The following Corporation Tax guidance note Produced by Tolley in association with Anne Fairpo provides comprehensive and up to date tax information covering:
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 make it preferable for a company to be incorporated in the UK (for example, because the process of incorporation is faster and simpler in the UK than in many other countries) 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.
There are a number of ways in which a company can transfer its tax residence from the UK to another 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.
The company may cease to be resident in the UK under the tie-breaker article in the treaty. Such an article might 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 is transferred to the other country
The place of effective management will not necessarily be the same as the location of central management and control.
Another form of the tie-breaker article states that the tax authorities of the two countries can determine
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