The past few years have seen offshore tax planning come under increasing scrutiny, both in the UK and internationally. Traditionally, UK companies have used offshore locations to benefit from tax arbitrage and favourable tax treatment on disposal of investments. Offshore companies have often been used to hold interests in foreign companies or assets (including intangibles) or as service providers to group companies.
The key requirements for offshore entities is that they do not create incremental tax costs, that they benefit from tax exemption in respect of foreign income and that they also benefit from European Union (EU) directives and treaty networks.
