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Companies receiving overseas dividends

This year’s Finance Act provides exemption from UK tax on overseas dividends with effect from 1 July 2009. The position is complicated, with different exemptions and pre-conditions plus the inevitable anti-avoidance legislation. One key point is that the exemption does not extend to branch profits. Going forward, therefore, the structure for new ventures will need careful consideration to reduce UK tax.

There are different regimes for small and large companies (large companies are defined as having more than 250 employees and turnover or balance sheet value of more than £10 million). Broadly, most 'normal' dividends will be exempt.

The provisions are welcome but do they need to be so complicated!

Cathy Corns is a tax adviser and a partner at Mercer & Hole. The views given in this blog are personal to the author.

 

 

Date: 19th August, 2009
Author: Cathy Corns

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