International Taxes

Operating across multiple jurisdictions brings significant opportunities and rewards but also has its own complicated compliance requirements.

In addition to the regular reporting requirements each UK resident company faces, there are many unknown and complicated additional disclosures that must be made when a UK company is involved in a multinational corporate group. A lot of these compliance requirements are unknown with clients unaware that the onus is on them to self-assess leading to potential enquiries and penalties being charged.

There are a number of potential reporting requirements and tax considerations facing international entities, such as the availability of relief under the UK’s extensive network of double tax treaties, the application of withholding taxes on cross-border payments of interest, royalties and dividends, the controlled foreign companies charge placed on a UK parent company with overseas subsidiaries, the restriction of a significant interest charge deducted through a company’s accounts, or the review of an overseas territory’s tax system to assess the potential mismatch of various finance instruments that are treated differently across two jurisdictions.

We provide expert guidance across a range of areas including:

Double Tax Treaties

The UK has an extensive network of double tax treaties designed to prevent the same income being taxed in two jurisdictions and to allocate taxing rights between countries. Understanding how these treaties apply to a particular transaction or structure can be complex, and the relief available is not always automatic.

Our team helps businesses:

• Review the relevant double tax treaty to determine how income, gains, and cross-border payments should be taxed.
• Assess eligibility for treaty benefits, including residence, beneficial ownership and any limitation on benefits provisions.
• Consider the interaction between treaty relief and UK domestic legislation, including unilateral credit relief where treaty relief is not available.
• Support claims for treaty relief or refunds of overseas tax, including liaising with HMRC where certificates of UK tax residence or other supporting evidence are required.

Withholding Taxes

Cross-border payments of interest, royalties, dividends and certain service fees can give rise to withholding tax obligations in either the UK or the overseas jurisdiction, and getting this wrong can result in unexpected tax costs and compliance failures.

Our team helps businesses:

• Identify when UK withholding tax applies to outbound payments such as yearly interest or royalties, and the rate at which it should be applied.
• Comment on the availability of reduced rates or exemptions under the relevant double tax treaty, including the application of the Double Taxation Treaty Passport scheme for qualifying lenders.
• Review inbound payments received by UK companies to determine whether overseas withholding tax has been correctly applied and whether relief, refunds or credits can be claimed in the UK.
• Consider the wider tax implications of cross-border financing, licensing and service arrangements to help structure them in a way that manages withholding tax exposure efficiently.

Controlled Foreign Companies (CFC) Rules

CFC rules are designed to prevent the artificial shifting of profits to low-tax jurisdictions.

Our team helps businesses:

• Identify whether foreign subsidiaries fall within CFC rules.
• Assess potential tax exposure on overseas profits.
• Implement planning strategies to mitigate unexpected tax liabilities.
• Prepare robust documentation to support your position with tax authorities.

Corporate Interest Restriction (CIR)

CIR rules limit the deduction of interest expenses, particularly in highly leveraged structures.

Our advisory services include:

• Reviewing group financing arrangements to determine CIR exposure.

• Developing strategies to maximise interest deductions within regulatory limits.
• Evaluating alternative financing options to support business operations while remaining compliant.
• Preparing filings and documentation to demonstrate compliance and reduce the risk of disputes.

Hybrid Entities and Instruments

Hybrid structure, where the tax treatment of an entity or instrument differs between jurisdictions, can create both planning opportunities and compliance risks.

Our team helps businesses:

• Identify hybrid mismatches that may give rise to double non-taxation or adverse tax consequences.
• Structure financing and investment vehicles to manage the tax impact across jurisdictions.
• Provide guidance on reporting obligations related to hybrid arrangements.
• Develop risk mitigation strategies in line with OECD BEPS rules and local anti-hybrid legislation.

Focused on your objectives

Our approach combines technical expertise with a practical understanding of business objectives, enabling companies to make confident decisions in a constantly evolving international tax landscape. Understanding this complicated tax system and paying the correct amount of tax, at the correct time, through the correct mechanism and in a way to minimise the risk of HMRC enquiry, is what most clients seek.