Tax structuring

Most businesses grow into a structure rather than choose one. A second company is set up for a new activity, a building is bought personally because it was simpler at the time, the founder takes whatever mix of salary and dividend was suggested in the first year. Each step was reasonable; together they can leave profits taxed twice, losses stranded in the wrong entity, and a sale or a succession that costs far more than it needs to.

Tax structuring means reviewing that arrangement as a whole and deciding deliberately where activities, assets and income should sit. It concerns the owners as much as the companies, and the years ahead as much as the present:

• the rules on holding companies, and on the tax treatment of dividends and gains passing up through them;
• the rules on fiscal unity and group relief, and on combining the results of related companies;
• the rules on how an owner-director draws income — salary, dividends, interest or benefits in kind — and on how each is taxed;
• the rules on where a company is resident, when it has a permanent establishment elsewhere, and where its profits are taxed;
• the rules on where intellectual property is held, and on how the income it produces is taxed;
• the rules on funding a subsidiary with equity or with loans, and on the limits on interest paid within a group;
• the rules on moving a company, its assets or its owner to another country, and on the tax due on departure;
• the rules on cross-border arrangements that must be reported to the authorities before or as they are implemented;
• the rules on the tax cost of passing shares to the next generation, by gift or on death.

Our lawyers can support you with this.