Cross-border acquisitions

Produced by a Tolley Corporation Tax expert

Corporation Tax

Guidance

There are three main tax considerations when a UK company makes an acquisition outside the UK. These 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.

For more in-depth guidance, see Tolley’s International Tax Planning Part B2 ‘Cross-border acquisitions’.

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 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:

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