Consider how the new UK-EU trade deal might impact your approach to...

• Withholding taxes

  The payment of dividends, interest or royalties between the EU and the UK may now carry a withholding tax burden. This could be a real cost where the applicable treaty rate is not zero, and the tax is not available for credit against the relevant UK or EU taxes.  

• Group structures

  UK companies may now break EU tax grouping relationships or consolidations. This may lead to possible clawback of previously claimed reliefs, and an inability to claim reliefs in the future.

• Corporate taxes

  The new agreement results in limited direct changes to corporate and direct taxation, but there some specific changes to consider the impact of, including:

   - Changes to the UK’s implementation of the EU’s “DAC 6” Mandatory Disclosure rules and a move towards replacing these with the OECD’s Mandatory Disclosure Rules.

  - The UK and EU have agreed to continue their support for the OECD BEPS initiative, so we should expect the UK to continue to implement changes proposed by the OECD.

  - The agreement now ends the EU State Aid regime in Great Britain, subject to certain conditions in the agreement, offering the UK more flexibility in setting future tax legislation looking forwards.

• Transfer pricing and exit charges

  Reorganisations to internal supply chain, financing flows, incorporation of new entities for regulatory, customs or other commercial reasons may change the location of significant people functions, risks and assets. If value has moved or will move out of the UK there is a risk of an immediate and potentially significant corporate tax charge.

• Foreign exchange

  As the full impacts of the deal on the economy and sterling work through, businesses should consider whether their tax teams are fully aware of positions treasury teams are taking and that UK corporation tax risks are being managed accordingly.