UK multinationals planning a move offshore may need to think twice, as changes under the looming Finance Bill and the state of the UK economy are likely to dictate the potential benefits
As we await further developments relating to the taxation of foreign profits – particularly in the Finance Bill 2009, which will introduce a new tax exemption for virtually all overseas source dividends – will the new rules have any effect on UK multinationals wishing to migrate their headquarters offshore, particularly to Ireland? In the meantime, the UK economy has gone into recession and shockwaves are still being felt in relation to the November 2008 High Court decision that the UK’s system of taxing dividends from European Union (EU) subsidiaries was incompatible with European Community law, potentially leaving the Treasury £5bn out of pocket. Therefore, companies that have not already made protective claims pursuant to the High Court decision should consider doing so as soon as possible.
