With recent changes in international tax planning and the need to look further afield when deciding the most suitable jurisdiction for structuring purposes, the UK has positioned itself as an important centre to consider. In addition to having a good international reputation, political stability and being a member of the EU, the UK can offer the following potential advantages:
• A wide tax treaty network – over 100 double taxation treaties.
• The tax treaty network enables dividends from many countries to be received free of tax in the UK (with the exception of dividends from tax haven locations).
• Unilateral tax relief available for foreign tax suffered on overseas source income if treaty relief is not available.
• No withholding tax on dividends from the UK.
• UK companies can benefit from the EU Parent/Subsidiary directive such that withholding taxes on dividends between the UK and EU countries can be eliminated.
• Capital gains exemption in most cases where a UK company owns at least 10% of the share capital of a trading company or trading group under the ‘substantial shareholdings’ regime.
• Falling Corporation Tax rates – this has reduced considerably over recent years and is due to fall to a competitive 20% from 2014.
• Losses can be carried forward against profits of future tax years, or set off against profits of the same or previous year.
• Foreign tax paid in excess of UK Corporation Tax can, within limits, be carried forward or carried back to be used in the three preceding years. Alternatively it can be deducted as an expense in arriving at the foreign income or capital gains liable to corporation tax.
• There is no capital or stamp duty on company formation.
Whilst there are a number of advantages as mentioned above, it is important to also consider the following:
• The controlled foreign company regime. This has recently been softened in its effect, but is subject to rules that are somewhat complex and detailed.
• Transfer pricing regime.
• Thin capital rules.
• Debt cap rules.
• The capital gains advantages of selling a subsidiary company does not apply to non-trading companies.
Other general factors:
> There is no minimum share capital
> Audit requirements do not apply to the following:
• Companies with an annual turnover not exceeding £6.5m
• Companies with assets on their balance sheet totalling no more than £3.26m
• Companies with less than 50 employees
> Ease of establishment – off the shelf companies are available and new incorporations can be completed within 24 hours.
For further information, please contact:
Vistra UK Limited: David Rudge | Managing Director | firstname.lastname@example.org
Compliments of EACCNY Member Vistra