In the global economy, governments compete aggressively to provide the best holding company regime. Multi-national groups, on the other hand, are actively comparing locations and look for certainty, simplicity and competitive tax rates - as a result, many jurisdictions have taken drastic steps to make their fiscal regimes more attractive.
During the past few years, the Netherlands and Luxembourg have taken the lead by operating a full participation exemption for capital gains and dividends. Other jurisdictions compete, for example, by the absence of controlled foreign company rules or by simplifying their tax regimes.
In the UK, the taxation of foreign profits is one of the hot topics for debate since HMRC started a review of the current regime during 2008. The review followed extensive litigation in the European Court of Justice and in the English domestic courts in which the UK’s credit system of taxation of foreign dividend income and the controlled foreign company rules were challenges as being in breach of community law. The UK now faces the challenge of bringing its rules in line with the EC Treaty and community law. Crucially, it has to make itself competitive as a holding company regime.
The current UK review suggests the introduction of an exemption regime and the current proposals indicate that an attractive foreign dividends package is likely to be introduced during 2009. This may result in a significant simplification the current regime. However, proposals for a "world wide debt cap" have also been tabled and this may introduce a level of complexity.
Companies contemplating redomiciliation due to the UK's current complex and far reaching regime, may in future be more inclined to remain in the UK. However, for many groups who were evaluating their redomiciliation, the CFC regime has been an important factor. While the UK government has indicated that it intends to review the current CFC rules, this may well remain unclear for some time. The significant developments in this regard during 2009 are likely to be those in the domestic courts following the ECJ judgment in Cadbury Schweppes in which the Court held that the CFC rules are not compatible with community law save in limited circumstances.
Topics to be covered are:
The UK as a holding company regime and key issues:
- Key features of the UK as a holding company regime
- Corporate residence and recent OECD developments
The new UK regime on taxation of foreign profits :
- Taxation of foreign dividends: exemption
- The restriction: implications of the new debt cap regime
- A new CFC regime?
- Impacts of the new rules
- Treasury and Transfer pricing issues
Current ECJ case law and its impact in the UK and the EU
How does the UK compare with other jurisdictions as a holding company?
- A panel discussion involving key speakers from popular holding company regimes including Luxembourg, Netherlands, Malta, Cyprus and Germany
Exit from the UK: migrations, inversions and structuring
- The available structures to facilitate exit
- The tax implications of exit and re-domiciliation
The Future?
The views of speakers from the UK Revenue authorities, industry and tax professionals on the future of the UK as a holding company regime
Glossary
