There are three main tax considerations when a UK company makes an acquisition outside the UK. These are:
structure, ie whether to establish a new subsidiary to make the acquisition
finance, ie whether to fund the new subsidiary with debt or equity
whether to acquire assets or shares in the target business
The same considerations will apply when a foreign company makes an acquisition of a UK business.
For more in-depth guidance, see Tolley’s International Tax Planning Part B2 ‘Cross-border acquisitions’.
There are a number of different structures which a company can use to acquire a target business in another country. These structures are similar to those which are used when setting up a new business in another country.
See the Setting up overseas ― companies and Setting up overseas ― branch or subsidiary guidance notes.
This structure will exist if:
the acquiring company buys shares in the target company
the acquiring company establishes a new subsidiary to acquire assets of the target business
Diagram 1 ― subsidiary ― share acquisition:
If
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