Informa Jumps Ship To Switzerland Following UK Budget

by Robert Lee, Tax-News.com, London

04 May 2009

Informa, the publishing and conference company, has become the first post-budget corporate defection after announcing its decision to move its tax residence from the UK to Switzerland in protest against new legislation affecting the taxation of foreign profits.

Informa, the current parent company of the Informa Group, on May 1 announced details of a proposed court-sanctioned change to the Group’s corporate structure by putting in place a new parent company that would remain listed in the UK, but incorporated in Jersey and tax resident in Switzerland.

According to Informa, this change has been prompted by proposed changes in the way UK companies’ foreign profits are taxed.

“If enacted in their current form, proposed changes to UK tax law that take effect from July 1, 2009 are likely to have a detrimental impact on the Informa Group’s tax position and such detrimental impact could be material,” the company stated.

Under the long-awaited reforms, dividends from overseas subsidiaries will normally be received completely free of UK corporation tax, bringing the system in line with many other countries having tax friendly holding company regimes, such as Luxembourg and the Netherlands. However, this exemption will only apply to dividends derived from ‘real’ economic activity, not income from intellectual property, trademarks and copyright. This would subject 80% of the company's income to double taxation.

Informa said that it considered a number of factors that make Switzerland a suitable location for its parent company, including “a highly stable political and economic environment” and “a less complex taxation system which offers upfront certainty of treatment and does not seek to impose tax on the unremitted profits of subsidiary companies in other jurisdictions.”

"The Informa board believes that the implementation of the scheme will provide a platform to mitigate the probable impact of such changes to UK tax law," the company announced. "Additionally, the scheme is expected to result in a structure through which the New Informa Group can develop and expand its business internationally, including in emerging markets such as the Indian sub-continent, China and the Middle East."

New Informa was incorporated under the Jersey Companies Law on March 11, 2009, as a public company limited by shares with the name Informa Limited and changed its name on April 29, 2009 to Informa plc.

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