Tax issues underlie virtually every business formation, plan and transaction - whether domestic, international or cross-border. Tax laws and regulations are more than just considerations; they often drive business strategy, structure and deal consummation.
Dechert’s tax practice advises clients on the direct and indirect tax aspects of UK and cross-border transactions. In particular, we specialise in providing tax and structuring advice in relation to private equity transactions and with respect to clients in the investment funds/investment management industry. We also advise on corporate finance related matters, corporate M&A and commercial real estate transactions as well as executive compensation and incentivisation planning.
Imminent Brexit issues to consider
UK Holding Companies/EU groups: EU tax directives will no longer apply to UK businesses. Reliance will need to be placed on UK double tax treaties (DTTs) to avoid withholding taxes on interest and dividend payments between international EU groups involving a UK member. Not all DTTs eliminate withholding tax, so a review of relevant DTTs is essential.
Group Royalties: the loss of EU tax directives could also result in withholding tax applying to royalty payments for the use of intellectual property between related companies involving a UK member.
U.S. Double Tax Treaties: U.S. DTT benefits for U.S. businesses/those dealing with U.S. businesses could be lost due to the UK no longer being in the EU and the impact on the “derivative benefits” provisions. This could result in withholding tax arising on dividend, interest and royalty payments between U.S. entities with UK owners and entities based in the EU or EEA member states.
Brexit Restructurings: businesses should consider the tax implications of relocating operations and employees. Care needs to be taken to avoid triggering tax charges on capital gains or intangibles disposals and consideration should be given to post restructuring transfer pricing models. Advice should also be taken in relation to the tax laws of EU jurisdictions to which operations and employees are being transferred to. Some jurisdictions have amended their tax laws to anticipate tax restructurings following Brexit particularly in relation to the introduction of favourable personal tax regimes.
How Dechert can help
Dechert provides inventive tax solutions that meet the challenges and objectives of clients’ most sophisticated business dealings around the globe, from corporate transactions and restructurings, to financial transactions and fund formation and investing.