Outbound migration

By Tolley in association with Robert Langston of Saffery Champness
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The following Corporation Tax guidance note by Tolley in association with Robert Langston of Saffery Champness provides comprehensive and up to date tax information covering:

  • Outbound migration
  • Reasons for an outbound migration
  • Methods of outbound migration
  • Consequences of outbound migration
  • Exit charges
  • Incorporation of an overseas branch
  • International movements of capital
  • Further reading

Reasons for an outbound migration

Migration describes the situation when a company changes its tax residence. Some companies migrate from the UK overseas as a way of escaping UK taxation and taking advantage of lower tax rates.

Alternatively, commercial factors may require a company to be incorporated in the UK but be tax resident in another country, eg all the directors may be resident in that country.

In either case, it is necessary to consider the tax position of the new company.

See the Holding companies guidance note.

Methods of outbound migration

There are a number of ways in which a company can transfer its tax residence from the UK to another country.

Company incorporated in the UK and no double tax treaty is in place between the UK and the other country

The company will remain resident in the UK because it is incorporated in the UK. If it becomes resident in the other country under the tax rules there, it will be treated as a dual resident company.

CTA 2009, s 14
Company incorporated in the UK and double tax treaty is in place between the UK and the other country

The company may cease to be resident in the UK under the tie-breaker article in the treaty. Such an article will typically state that a company is treated as resident where its place of effective management is located, if it would otherwise be treated as resident in both countries. To effect a migration under this form of tie-breaker article, it is therefore necessary that:

  • the company becomes resident in the other country under the tax rules there
  • the place of effective management

More on Tax planning for international groups: