This Practice Note focuses on the characteristics of the UK as a tax-efficient holding company jurisdiction for wholly-owned corporate subsidiaries and covers:

1. •

   residence and governance

2. •

   withholding tax on payments to a UK holding company

3. •

   tax on payments received by UK holding company, including:

   1. ◦

      corporation tax

   2. ◦

      the distributions exemption

   3. ◦

      the substantial shareholding exemption

   4. ◦

      interest deductibility, and

   5. ◦

      controlled foreign company (CFC) and other anti-avoidance rules

4. •

   withholding tax on payments by a UK holding company to shareholders, including on dividends or interest

5. •

   other tax considerations, including value added tax (VAT) and stamp duty

6. •

   complexity/stability of UK tax code

7. •

   engagement with UK tax authorities, and

8. •

   tax considerations on leaving the UK

For a summary of the tax issues relevant to the use of holding companies and the choice of holding company jurisdiction, as well as the general attributes of a tax efficient holding company, see Practice Note: Holding company jurisdictions—tax considerations.

As summarised