Category: Corporate Services

The global tax landscape is shifting dramatically with the implementation of Pillar II, a key piece of the OECD’s Inclusive Framework on BEPS (Base Erosion and Profit Shifting). While primarily targeting large multinationals, Pillar II’s reach may extend to many private companies and family offices operating internationally. There are, however, possible safe harbours that may be available.

What do Private Companies Need to Know About Pillar II?

The first step is to identify, by confirmation from your parent, whether your multinational group is within scope of Pillar II (the most notable revenue headline requirement of €750 million in two out of the four prior years immediately preceding the fiscal year being tested).

Further, understanding the reporting needs, and obtaining an implementation roadmap from your parent is needed, for a full understanding of tax and accounting reporting expectations. Reaching out to your multinational enterprise is an important step in communicating and understanding this.

Private companies will need to make an assessment on their current data and system structures to identify any system gaps that require remediation. A data strategy may then be deployed in rooted systems and processes, to ensure sufficient and appropriate reporting for the purposes of Pillar II.

More information on the requirements of Pillar 2 can be found here.

What is the Impact on Family Offices?

Even though family offices are not the intended target, their structures may bring them under the scope of Pillar II if they meet the respective criteria. Although entities within family office structures may not be required to prepare financial statements – either due to company law requirements in the jurisdiction they are located or due to the form, such as trusts or partnerships – hypothetical financial statements are applied as the starting point and applied against the Pillar II criteria.

Family offices operating in more than one jurisdiction may thus be subject to top-up tax. Family offices are recommended to assess the potential impact and explore mitigation options.

How May Pillar II Impact Private Companies and Family Offices?

If you form part of a group that falls within the scope of Pillar II, after consideration of the exceptions that are applicable (including excluded entities), consequences to consider may include:

• Increased need to collect data and related reporting – companies may need to maintain books in terms of US GAAP or IFRS (depending on the multinational’s reporting framework), in tandem with records of local GAAP, which may create the need to maintain separate books.
• Increased cash tax expense for any top-up payments required.
• Possible impacts to tax and business structures.
• Increased administration and compliance – with relation to set-up, track, report and documentation for Pillar II information.

What Else Should Private Companies and Family Offices Consider?

Although the minimum global tax is applicable to multinational enterprises, private entities have the onus of ensuring compliance. Family offices meeting the respective criteria also have the obligation of ensuring compliance. Confirming the appropriate tax advice is obtained is crucial, to ensure adherence to the tax reporting requirements under Pillar II.

Additional Information

Should your family office or private company have any questions on the related impact of Pillar II, reach out to Dixcart for more information. Please contact Dixcart Portugal for more information: advice.portugal@dixcart.com.

Disclaimer: This guide is for informational purposes only and does not constitute professional tax advice. Please consult with qualified tax professionals for specific guidance.

Why Use the Isle of Man?

Isle of Man companies benefit from a zero rate of tax on trading and investment income.  They are also able to register for VAT, and businesses in the Isle of Man are treated as if they are in the UK for VAT purposes. There is also no withholding taxes on dividend income from Isle of Man companies.

Isle of Man companies are therefore particularly useful for activities such as:

• Holding Companies e.g. equity, real estate, superyachts, aircraft, investment portfolios etc.

• Estate Planning

• International Structuring e.g. multi-jurisdictional or cross-border businesses

The key points above outline some of the most frequent reasons for the use of Isle of Man companies. Please note it is not a definitive list of reasons for using such companies.

Formation of Companies in the Isle of Man

Isle of Man companies can currently be formed and regulated under two separate Acts.

This Jurisdiction Note outlines the formation and regulation of companies as embodied in the Isle of Man Companies Act of 1931 (as amended).  A second Jurisdiction Note is available which details companies governed by the Isle of Man Companies Act of 2006.  Please request this second note if you wish to consider both types of Isle of Man company.

1. Incorporation 

Standard incorporation of a Company occurs within 48 hours of receipt of the relevant documents to the Isle of Man Registry, however for an additional fee companies can be incorporated in 2 hours or “while you wait”.

2. Company Name

The proposed name must be approved by the Companies Registry. The Company can have its name ending in any of the following:

• Limited
• Ltd
• Public Limited Company
• PLC

3. Capitalisation

Companies may be incorporated with a single share, which can have a par value as low as one pence. There are thereforefe no thin capitalisation rules.

4. Shareholders

Companies can be incorporated with only one shareholder. Shareholders need to be recorded at the registered office of the company and at the Companies Registry.  

5. Nominee Shareholders

These are permitted and can be provided by Dixcart.

6. 6. Minimum Number of Directors

The minimum number of directors is two. Directors do not need to be resident in the Isle of Man. 

7. Secretary

A company secretary is required. The secretary does not need to be resident in the Isle of Man.

8. Registered Office

The registered office must be situated in the Isle of Man.

9. Annual Return

There is a requirement to file an annual return.

10. Accounts

Accounts must be prepared but these do not need to be filed with the Companies Registry.

11. Audit of Accounts

A company need not have its accounts audited if it meets two of the three following criteria:

• Its annual turnover is £5.6 million or less
• Its balance sheet total is £2.8 million or less
• Its average number of employees is 50 or fewer 

12. Taxation

A tax return must be prepared and filed at the Isle of Man Treasury. These are not publicly available.

All Isle of Man companies are now treated as resident companies.  Resident companies are taxed at a rate of 0% on their trading and investment income.  Income derived from land and property situated in the Isle of Man is taxed at a rate of 20% and banks are taxed on their banking business at a rate of 15%.

13. VAT

The Isle of Man has a Customs and Excise agreement with the UK. This means that for VAT, Customs, and most Excise duties, the two territories are treated as one.

14. Beneficial Ownership Register and Nominated Officer

The Isle of Man operates a non-public Beneficial Ownership Register and a nominated officer is required for each entity, a service which can be provided by Dixcart. The register is only accessible by Isle of Man regulatory bodies and/or law enforcement agencies for a permitted purpose. It is not available to the public.

Dixcart Management (IOM) Limited is licensed by the Isle of Man Financial Services Authority

With the introduction of the Companies (Amendment) Act 2021 (the Act) Isle of Man companies incorporated under the Companies Act 2006 (CA 2006) can now re-register as a Companies Act 1931 (CA 1931) company.

This all sounds great, but what does this actually mean for you and your clients? In this article we’ll consider the what, how and why of the Act in respect of private limited companies. We’ll cover:

• Re-Registration: What Happened Until Now?
• Re-Registration: Where are we now?
• Other updates: Registration of Directors
• Why Would a Company Voluntarily Re-Register Under Another Act
• Supporting the Re-registration of Isle of Man Companies

Re-Registration: What Happened Until Now?

When the CA 2006 was introduced into Manx law, s148 of the Act included the power to re-register CA 1931 companies to a CA 2006 company, but not vice versa. It is difficult to know why this one-way system was created. Presumably it was thought that the more flexible and less onerous CA 2006 company would eclipse the need for CA 1931 companies. You can find out more about the differences between CA 1931 and CA 2006 companies here in our guide.

Initially this was shown to be true, with CA 2006 companies steadily overtaking the number of new CA 1931 companies being incorporated, peaking in 2016, accounting for 62% of Limited Company incorporations.

However, the growth in incorporations of CA 2006 companies has slowed, and there is now more or less parity in the numbers of CA 1931 and CA 2006 entities: in 2020 CA 1931 @ 51% / CA 2006 @ 49%.

With time we have discovered that the CA 2006 company, whilst possessing a great deal of flexibility and presenting a streamlined trading structure, is not the clear choice. As with almost everything, corporate structuring and tax planning is not a ‘one size fits all’ scenario.

Re-Registration: Where are we now?

The Act has now remedied the inconsistency regarding re- registration from CA 2006 to CA1931 and visa versa.

The Members can vote to re-register whilst the company has a Registered Agent appointed, requiring a special resolution (“SR”) passed by members holding 75% or more of the voting rights. 28 clear days’ notice must be given to the Registered Agent of the intention to re-register. A shorter notice period can be agreed with the Registered Agent.

The SR will consider the approval of the re-registration from CA 2006 to CA 1931, the submission of revised constitutional documents (Memorandum and Articles) – ensuring nothing within the Articles prohibits such action.

The re-registration process will require the submission of various documents, including the application for re-registration (Form 101), re-registration fee of £100, certified copies of the requisite resolutions along with the revised Memorandum and Articles. Note that the company can only re-register in line with the type previously adopted i.e. a company limited by shares can only re-register as a company limited by shares etc.

In addition, any outstanding filing fees must be settled, which includes filings due within one month of re-registration.

Once the new filings have been accepted and a certificate of de-registration is issued, the company is then beholden to the CA 1931. It’s important to note that re-registration of the company does not form a new entity, nor does it affect the rights of creditors concerning any previously registered charges, which do not need to be re-registered. The Isle of Man Companies Registry have produced a useful practice note covering the changes. Please note, CA 2006 companies re-registering to become a CA 1931 company who have not yet registered charges will need to do so prior to beginning this process.

It is worth noting that the now CA 1931 company will require a minimum of two Directors, a Company Secretary and still needs an Isle of Man Registered Office. 

Other updates: Registration of Directors

The Act also introduces the requirement for CA 2006 entities to notify the Registrar of any removals/appointments of Directors within one month of the change – bringing such filing requirements in line with CA 1931 companies. Please note that this has not yet come into force and is not currently mandatory for CA 2006 companies.

Why Would a Company Voluntarily Re-Register Under Another Act

Where a client wishes to redomicile a company, it is currently less onerous, more efficient and therefore less costly to first establish a CA 2006 company. The company now has the choice to then re-register as a CA 1931 entity if desirable; this can be attractive if the intention is eventually to physically manage the company from the Isle of Man.

At the time of incorporation, the CA 2006 company only requires one Director, does not require the appointment of a Company Secretary and of course must have a Registered Agent; this can be especially attractive for start-ups and burgeoning businesses with lower resources. In the future, when there are higher staffing levels, the company may wish to re-register as a CA 1931 company, now able to meet the minimum of two Directors and a Company Secretary; dispensing of the requirement for a Registered Agent.

Supporting the Re-registration of Isle of Man Companies

At Dixcart, we have been providing Corporate Services and guidance for over 45 years; assisting clients with the effective structuring and efficient administration of companies tailored to their individual objectives.

We have developed a full suite of company services for advisers and their clients, which includes supporting the planning, incorporation, directorships, administration, redomicile and of course re-registration of companies.

Get in touch

If you require further information regarding the Isle of Man Foundations, their establishment or management, please feel free to get in touch with Paul Harvey at Dixcart: advice.iom@dixcart.com

Dixcart Management (IOM) Limited is licensed by the Isle of Man Financial Services Authority.

Switzerland is a friendly place to start a business, with many international companies having their headquarters in the country. Companies both large and small are attracted to Switzerland for its stability, the strength of its currency and some of the lowest corporation taxes in Europe.

So you have decided to start a business in Switzerland? You have a business plan and are ready to get started.

Legal Structure

Entrepreneurs can choose from several legal structures when setting up a business in Switzerland, including:

• Sole Proprietor: A business structure where a single individual owns and operates the business, assuming full personal liability for its obligations.
• Partnership: A legal form where two or more individuals share ownership and responsibility for a business, with options for general and limited partnerships.
• Limited Liability Company:  A legal business entity that combines elements of partnership and corporation, providing limited liability to its owners while maintaining operational flexibility.
• Branch: A business extension of a foreign company in Switzerland, operating as a dependant part of the parent company and subject to Swiss regulations.

Each structure has its advantages and implications for liability, taxation and governance, so it is crucial to select the most suitable option based on the nature and scale of the business.

Registration Process

The registration process varies depending on the chosen legal structure. However, in general, the following steps are involved:

1. Choose a business name and verify its availability.
2. Open a bank account with a Swiss bank to deposit the share capital.
3. Prepare the necessary documentation.
4. Founders Meeting with a Public Notary.
5. Register the business with the relevant commercial register and tax authorities.
6. Obtain any required permits or licenses based on the industry and activities of the business.

Once you have chosen your Legal Structure and started the registration process, important next steps are to understand your accounting requirements and tax considerations.

Accounting and Reporting Requirements

Swiss companies are required to maintain and file accurate accounting records in accordance with established financial standards ensuring compliance with the regulatory requirements.

Tax Considerations

Switzerland offers a competitive tax environment for businesses, with varying rates between cantons. Key aspects of taxation include:

• Corporate tax: businesses are subject to federal, cantonal, and municipal taxes and it is essential to understand the tax implications based on the location and nature of the business activities.
• Value Added Tax (VAT): Businesses with annual turnover exceeding CHF 100,000 or more a year must register for VAT and charge VAT on their goods and services. Value-added tax is a general tax levied on the distribution, import, export and sale of a product or service by any company in Switzerland. 
• Double Taxation Treaties: Switzerland has double taxation treaties with numerous countries to avoid double taxation of income in multiple jurisdictions.

Employment Regulations

Switzerland’s employment laws are characterised by flexibility and employee protection. These considerations include:

• Employment Contracts: Written contracts outlining terms of employment, including wages, working hours and benefits are standard practice.
• Work Permits: Foreign nationals working in Switzerland may require work permits, which are subject to specific conditions depending on the individual’s nationality and qualifications.
• Minimum Wages: While Switzerland does not have a statutory minimum wage at the federal level, certain cantons and industries may have minimum wage regulations.

Compliance and Regulatory Matters

Switzerland has a well-established regulatory framework governing various aspects of the business operations, covering:

• Company Law: Compliance with Swiss company law, including corporate governance, shareholder rights and disclosure obligations.
• Anti-Money Laundering Regulations: Implementation of AML compliance programmes to combat money laundering and terrorist obligations.
• Data Protection: Adherence to data protection regulations, ensuring privacy and security of personal data.
• Regulatory Authorities: Oversight by regulatory bodies specific to industries or activities, such as FINMA for financial institutions.

Advice and Additional Information

Dixcart has had an office in Switzerland for over twenty-five years and is well placed to provide advice regarding the establishment of companies here. Please contact Christine Breitler at the Dixcart office in Switzerland: advice.switzerland@dixcart.com.

As of 1 January 2024, Pillar 2 (BEPS 2.0) came into effect, as recommended by the OECD, where multinational companies are subject to a global minimum tax of 15% which will apply for the first time for certain large economies – agreed by more than 140 countries under the OECD Inclusive Framework.

In the digital age and face of globalisation, the global economy has transformed – with countries facing pressure to lower their corporate income tax rates to offer incentives to compete for capital and investment. Building on BEPS actions and placing a floor under tax competition, the OECD, together with member countries, have addressed the collective action problem for the so-called race to the bottom.

A series of interlocking rules apply to companies taxed below the 15% rate in one country (with the possibility of other countries being able to apply a top-up tax), which is summarised below in six steps:

Step 1: Determination of Multinational Groups in Scope

The following steps apply in determining which multinational groups are in scope:

1. Internationally active groups – determination as to whether the group has entities or permanent establishments in more than one jurisdiction, is required;
2. Groups with annual revenue of €750 million or more, in at least two out of the four prior years immediately preceding the fiscal year being tested; and
3. Identify excluded entities from the application of the Pillar II rules (but note that these are not excluded from the revenue threshold calculation above).
   4. Public interest entities, such as governmental and non-profit organisations, tax-neutral entities (such as pension and investment funds), and certain asset-holding companies are excluded.

Step 2: Allocation of Income to Constituent Entities on a Jurisdictional Basis

The multinational group needs to determine the income (abbreviated as FANIL for Financial Accounting Net Income or Loss – determined by accounting standards for financial reporting) and the location of each constituent entity, to identify the respective local tax treatment.

Step 3: Calculation of GloBE Income

Global Anti-Base Erosion (GloBE) income is calculated by making adjustments to FANIL to align the tax base for the global minimum tax with those that are typically applied for local tax purposes. Types of adjustments include:

1. Adjustments to financial accounting income to better align with taxable income – net taxes, dividends (avoid double counting profits within a group), equity gains and losses (unrealized – no impact for GloBE; realized – may need adjustments for timing differences between accounting and tax), asymmetric forex gains and losses (differences in treatment between accounting and tax require reconciliation to align with taxable income), pension expenses (use of tax accounting principles), stock-based compensation (portion deductible for tax added to GloBE income);
2. Correct allocation of income between jurisdictions is adjusted for – such as transfer pricing adjustments and intra-group financing;
3. Policy-based adjustments – such as the disallowance of illegal payments such as bribes, or payments of fines and penalties (only allowed to a maximum of €50,000).

Step 4: Determination of Adjusted Covered Taxes

For each constituent entity, the GloBE income or loss is calculated. The tax associated with the income must then be calculated using the following steps:

1. Determination of covered taxes – the current tax expense as shown in the financial accounts (includes incomes taxes, but does not include non-income-based taxes such as indirect taxes, payroll and property taxes);
2. Adjustment to covered taxes – to consider taxes that are not recorded in the tax line of the profit or loss statement and exclude taxes not related to GloBE Income or Loss, addressing of temporary differences as well as tax credits;
3. Cross-border allocation – adjustment to allocate certain cross-border taxes to the proper constituent entity (like taxes imposed under a CFC regime, distribution taxes, withholding tax on dividends paid, or other taxes paid);
4. Post-filing adjustments – in the case of post-filing adjustments, generally an ETR recalculation is required for the relevant fiscal year (examples include audit or transfer pricing adjustments).

Step 5: Computation of ETR and Calculation of Top-Up Tax

GloBE income or loss and covered taxes (steps 3 and 4 above) from the same jurisdictions must be added together to determine the jurisdictional effective tax rate (ETR).

Note an exemption applies for multinationals that have limited operations, namely, below the de minimis thresholds of €10m for revenue and €1m for income.

From GloBE, a substance-based income exclusion is deducted to reduce the potential burden on multinationals with genuine operations and investments in a jurisdiction. A percentage of tangible assets and payroll expenses is applied for the purpose of the substance-based income exclusion.

The top-up tax percentage is due on the difference between the 15% minimum rate and the ETR in the jurisdiction – the delta which is applied to the GloBE income or loss in the jurisdiction, after deducting a substance-based income exclusion.

Each constituent entity, with GloBE income, is subsequently allocated top-up tax.

Step 6: Charge the Top Up Tax under QDMTT, IRR, or UTPR

A member jurisdiction has a liability towards a top-up tax for a multinational group under three types of provisions, in the following agreed rule of order:

1. If your domestic tax already hits the global minimum, you won’t be hit with extra “top-up” taxes from other countries – referred to as the Qualified Domestic Minimum Top-Up (QDMTT);
2. If the jurisdiction where the low-taxed constituent entity is located does not have a domestic minimum top-up tax, the ultimate parent entity, in proportion to its ownership interest, might collect the top-up tax under IRR (Income Inclusion Rule);
3. If the ultimate parent entity is in a jurisdiction that has not implemented a domestic minimum top-up tax, then the top-up tax will be levied on the next entity in the ownership chain that is located in a jurisdiction with an IRR following a top-down approach;
4. Where IRR does not apply, the Under-Taxed Payment Rule (UTPR) becomes applicable. UTPR acts as a back-up to the IRR, ensuring a top-up tax payment within jurisdictions applying this rule.

Specific Rules for Each Jurisdiction

Members will need to implement the GloBE rules in a way that is consistent with the outcomes provided in the agreed rule order, to ensure transparent and predictable outcomes across jurisdictions. Note that the legislative draft GloBE rules accommodate a wide range of multinational groups and tax systems. The OECD have recommended Pillar 2 rules to become effective in 2024.

Conclusion

The implementation of Pillar 2 marks a significant step towards creating a more level playing field and addressing tax challenges arising from the digital economy. Ultimately, Pillar 2 represents a critical step towards a more equitable and sustainable global tax system. Its impact will depend on effective implementation, addressing potential concerns, and continuous evaluation to ensure it meets its intended goals.

Additional Information

If you would like to discuss any of the matters raised in this Article, please contact Lionel de Freitas, a director of our Dixcart office in Portugal: advice.portugal@dixcart.com.

In our continuous commitment to providing valuable tools for our clients, we are excited to introduce the all-new ‘Corporate Comparison Guide’ on our website. This interactive and user-friendly feature empowers clients to efficiently compare key corporate information across the seven jurisdictions where we operate. From corporate tax rates to filing requirements, this guide offers an in-depth analysis of crucial factors for informed decision-making. There are many considerations when deciding where might be the best jurisdiction in which to establish a company. Dixcart’s Corporate Comparison Guide can assist in this process by detailing key information regarding corporates in a number of jurisdictions. 

Key Features:

Comprehensive Comparison:

User-Friendly Interface:

We understand the importance of simplicity and efficiency. Our user-friendly interface ensures a seamless experience, enabling users to navigate effortlessly through the comparison guide. Accessible dropdown menus, clear categories, and intuitive design make the process smooth and enjoyable.

Quick Comparison and Analysis:

Users can compare up to four jurisdictions at a time, streamlining the fact gathering process. This feature is particularly valuable for businesses considering expansion or investors exploring opportunities in multiple locations.

Multi-Platform Accessibility:

Access the Corporate Comparison Guide seamlessly across multiple platforms. Whether you’re using a desktop, tablet, or smartphone, our responsive design ensures a consistent and optimised experience.

Explore our Corporate Comparison Guide here and take the first steps towards understanding more about corporates across diverse jurisdictions.

Before any final decision is made, we recommend that professional advice should always be taken. Dixcart Group has a corporate department in each of our offices and would be delighted to help: advice@dixcart.com

The Reputation of Swiss Companies

Even by the end of January 2024, Switzerland had already introduced new regulations, which will influence various aspects of business operations, demanding attention, and adaptation from enterprises both large and small.

Notable changes for 2024 include:

A. Increase of Swiss VAT rates:

Effective January 1, 2024, The VAT on goods and services has experienced an increase, climbing from 7.7% to 8.1%. Similarly, the reduced rate has undergone an increase, moving from 2.5% to 2.6%.

B. Multinationals Minimum Corporate Tax:

In a global context, Switzerland aligns itself with the evolving international tax landscape by implementing the Multinationals Minimum Corporate Tax. In adherence to the OECD/G20 directives, large multinational entities find themselves subject to a baseline tax rate of 15%.

C. Abolition of Swiss Import Duties:

Notably, the year 2024 sees the abolition of Swiss import duties. The elimination of industrial tariffs not only streamlines the Swiss tariff structure but also places Switzerland in a competitive situation with other global economies.

2023 Overview

Please see below a detailed overview of the key developments, that took place in 2023:

A. Treaties

Switzerland and the UK signed a bilateral treaty on 21 December 2023 for mutual recognition in financial and insurance services. This treaty is based on mutual recognition of the equivalent respective national laws and regulations. It aims to enhance competitiveness and collaboration between these two major European financial centres, both operating independently from the EU. Common standards will be used for cross-border financial services in areas such as; insurance, banking, asset management and capital markets.

B. Data Protection Law (FADP)

The Federal Act on Data Protection, effective since 1 September 2023, aligns Swiss regulations with EU standards. FADP ensures the free movement of data with the EU, keeping Swiss companies highly competitive.

FADP introduced several obligations for companies, whether Swiss or international, that provide goods or services to Swiss citizens and processes their sensitive data. These include:

• Communicate individuals’ rights and data collection to users and act according to their privacy preferences. Users must consent to the utilisation of their data.
• Maintain updated records of processing activities.
• Conduct Data Protection Impact Assessments.
• Foreign companies must appoint a Swiss representative for data-related matters.
• Train employees on data protection and privacy.
• Notify users, the appropriate authorities, and shareholders of data breaches.
• Companies can be fined up to CHF 50,000.
• Wilful breaches may lead to fines of up to CHF 250,000.

C. Corporate Law Reform

Swiss Corporate Law changed significantly offering more flexibility in various areas, outlined below:  

1. Share Capital

• Companies can denominate their share capital in EUR, USD, GBP or JPY, provided the respective currency is the functional and financial reporting currency.
• Minimum nominal value of a share can be any low fraction, as long as it is greater than zero.
• Share capital can be increased/decreased within a predefined bandwidth of up to 50%, during a maximum period of five years, with potential tax benefits.

2. Interim Dividends

Companies can pay interim dividends out of the current year’s earnings based, on an interim balance sheet.

3. Audit Requirement

Companies must have their financial statements audited by an external auditor, if their net assets no longer cover half their nominal share capital and the portion of the statutory capital and profit reserve, that is legally restricted or reserved for specific purposes.

4. Shareholders and Board Resolutions

Various meeting formats, including physical, virtual, multi-location and circular resolutions, have been introduced to accommodate modern communication methods. Read more about these obligations here Swiss Director Obligations: Why It Is Important to Get It Right (dixcart.com)

5. Minority Shareholder Protection

The reforms strengthen minority shareholder protection by; simplifying procedures and expanding their rights, increasing transparency, and promoting efficient/electronic communication: 

1. Lowered thresholds for requesting Shareholders General Meetings and adding agenda items.
2. Elimination of certain thresholds.
3. Right to request company information (10% share capital/votes), and inspect records (5%).
4. Board of Directors must respond within four months.
5. Modernised annual report communication with electronic accessibility.

This simplified summary highlights the main changes introduced by Swiss Corporate Law Reform. For further information, please refer to our article Swiss Corporate Law Reform: The Key Changes (dixcart.com)

D. Anti-Money Laundering

Since 1 January 2023, any association which primarily collects or distributes assets abroad for charitable, religious, cultural, educational, or social purposes must be registered with the Commercial register. Registered associations must maintain a member list and have a Swiss-domiciled representative.

The compliance deadline is 30 June 2024.

Additional Information

The Dixcart Office in Switzerland can provide a detailed understanding regarding Swiss corporations, their incorporation, management, and administration. We can also detail the obligations that need to be met.

If you need further information and/or require guidance regarding completion of a Swiss corporate tax return, please get in touch: advice.switzerland@dixcart.com.

What is the purpose of the Act and who will it affect?

On 26^th October 2023 the Economic Crime and Corporate Transparency Act 2023 (ECCTA) passed into UK law, marking the most significant change to Companies House since its inception. Its leading principle is that Companies House will be afforded greater powers in a bid to tackle economic and financial crime and address other abuses of the register.

The changes will bring added responsibilities for new and existing directors, persons of significant control (PSCs) and any agents who file on behalf of a company, as Companies House will be able to impose sanctions for incorrect or misleading information, or if the company fails to comply with the new registration requirements.

Companies House plans to introduce measures from March 2024 onwards affecting the following entities:

• private limited companies
• public limited companies (PLCs)
• limited liability partnerships (LLPs)
• limited partnerships (LPs)
• community interest companies (CICs)
• overseas companies

Companies House published guidance in its blog on 22 January 2024 regarding the first set of changes coming into effect on 4 March 2024: Get ready for changes to UK company law – Companies House (blog.gov.uk)

What are the changes?

1. Confirmation statements and registered office addresses – from March 2024

Every company, including dormant and non-trading companies, will need to file a confirmation statement at least once a year, even if there have been no changes during the review period.

Furthermore, to ensure information on the register is accurate and up-to-date, companies will need to provide an appropriate address for the registered office to which correspondence will be received by a representative of the company. Companies will no longer be able to use a PO box as a registered office address, and Companies House will have powers to query and challenge addresses it believes to be inaccurate and, more widely, information it suspects to be incorrect. The enforcement tools at its disposal include:

• Financial penalties
• An annotation on the company’s record
• Prosecution
• Strike companies off the register

2. Statement of lawful purposes – from March 2024

When incorporating or registering a company, subscribers of that company will be asked to provide a statement confirming that the purpose of formation is for a lawful purpose, and that future activities will also be lawful.

3. Identity verification – date of introduction TBC

Another significant change is the future introduction of identity verification for all PSCs and directors of a company, including companies already on the register. To deter those setting up companies for illegal purposes, verification will need to be done either directly with Companies House or by using an Authorised Corporate Service Provider (ACSP), such as solicitors or accountants. For LPs, this must be done solely through ACSPs to ensure that information is from a trustworthy source.

Companies House has confirmed there is not yet a date of introduction and more information is to follow. For PSCs and directors of existing companies, there will be a transition period once introduced to allow reasonable time for adjustment to the new requirements.

The Dixcart UK Legal department is an Authorised Corporate Service Provider (ACSP) and can assist with verification.

4. Higher fees – date of introduction TBC

Companies House fees will be increasing in 2024 to cover the costs of the enforcement powers, although we await further guidance on what these fees will be.

4. Software-only filing – date of introduction TBC

Over the next 2 – 3 years, Companies House plans to shift towards a system of filing by software-only, applying to directors who file accounts themselves as well as third party agents like solicitors.

5. “Failure to Prevent Fraud”

Significantly, the ECCTA includes a new criminal offence which makes companies and partnerships liable for failing to prevent fraud by employees or representatives for the benefit of the organisation. Those who hold a position within the organisation of “senior manager” or higher will be liable for conviction if an economic crime is committed.

Further guidance is expected from Companies House as to when we can expect all measures to be implemented and updates will be released accordingly. For additional details see the gov.uk website.

For more information from us, or if you wish to discuss using an ASCP, please use our enquiry form or email us at advice.uk@dixcart.com.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.