Group Restructuring

Restructuring a company/subsidiary companies can achieve several benefits including:

• Streamlining Operations: Companies within a group may merge or consolidate their operations to eliminate duplication and reduce costs.

• Risk Management: Restructuring can be used to segregate or allocate risks within the group to protect valuable assets or limit liability.

• Tax Efficiency: Companies may restructure to take advantage of tax benefits, such as reducing tax liabilities or optimising VAT and stamp duty positions.

• Ownership Changes: Restructuring may involve changes in ownership or the introduction of new investors or shareholders.

• Debt Management: The restructuring process can be used to refinance or restructure debt, enhancing the financial stability of the group.

• Asset Optimisation: Assets such as real estate, intellectual property, or subsidiaries may be transferred or reorganised to maximise their value.

The benefits above from restructuring can be achieved through various methods. These include:

• Mergers and Acquisitions: One or more companies within the group may merge, acquire, or be acquired by other group entities.

• Asset Transfers: Companies may transfer assets between group members or restructure their asset holdings to enhance efficiency.

• Debt Restructuring: The group may renegotiate or refinance its debts to improve financial stability and cash flow.

• Dissolutions or Liquidations: Underperforming or redundant subsidiaries may be dissolved or placed into liquidation.

The specific tax consequences of restructuring will depend on various factors, including the type of restructuring, the jurisdiction in which the company operates, and the applicable tax laws. Our specialist will guide you through what taxes may affect your company. Common tax implications that should be considered during restructuring include:

• Capital Gains Tax: If a company sells assets or divisions as part of a restructuring, it may be subject to capital gains tax on any profits earned from the sale.

• Value Added Tax (VAT): In some countries, restructuring transactions can trigger VAT liabilities. For instance, the sale of assets or the provision of services may be subject to VAT, impacting the overall cost of the restructuring.

• Stamp Duty: Some jurisdictions impose stamp duty on certain transactions, like the transfer of shares or property. The amount of stamp duty payable can vary depending on the nature and value of the assets being transferred.