Brit Insurance has announced that it is forming a new holding company incorporated and tax resident in the Netherlands to take advantage of that country's more favorable holding company tax regime compared to that in the UK.
The move comes after an "extensive review" by Brit of its existing company arrangements, which has concluded that redomiciling the group in the Netherlands, combined with other changes to the group structure, should deliver "a number of significant benefits" including being able to better align its corporate tax rate with those of its competitors.
"As the Group seeks to develop a broader international general insurance and reinsurance business, the establishment of the Group's holding company in the Netherlands should provide the Group with a stable commercial, legal, regulatory and fiscal environment from which to operate," stated the company's proposal, issued on November 12.
"Many of the Group's principal competitors already enjoy substantial tax benefits arising from their domicile; benefits not currently available to Brit," the statement continued. "The Board believes that the restructuring of the Group under a new Dutch holding company should provide the opportunity to realize a reduction in the Group's effective tax rate over time aligning it with its global peer group."
Dutch companies pay no additional tax on the majority of overseas earnings and enjoy a "pragmatic" regime dealing with income arising overseas, the company added. Moreover, Brit will still have access to a large network of double taxation treaties and retain the advantages of remaining in an EU jurisdiction.
The company, to be renamed New Brit, will be listed on the London Stock Exchange.
Despite the introduction of a new foreign profits regime in the UK on July 1, 2009, under which dividends from overseas subsidiaries can generally be received completely free of UK corporation tax, Brit is the latest in a growing list of UK-based multinationals expressing discontent with the overall state of the UK tax regime.
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