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A Step Forward for a Corporate Re-domiciliation Regime for the UK

On 12 April 2022, the UK Government published a summary of responses to the consultation on a corporate re-domiciliation regime. We have previously covered the proposed consultation when it was announced as part of the UK Government’s Autumn Budget 2021. The consultation ran from 27 October 2021 to 7 January 2022.

In the summary of responses, the UK Government reaffirmed its commitment to the introduction of a corporate re-domiciliation regime. This would bring the UK in line with other jurisdictions such as Australia, Canada, Singapore, New Zealand and Singapore and a number of U.S. states.

It was noted in the summary of responses that respondents were broadly supportive of such a regime. However, as the consultation was focused on the principles of a re-domiciliation regime, respondents were understandably keen to receive further details on the design of the regime and to better understand how such a regime would work in practice. There were a number of key points raised in the summary of responses that dealt with, among other things, entry criteria, taxation and the operation of the regime on a two-way basis. We have explored these points in the paragraphs below.  

As a high-level consideration, a key takeaway from the summary of responses is that many respondents noted that the proposed corporate re-domiciliation regime would be insufficient, by itself, to attract overseas companies to the UK and that the broader business environment (both domestic and international) would likely be the main driver for re-domiciliation into the UK.  

Entry criteria

As regards entry criteria, the “overwhelming majority” of respondents agreed with the UK Government that an economic substance test was not necessary, particularly given that no such requirement currently applies to UK companies. Similarly, there was also consensus that the regime should be open to a wide spectrum of bodies corporate that are comparable with UK corporate entities which are currently permitted, and that the regime should not be limited to collective investment vehicles.  


From a taxation perspective, a number of key tax issues were raised in the consultation process. In relation to the taxation of re-domiciled companies, most respondents favoured treating a company that re-domiciles to the UK as UK tax resident (subject to any relevant double tax treaty) so as to ensure parity with companies originally incorporated in the UK. Most respondents favoured treating a company that re-domiciles from the UK as ceasing to be UK tax resident (subject to the company’s central management and control being outside the UK).

In relation to loss importation, the summary of responses noted that the general view was that the potential for an inward re-domiciled company being able to utilise existing losses was not a new risk on the basis that a company can already become UK tax resident by moving its “central management and control” to the UK, regardless of the company’s accrued losses. As such, it was reported that current protections should be sufficient to address this risk.

The treatment of capital gains and intangible asset base cost on inward re-domiciliation also forms a key component of the tax issues arising in the context of re-domiciliation. Whilst the UK Government has identified different aspects of the current taxation of asset transfers based on current UK tax provisions (including whether to use market value, accounting value, or historical base cost), there was no clear consensus as to the most appropriate way to deal with this issue.  

Re-domiciliation also has potential tax consequences for the UK tax liabilities of directors and shareholders of re-domiciling companies, particularly in relation to the situs of shares or securities for inheritance tax purposes. Respondents suggested that specific exemptions and deferral provisions should be introduced to minimise the tax impact for such individuals.

Stamp taxes and VAT also featured as part of the consultation, with it being noted in both instances that further work would be required to address the various issues that may arise in the context of companies re-domiciling into or out of the UK.  

A two-way regime

One of the key components of the consultation concerned whether a re-domiciliation regime should permit both inbound and outbound re-domiciliation. In the summary of responses, the UK Government noted that the majority of respondents supported a two-way regime, including for the purposes of reciprocity which may otherwise prevent an outgoing jurisdiction permitting re-domiciliation into the UK if the UK did not itself allow UK companies to re-domicile overseas. Notwithstanding the support for a two-way regime, the UK Government did not commit to whether outbound re-domiciliation would be part of the UK’s regime.  

Next steps

Further refinements to the proposed corporate re-domiciliation regime, including additional public consultations, are expected given that the consultation process to date simply represented the early stages of the policy development process. As such, it remains to be seen how the UK Government will address each of the issues raised in the summary of responses and navigate through the variety of proposals to address each issue. 

Key Contacts

Adam Blakemore
T. +44 (0) 20 7170 8697

Linda Z. Swartz
T. +1 212 504 6062

Jon Brose
T. +1 212 504 6376

Andrew Carlon
T. +1 212 504 6378

Mark P. Howe
T. +1 202 862 2236

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