Latin American carriers Avianca and Gol have agreed to join operations under a UK-based holding company while maintaining individual brands – a move intended to create long-term stability in the post-coronavirus environment.
“The principal shareholders of Colombia’s Avianca and the controlling shareholder of Brazil’s Gol have signed a landmark agreement to create a leading air transportation group across Latin America under a holding company structure named Abra Group Limited,” the companies reported on 11 May. “Subject to customary regulatory approvals and closing conditions, the Abra Group will control Avianca and Gol and bring together their iconic brands under a single holding.”
So why should two major companies from Latin America decide to choose the UK to set up their new holding company?
There can be no comment on this particular deal of course, but we can look at the features of a UK company and consider how these might have had an influence on these major and long established airlines.
On top of the list must be the general low level of bureaucracy in the UK combined with its status as an international financial centre and of course, low bureaucracy means lower operating costs.
For example, there is no need for any of the directors of the company to be UK citizens or to live in the UK. The entire process of forming the company can be performed by professional agents without the need for anyone to come to visit the UK.
In addition, the process of running the company is much easier than in many countries, with suitably qualified professional firms able to perform the daily activities and handle the relationships with authorities, ensuring that the company remains compliant with the local rules.
When you add that dividends received from the subsidiary companies are not taxed in the UK, and that there is no withholding tax on dividends paid out to shareholders, wherever they live, it is easy to see why so many businesses set up their group holding operations in the UK.
You do not have to be a large business like these airlines, just be determined to do the best you can for your company and its shareholders.
So why the UK is a good place to set up your holding company:
1. The UK holding company is easy to set up and run from anywhere in the world
2.The UK does not charge company income tax on dividends received from daughter companies
3.The UK does not charge withholding tax on dividends paid to shareholders, anywhere in the world.
EBS has formed a lot of UK holding companies for our clients and this is driven by the better tax treatment (particularly withholding taxes) in the UK.
So, if you want to join the others major companies which benefit from the UK business friendly environment, speak to our Team.