Even post-Brexit, the combination of no withholding taxes on dividends, an exemption from gains on disposals of substantial shareholdings, broad exemptions from tax on dividends received and an extensive tax treaty network to reduce or eliminate non-UK withholding taxes that might otherwise be imposed on such dividends make UK holding companies relatively attractive.

One point to consider is whether a UK company is likely to receive dividends from a subsidiary in an EU member state which imposes withholding taxes on dividends. Pre-Brexit, the EU Parent Subsidiary Directive might have applied to eliminate the withholding. Post-Brexit, the UK’s double tax treaties should eliminate most withholdings, but there are some EU member states whose tax treaties with the UK will not entirely do so. The UK’s treaties with Germany, Italy and Portugal are examples. That said, it is quite possible that the arrangements for Brexit may preserve some of the benefits of the Parent Subsidiary Directive between UK and EU companies (in much the same way as the Swiss agreement with the EU currently does).

Another issue to keep one eye on is the effect of Brexit on “equivalent beneficiary” provisions which can apply to mitigate the limitation of benefits (LOB) clauses in treaties with the US. These provisions may become more widespread following the implementation of OECD/G20 BEPS proposals on treaty abuse. If so, the treaties of EU member states are likely to give preferential treatment to companies in other EU member states, which may permit a greater degree of flexibility in group structures, and may mean that the insertion of a UK company in the group structure could affect the ability of another group company to claim treaty benefits. At present, that is crystal ball-gazing. It is likely only to be an issue in a minority of cases – and even then a Swiss holding company will not help. It’s not in the EU.