Advantages of Jersey / Guernsey companies as UK ‘qualifying asset holding companies’ QAHCs

• The QAHC is a new UK corporate structure with many advantages for Jersey or Guernsey companies
  
  
• There are several tax benefits including exempting gains on some shares and non-UK real estate, corporate tax exemptions and no UK withholding tax on interest payments, among others
  
  
• Jersey and Guernsey's corporate landscape is well-suited for QAHC vehicles due to greater flexibility in paying out capital and its rule on incorporating no-par value companies

On 1 April 2022, the UK introduced a new tax advantaged corporate structure, a “qualifying asset holding company” (“QAHC”), which benefits from a number of UK tax breaks.

A crucial requirement for QAHC eligibility is that the company is UK tax-resident, but not that it is a UK company.

There are additional advantages for QAHC’s established as Jersey or Guernsey companies, mostly relating to the Islands’ company law regimes and their more flexible approach to returning money to shareholders.

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Definitions and benefits of the QAHC regime

A new regime took effect from 1 April 2022 for QAHCs and certain payments they make.

A QAHC is an unlisted UK tax resident company that is owned at least 70% by diversely-owned funds, or certain institutional investors (“Category A Investors”) and mainly carrying out investment activity.

The aim of the new regime is to ensure that Category A Investors can invest in a tax efficient matter in share, debt and non-UK real estate. The QAHC regime also includes tax benefits for individuals that manage them.

The QAHC must be UK tax resident (not necessarily UK incorporated), but various existing UK tax rules are “switched off” so that the QAHC has a number of tax benefits, including:

• exempting gains on disposals of certain shares and non-UK real estate by QAHCs
• allowing deductions for interest payments on profit-participating loans that would usually be disallowed as they would be treated as distributions, meaning that a QAHC could have very low taxable profits (transfer pricing still applies)
• complete exemption from corporation tax on profits of a non-UK real estate business (to the extent taxed abroad) as well as on profits from related loan relationships and derivatives
• no UK withholding tax on interest payments
• capital returns to investors can be facilitated by switching ‘off’ tax rules that treat premiums on share buy-backs as distributions
• switching ‘off’ the late paid interest rules so that interest payments are deducted on the accruals basis rather than the paid basis
• entry and exit provisions, including the rebasing of certain assets to market value and the creation of a new accounting period when a company enters and exits the regime
• no stamp taxes on share or loan note repurchases
• the remittance basis of tax is available to non-UK domiciled managers for non-UK source QAHC returns, even though the QAHC is UK tax resident.

• the UK (and therefore a QAHC) is outside the EU Anti-Tax Avoidance Directives
• there is no UK withholding tax on dividends
• a properly structured QAHC will benefit from the UK’s double tax treaties network

On 1 April 2022, the UK introduced a new tax advantaged corporate structure, a “qualifying asset holding company” (“QAHC”), which benefits from a number of UK tax breaks.

A crucial requirement for QAHC eligibility is that the company is UK tax-resident, but not that it is a UK company.

There are additional advantages for QAHC’s established as Jersey or Guernsey companies, mostly relating to the Islands’ company law regimes and their more flexible approach to returning money to shareholders.

Click to view article

Definitions and benefits of the QAHC regime

A new regime took effect from 1 April 2022 for QAHCs and certain payments they make.

A QAHC is an unlisted UK tax resident company that is owned at least 70% by diversely-owned funds, or certain institutional investors (“Category A Investors”) and mainly carrying out investment activity.

The aim of the new regime is to ensure that Category A Investors can invest in a tax efficient matter in share, debt and non-UK real estate. The QAHC regime also includes tax benefits for individuals that manage them.

The QAHC must be UK tax resident (not necessarily UK incorporated), but various existing UK tax rules are “switched off” so that the QAHC has a number of tax benefits, including:

• exempting gains on disposals of certain shares and non-UK real estate by QAHCs
• allowing deductions for interest payments on profit-participating loans that would usually be disallowed as they would be treated as distributions, meaning that a QAHC could have very low taxable profits (transfer pricing still applies)
• complete exemption from corporation tax on profits of a non-UK real estate business (to the extent taxed abroad) as well as on profits from related loan relationships and derivatives
• no UK withholding tax on interest payments
• capital returns to investors can be facilitated by switching ‘off’ tax rules that treat premiums on share buy-backs as distributions
• switching ‘off’ the late paid interest rules so that interest payments are deducted on the accruals basis rather than the paid basis
• entry and exit provisions, including the rebasing of certain assets to market value and the creation of a new accounting period when a company enters and exits the regime
• no stamp taxes on share or loan note repurchases
• the remittance basis of tax is available to non-UK domiciled managers for non-UK source QAHC returns, even though the QAHC is UK tax resident.

• the UK (and therefore a QAHC) is outside the EU Anti-Tax Avoidance Directives
• there is no UK withholding tax on dividends
• a properly structured QAHC will benefit from the UK’s double tax treaties network