UK taxation of foreign profits in a UK resident company

Produced in partnership with Jisun Choi of Skadden

Practice notes

UK taxation of foreign profits in a UK resident company

Produced in partnership with Jisun Choi of Skadden

Practice notes

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Many UK resident companies likely operate entirely within the boundaries of the UK, with all of their customers and suppliers being based in the UK, such that all of the company's profits and gains are generated by activity in the UK. However, not all UK resident companies do so and for quite a large population of UK companies their profits include non-UK profits. These companies therefore have to consider the interaction of:

•
the UK principle of taxing worldwide profits, for which see more below, and
•
the tax systems of other territories

This population of UK resident companies with non-UK profits is not limited to large multinational groups but includes any company that suffers foreign tax, whether by way of:

•
withholding tax on payments received, and/or
•
tax due by direct assessment in a foreign territory that imposes tax on the activity of the UK resident company, whether or not the non-UK activities constitute a permanent establishment (PE)

This note sets out a brief summary of

Jisun Choi

Partner, Skadden

Jisun Choi advises a wide range of clients, including multinational corporations in various industries, private equity funds and financial institutions, on international and U.K. corporate tax matters, with a particular transactional focus on mergers and acquisitions and group restructurings, as well as associated financings.

Ms. Choi’s practice involves structuring and advising on the tax aspects of:

• private and public acquisitions and disposals of businesses, including management buyouts, sales of businesses in administration and auction sales

• international group holding structures, including on joint ventures, the use of the U.K. as a holding company jurisdiction, and investment and asset management structures

• group reorganisations and restructurings, including de-mergers of businesses and post-acquisition integration planning

• capital market transactions, including initial and secondary listings of equity and debt instruments, and return of value to shareholders

• banking and derivative transactions, including bank credit facilities and private placement arrangements

In addition, Ms. Choi has significant experience representing clients from the insurance and reinsurance industries and regularly works on insurance-related corporate transactions.

Jurisdiction(s):

United Kingdom

Key definition:

Profits definition

What does Profits mean?

The aggregate of income and chargeable capital gains of a company.

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