There have been a significant number of high-profile
transactions where UK tax resident companies have become new
holding companies of multinational groups. In 2013, LyondellBassel
Industries NV (market capitalization: $49 billion) moved to the UK,
and Fiat Industrial and CNH Global merged and established UK
residence. In 2014, Fiat, Chrysler, Omnicom, and Publicis announced
similar transactions.
The UK has established itself as a very attractive holding company
jurisdiction. Various changes to the UK rules (e.g., exemptions for
dividends received, amendments to UK CFC rules) and existing
features of the UK (no withholding tax on dividends, wide treaty
network) make it a favorable environment in which to operate. Just
as important, UK company law is flexible and familiar for common
law jurisdictions. A number of these transactions have used EU
style mergers to redomicile the company for corporate law purposes.
Although the UK does not have a domestic merger regime, it has
adopted legislation to confirm with the EU mergers directive, which
allows UK companies to merge into EU companies or vice versa. We
would expect more of these transactions to be announced in the
future. Significant acquisitions/mergers provide a compelling
rationale for redomiciliation, especially where neither of the
companies involved wants to be perceived as becoming a subsidiary
of the other, and both would prefer to find a neutral third party
jurisdiction.
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