A good reason to relocate to the UK is to take advantage of the UK company as a highly tax efficient investment holding vehicle for the receipt of foreign dividends. Sovereign considers client requirements individually with a view to proposing a bespoke solution, but the following considerations generally apply.
Since 2009, dividends received by UK companies from foreign-registered subsidiary companies have generally been exempt from UK corporation tax. Further, by utilising the UK’s network of over 100 double tax treaties, UK companies can also mitigate source withholding tax on the overseas dividend. If the UK company is itself owned by a further company, even an overseas entity, the dividend income received by the UK company can be paid to its parent without any dividend withholding tax.
The Substantial Shareholdings Exemption (SSE) rules also provide an exemption from capital gains for disposals of shares by companies that meet certain conditions. If a UK company owns a group of active subsidiaries (at least two) and one of these is sold, the resulting capital gain arising should not be subject to UK tax.
The combination of the UK’s DTA network and attractive holding company regime, together with the high status in which the UK company is perceived, represent compelling reasons for using the UK to establish an international headquarters. This can prove hugely beneficial when considering business expansion worldwide.