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Date of publication: January 2012
Dividends paid by subsidiary companies are subject to reduced or nil rates of withholding tax.
Holding company is not subject to tax on dividend income received.
Dividends paid out by holding company is not subject to withholding tax.
Sales of shares in subsidiary companies are tax free.
In the UK it is possible to achieve all of these aims.
|5 Withholding tax dividends*||nil||5-15%||Up to 25%||Up to 30%||30%|
*With the exception of the UK, all rates vary depending upon tax treaties and other conditions, and level of shareholding.
**Rates given will vary depending on location, size of company etc.
The tax treatment of international transactions is a complex issue – professional advice should always be sought.
Dividends can be received from most countries in the world at competitive rates of withholding taxes. This is due to the UK's extensive Tax Treaty network. Where withholding tax is deducted, tax relief may be available.
UK companies are not normally taxable on dividends received from subsidiaries in any jurisdiction, subject to certain conditions and limitations.
No Capital Gains Tax on sale of shares in a subsidiary (provided more than 10% ownership, and subject to some further restrictions).
Due to its extensive tax treaty network, the UK can also provide very competitive rates of withholding taxes on interest and royalties. Consideration must be given to non-conduit clauses in certain of the tax treaties.
This guide does not contain a full statement of the law and it does not constitute legal advice. Please seek legal advice if you have any questions about the information set out above.