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Does income from abroad emanate from a transparent or opaque entity?
KEY POINTS
- Determining whether a foreign entity is transparent or opaque can be crucial to determining UK personal tax liabilities.
- HMRC’s International Manual sets out the departmental tests for transparency.
- Ascertaining the status of a foreign entity and the nature of distributions from it in advance can avoid unexpected UK liabilities.
- Although HMRC do list foreign entities this may not include recently created business bodies.
- Th e tax treatment of the distribution abroad may be critical to determining UK liability.
Opacity and transparency
The question of whether an entity should be looked through so that the beneficial owners are taxed on its income is a fundamental issue and thankfully it is fairly straightforward for most UK practitioners to grasp. This...
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