The UK as a holding company jurisdiction—tax considerations
Produced in partnership with Andrew Howard of Ropes & Gray
The UK as a holding company jurisdiction—tax considerations

The following Tax practice note produced in partnership with Andrew Howard of Ropes & Gray provides comprehensive and up to date legal information covering:

  • The UK as a holding company jurisdiction—tax considerations
  • Residence and governance
  • Mitigation of local jurisdiction withholding tax on payments to a UK holding company
  • No or low tax on payments received by a UK holding company
  • Low rate of corporate income tax
  • Participation exemptions—exemptions for distributions and capital gains
  • Interest deductibility
  • Anti-avoidance—the CFC rules
  • Mitigation of UK withholding tax on payments by a UK holding company to shareholders
  • Dividends
  • More...

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?

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

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