The government has published its response to its consultation ‘Corporate re-domiciliation’ which explores whether there is a need to make it easier for foreign-incorporated companies seeking to relocate to the UK to change their place of incorporation to the UK.

The Consultation made several proposals including:

  • Re-domiciled companies to be subject to the same rules/standards as UK-incorporated companies.
  • No economic substance test.
  • The current country of domicile allows such a transfer and its criteria must be met.
  • The entity must be a UK compatible corporate entity.
  • The move must not pose a security risk and not be contrary to the public interest.
  • The company must be solvent.

The consultation had just forty respondents, who broadly supported the proposed regime as being simpler than the current rules but noted that this alone would not be enough to attract overseas companies to the UK. Whilst seeking more details on the design of the regime most respondents supported:

  • A two-way regime allowing inward and outward re-domiciliation.
  • No economic substance test.
  • The same tax treatment for re-domiciled companies as for UK incorporated companies.
  • Flexibility balanced with sufficient but proportionate rigour, and appropriate checks.

There was no real consensus amongst respondents about the:

  • Types of companies (and their sectors) that might seek to re-domicile themselves in the UK or where they might currently be domiciled.
  • The level of demand there might be for UK re-domiciliation.
  • Economic benefits of re-domiciliation.

The overall view was that the attraction of such a regime will be significantly influenced by UK tax rates as compared to other jurisdictions with re-domiciliation regimes.

The government has confirmed that legislation will be introduced to implement the proposed regime, however more detailed engagement and analysis is first required with further consultation not being ruled out.

Useful guides on this topic

Companies: permanent establishment and residence
What are the rules for determining a company's country of residence? What is central management and control? When does a company create a permanent establishment in another country?

Offshore company holding UK residential property: tax issues
Is it still worth holding UK property via an offshore company? How are these properties taxed? Should I bring my offshore company into UK corporation tax? What are the tax issues of repatriation?

Profit Fragmentation
A summary of the Profit Fragmentation anti-avoidance rules introduced to tackle tax avoidance schemes that move UK profits outside the UK tax charge, resulting in significantly less tax being paid.

External link

Corporate Re-domiciliation Consultation Summary of Responses 

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