in relation to their distributions from the fund. More generally, some offshore structures can help prevent double taxation arising in the acquisition structure and at the investor level.
Many of the issues arising in an acquisition involving offshore elements are the same as, or similar to, those arising in a purely UK context. For a full description of these UK issues, see Practice Note: Buyouts—tax issues for the acquisition group.
One of the principal concerns is to ensure that there is a tax-efficient exit mechanism put in place. This can be complicated because the form of the exit will be unknown when structuring the acquisition (eg whether the exit will be by way of sale or IPO, and whether there may be a 'dividend recap' along the way).
This Practice Note focuses more on the end of the investment’s life rather than the beginning. The issues considered are:
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