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  • Brexit planning guide

    UK as holding company location

UK as holding company location

The UK is an attractive location for holding companies and, for many reasons, it is likely to remain an attractive location for holding companies after the UK has formally left the EU.

The UK has a well-developed legal system and a strong set of financial governance regulations.

The UK tax system is mature, transparent and complies with international tax initiatives such as Base Erosion and Profit Shifting (BEPS), where the UK has been an important contributor and an early adopter.

The UK imposes few withholding tax (WHT) obligations when businesses make payments to persons outside the UK.

Dividends payable by a UK company are not subject to WHT but annual interest and royalties are. While WHT applies to interest, if the debt is listed as a Eurobond a specific UK exemption from WHT applies.

Royalties on intangible property such as tradenames and trademarks are subject to WHT.

The UK has an extensive range of bi-lateral Double Tax Agreements (DTA) with c130 countries, which may grant full and or partial relief from WHT on payments to / from the UK. In addition, the UK gives credit relief for overseas taxes to avoid double taxation either via a DTA or by unilateral relief.

Dividends received by a UK company are generally exempt from UK tax as are gains arising on the disposal of a trading subsidiary.

The UK extensively amended its Controlled Foreign Company (CFC) legislation in 2012 to ensure that profits earned outside the UK are only taxed if they represent a diversion of profits from the UK.

The loss of the EU directives may mean payments of dividends, interest and royalties from a EU ‘subsidiary’ to its UK parent will be subject to WHT of the paying country. Where the UK has a DTA with that EU country the WHT may be fully or partially mitigated.

Download our guide to read more on these issues:

  • EC directives and withholding taxes 
  • Matrix of withholding taxes in the EU 
  • UK taxation of dividends 
  • Double tax relief 
  • UK exemption on disposal of shares 
  • Controlled Foreign Companies 
  • Foreign exchange and hedging 
  • Business restructuring 
  • Holding companies - VAT issues 
Download our guide