"Publisher deserts UK tax regime"

"UK publishing and events firm United Business Media has proposed creating a new parent company based in Ireland, where taxes are lower than in Britain. The 90-year old firm, which owns trade titles Property Week and The Publican, said it reflects that 85% of its profits now come from abroad."

It's the "85% of its profits now come from abroad" that is the key to all this. Remember that it makes no difference to your overseas tax bill where the holding company is located. The relevant bit is how those profits are taxed when the overseas subsidiaries pay up a dividend to the holding company.

The UK and Ireland are the only major countries in Europe which tax overseas dividends in full*. The UK gives a credit for overseas corporation tax already paid, so extra tax is due if the holding company receives dividends from countries with an effective rate less than 28%. The same applies in Ireland, of course, but they only pay further corporation tax if the overseas subsidiary pays corporation tax of less than 12.5%, which is very few countries indeed.

Lord Forsyth's Tax Reform Commission reckoned that moving to the European system, whereby overseas dividends are either 100% exempt (or 95% exempt in some countries) would cost less than £1 billion**, i.e. chickenfeed in the grander scheme of things.

* See AGN European Parent Companies Survey.

** See Proposal 20, page 143. Also interesting is Figure 23 on page 75.