All change: Corporate Re-Domiciliation to UK
Foreign companies will soon find it possible to move their domicile to and relocate to the UK, under government proposals facilitating ‘re-domiciliation’. The proposals for a new re-domiciliation regime, published as part of the recent Autumn Budget, are part of a government drive to strengthen the UK’s position in the global economy.
What is ‘re-domiciliation’?
Re-domiciliation will happen when a company which is presently incorporated in a foreign jurisdiction changes its place of incorporation of registration to the UK. The effect would be “maximum continuity over business operations” and make the administrative process easier than alternative methods of transferring to the UK.
Existing routes can be complex and expensive, as well as having adverse tax consequences for the business organisation. A consultation paper (link) singles out the risk of liabilities being crystalised – which can, for instance, prove a barrier to creating a UK holding company.
This begs the question: will foreign companies want to be re-domiciled?
Government says it wants to make it possible to increase the UK’s attractiveness and availability; modernise its legal framework; and believes it could bring increased investment and demand for professional services in the UK and improve corporate governance and transparency.
What’s proposed?
Under the proposed regime, a foreign entity would need to fulfil the relevant eligibility criteria to redomicile in the UK. The criteria proposed are:
· Authorisation from the departing country – the current place of incorporation must allow for re-domicilation and have complied with all legal requirements as to transfer of registration.
· Corporate form – the firm would be expected to be corporate to the extent that it is comparable with UK forms, as set out in its constitution
· Directors must be of “good standing” – no legal or enforcement action should be underway against them in their country of incorporation. This must be confirmed by the jurisdiction’s competent authority
· No national security risk or contrary to public interest – the application must be made in good faith and poses no national security or other risks
· Registration fee - There would be a registration fee for each application for re-domiciling. The consultation does not indicate what level this might be
· Reporting evidence – evidence of passing the first financial period to show track record before re-domiciling
· Solvency – the firm must be solvent and be a going concern, evidenced by a sworn declaration and independently audited in accordance with both local and UK requirements
· Wider impact report – the firm would be expected to provide a report explaining the full legal and economic impacts of the re-domiciliation and its implications for creditors, shareholders and key stakeholders.
The consultation closes on 7 January 2022.
If you have any concerns about the proposals and how they may work in practice, consider taking specialist legal advice from experience commercial solicitors.
If you would like us to cover an issue in the next NGM Tax Law Newsletter, we would be pleased to hear from you