Advantages of Spinning Off Subsidiaries Under a UK Ltd

Are you considering transitioning from an English Limited company to a German entity? One approach could be to establish a German subsidiary under your existing Limited.


In our opinion, some arguments strongly support this model:

- Utilization of tax benefits
You can transfer any assets of the Limited into the newly founded subsidiary. For example: If you wish to establish a UG with a share capital of EUR 5,000, you would normally need to provide this capital personally, from already taxed personal funds. By setting up as a subsidiary of your Limited, you can directly use the corporate assets of your Limited for the establishment. This saves you from personal taxation (at the top tax rate of 42%; at distribution 25%).

- Development of clever corporate structures
Do you want to outsource risks? Establishing a sensible corporate structure with a holding and possibly operational and property companies as subsidiaries can be a first step. Of course, such an approach still requires specific legal advice. It is also important to note that many aspects are still unresolved. For instance, the question regarding the legal status of the Limited, i.e., its legal capacity.

- Utilization of the advantages of different legal systems
With England's exit from the EU, in our opinion, there are great opportunities for flexible entrepreneurs. English corporate law still offers some very crucial advantages that provide flexibility. For example, no notary is needed for changes in the shareholder structure, the appointment or dismissal of directors. Different classes of shares, which can be configured with varying rights. No notarial form requirement for trust agreements.

- General advantages due to England's exit from the EU
It is expected that Britain will be forced to create significant incentives for entrepreneurial action to make its business location more attractive.