Robert Langston provides a checklist of tax issues for companies considering debt funding into the UK
Generally speaking companies with debt finance can obtain a deduction for interest and other finance costs. At least in the UK this is the fundamental tax difference between debt funding and equity funding as no deduction is available for dividends paid on equity.
Where the borrower (the debtor) is subject to UK tax but the lender (the creditor) is not there is a further dimension as the income will only be taxable at overseas tax rates.
This can create either a positive or negative arbitrage on tax rates.
In the UK there are a number of restrictions which can limit the tax deductibility of interest including the worldwide debt cap which applies from 1 January 2010.
Given the value of interest deductibility it is important to...
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Robert Langston provides a checklist of tax issues for companies considering debt funding into the UK
Generally speaking companies with debt finance can obtain a deduction for interest and other finance costs. At least in the UK this is the fundamental tax difference between debt funding and equity funding as no deduction is available for dividends paid on equity.
Where the borrower (the debtor) is subject to UK tax but the lender (the creditor) is not there is a further dimension as the income will only be taxable at overseas tax rates.
This can create either a positive or negative arbitrage on tax rates.
In the UK there are a number of restrictions which can limit the tax deductibility of interest including the worldwide debt cap which applies from 1 January 2010.
Given the value of interest deductibility it is important to...
If you or your firm subscribes to Taxjournal.com, please click the login box below:
If you do not subscribe but are a registered user, please enter your details in the following boxes:
