Question Holding company in the UK vs offshore

[Alphard]

I am a UK resident (although I migrated here, I was born in the EU) and currently have an affiliate marketing business with a UK company. I want to establish a holding company that will reinvest the extra capital into securities (shares, commodities, etc.) or reinvest it into new businesses. My idea was to do it in the UK, but I have a strong feeling that stuff in the UK will be pretty tough in the years ahead, and upcoming governments might tax the heck out of everyone in the future.

In a few words, although I feel pretty happy here for now, my circumstances might change, and I want to have a Plan B whenever I want to leave to make the process of moving me and my business as easy as possible. Moving my trading business will be pretty easy: it's just me, so if I move abroad, my business moves, and I can close down the company and open another one in the new place.

The issue is the holding company. If I start investing into assets and, say in 5 years I want to leave, I can do that but I will need to pay a hefty tax on the capital gains of these assets, before transferring the assets abroad.

Now, a tax advisor suggested me to open the holding company in jurisdictions such as Gibraltar, Jersey or Guernsey, but register it in the UK as a tax resident, so there is no issue for the UK as it's centrally managed in the UK. While I stay in the UK, I simply never sell assets, so I have no tax to pay. Whenever I will want to leave, I simply tell the UK tax authorities that this foreign company is no more tax resident in the UK, and there we go, job done.

Another option could be to form the holding in the UK, but once I leave offset the corporate tax I'd have to pay on capital gains for the transfer, with a series of invoices from the new foreign company.

What do you guys think? I wanted to hear some opinions of people with a different knowledge base.

 

[CyprusLawyer101]

I am a UK resident (although I migrated here, I was born in the EU) and currently have an affiliate marketing business with a UK company. I want to establish a holding company that will reinvest the extra capital into securities (shares, commodities, etc.) or reinvest it into new businesses. My idea was to do it in the UK, but I have a strong feeling that stuff in the UK will be pretty tough in the years ahead, and upcoming governments might tax the heck out of everyone in the future.

In a few words, although I feel pretty happy here for now, my circumstances might change, and I want to have a Plan B whenever I want to leave to make the process of moving me and my business as easy as possible. Moving my trading business will be pretty easy: it's just me, so if I move abroad, my business moves, and I can close down the company and open another one in the new place.

The issue is the holding company. If I start investing into assets and, say in 5 years I want to leave, I can do that but I will need to pay a hefty tax on the capital gains of these assets, before transferring the assets abroad.

Now, a tax advisor suggested me to open the holding company in jurisdictions such as Gibraltar, Jersey or Guernsey, but register it in the UK as a tax resident, so there is no issue for the UK as it's centrally managed in the UK. While I stay in the UK, I simply never sell assets, so I have no tax to pay. Whenever I will want to leave, I simply tell the UK tax authorities that this foreign company is no more tax resident in the UK, and there we go, job done.

Another option could be to form the holding in the UK, but once I leave offset the corporate tax I'd have to pay on capital gains for the transfer, with a series of invoices from the new foreign company.

What do you guys think? I wanted to hear some opinions of people with a different knowledge base.

As per the advisors suggestion if the company would be tax resident in UK, why then exit taxes wouldnt apply? Is there an exemption for such foreign companies who have tax resident in UK?
Cyprus is a good option as a holding company. You need a jurisdiction which will exempt or minimize taxes on income from abroad ( most traditional holding jurisdictions meet this ) and must also have a large number of double tax treaties which would provide for reduced withholding taxes when recieving income from your investments abroad, whether that is dividend income from companies or stocks, interest from bonds/other financing income or royalty income.

 

[Martin Everson]

My idea was to do it in the UK, but I have a strong feeling that stuff in the UK will be pretty tough in the years ahead, and upcoming governments might tax the heck out of everyone in the future.

UK tax laws change as often as Buckingham Palace guards my friend. Ask anyone who has invested in UK property via an offshore company etc. It is a certainty that unless they cut spending they will have to tax people to death.

As per the advisors suggestion if the company would be tax resident in UK, why then exit taxes wouldnt apply? Is there an exemption for such foreign companies who have tax resident in UK?

That's a good question. The principle is that if HMRC loses the ability to tax a company that was resident for tax purposes or had a Permanent Establishment then exit tax applies. But tax advisor should inform you.

What do you guys think? I wanted to hear some opinions of people with a different knowledge base.

The UK is too unstable (tax policy wise today) to plan something that will be tax effective even 1 year down the line. But basically any offshore holding structure that meets substance requirements and is operating at arms length may work as a long term solution.