Cross-border acquisitions

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Corporation Tax

Guidance

Introduction

This guidance note outlines the three main tax considerations when a UK company makes an acquisition outside the UK, which are:

•
structure, ie whether to establish a new subsidiary to make the acquisition
•
finance, ie whether to fund the new subsidiary with debt or equity
•
whether to acquire assets or shares in the target business

The same considerations will apply when a foreign company makes an acquisition of a UK business.

Structure

There are a number of different structures which a company can use to acquire a target business in another country. These structures are similar to those which are used when setting up a new business in another country.

See the Introduction to setting up overseas ― companies and Setting up overseas ― branch or subsidiary guidance notes.

Subsidiary

This structure will exist if:

•
the acquiring company buys shares in the target company
•
the acquiring company establishes a new subsidiary to acquire assets of the target business

Diagram 1 ― subsidiary ― share acquisition:

Diagram 2 ― subsidiary

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Anne Fairpo

Barrister

With effect from 1 June 2021, Anne Fairpo is a judge of the First-tier Tribunal sitting in the Tax Chamber. She was previously a fee-paid judge in the same Chamber. Her contributions to LexisPSL Tax and TolleyGuidance were written before her full-time appointment and are her personal view as she is not authorised to write on behalf of the Tribunals Service or the judiciary. Until April 2021, Anne was a tenant at Temple Tax Chambers. She was called to the bar in 2009 after 15 years as a solicitor. Anne’s experience and expertise covers UK and international corporate tax planning and disputes, having acted for a range of clients from small owner-managed businesses to listed multinationals, as well as having advised on intellectual property taxation and UK-US cross-border tax planning, with regard to both direct and indirect tax matters

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