UK as International Holding Location post-Brexit

What are the implications of the Brexit for the UK as a premier location for international holding companies?

  • Participation Exemption: Inbound dividends received by a UK company are exempt from tax. This will continue after Brexit.
  • Capital Gains Tax: Disposals of substantial shareholdings in subsidiaries are exempt from UK corporation tax, provided certain conditions are met. This will not change after Brexit.
  • No Withholding Tax on Dividends: The UK does not levy withholding tax on outbound dividends paid from UK companies. This will not change.
  • No capital gains tax on the sale of shares in a UK company by non-UK residents. This will not be affected by the Brexit
  • Extensive network of double tax treaties minimizing Withholding Tax on Dividends, Interest and Royalties Paid to UK Companies. In most situations the rate of withholding tax is reduced to 5% and sometimes reduced to zero, provided certain conditions are met.
  • Post Brexit, UK companies might not have access to all of the EU directives, as the EU Parent/Subsidiary Directive, as well as the Interest and Royalties Directive, reducing the withholding tax to zero for many European countries. Further planning and claiming relief under the double tax agreements or normal domestic rate may be neccesary in the case of a ‘hard Brexit’, the effect will then be marginal.
  • No Minimum Paid Up Share Capital.
  • Profits of Overseas Branches. UK companies may elect for the profits of overseas branches to be exempt from UK tax. This will not change.
  • Research and Development and Patent Box Regimes. The UK offers attractive R&D and Patent Box regimes. This will not change.
  • The UK will continue as one of the leading capital markets.
  • Post-Brexit the UK may enact legislation to attract foreign investors and become even more competitive than it is today.
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