UK government plans to introduce re-domiciliation scheme | Hogan Lovells
[co-author: Tamsin Dow]
On October 27, 2021, HM Treasury, BEIS and HMRC released a consultation paper seeking views on proposed UK redomiciliation regime under which foreign incorporated companies could change their place of incorporation to the UK. United while maintaining their legal identity as a legal person. .
The legal systems of many jurisdictions around the world, including Canada, New Zealand, Singapore, some US states, Belgium, and Luxembourg, currently include regimes that allow businesses to “re-domiciliate” by moving their business. place of constitution from one jurisdiction to another while maintaining the same legal identity. This mechanism may have a number of practical and legal advantages over other alternatives for moving operations between jurisdictions, such as the creation of a new local entity and the transfer of the business and assets from one. foreign entity or the creation of a new local holding company and the transfer of shares in the foreign entity, each of which can often require significantly more work to implement and can lead to unwanted tax consequences.
The consultation aims to explore:
the benefits and demand for a UK re-domiciliation scheme;
appropriate entry criteria for corporate redomiciliation;
the merits of establishing an outward redomiciliation scheme (i.e. one which would allow UK businesses to re-domiciliate in another jurisdiction), and
the potential tax implications of setting up a re-domiciliation regime.
As the consultation paper states, the government clearly hopes that the new redomiciliation regime could strengthen the UK’s position as a global business hub, giving the UK corporate legal regime a new tool that is already benefiting other international jurisdictions and encouraging businesses to locate in Britain. At this point, however, it’s also clear that some of the key details, especially around tax implications and the checks needed to maintain corporate governance standards, remain to be worked out. These are likely to be critical to the success of the initiative.
The consultation ends on January 7, 2022.