Category: Corporate Services

This article considers a number of questions that we are frequently asked regarding Swiss companies.

1. Why is Switzerland Such an Attractive Location for Corporates?

Switzerland is considered an attractive location for corporates for several reasons:

• Strategic Location: Switzerland’s central location in Europe makes it an ideal hub for businesses aiming to access European markets. It offers excellent connectivity and transportation infrastructure, with multiple international airports and efficient rail networks.

• Innovation and Research: Switzerland has a strong emphasis on innovation and research. It is home to prestigious universities, research institutes, and numerous multinational companies’ research and development centres. The country actively promotes collaboration between academia and industry, fostering an environment conducive to innovation.

• Stable Economy: Switzerland has a highly stable and prosperous economy. It boasts a low inflation rate, low unemployment rate, and a strong currency, which provides a secure environment for businesses to thrive.

• Political Stability: The country is renowned for its political stability and neutrality. Switzerland has not participated in any armed conflict for over two centuries, which enhances its reputation as a safe and predictable business environment.

• Strong Legal Framework: Switzerland has a well-established legal system that emphasises the protection of property and intellectual property rights, and contract enforcement. This legal framework provides businesses with a high level of security and confidence when conducting their commercial activities.

• Business-Friendly Regulations: The Swiss Government maintains a business-friendly regulatory environment, characterised by; low bureaucracy, efficient administration, and attractive tax policies. The tax system is competitive, with low corporate tax rates, tax incentives for research and development, and several beneficial double taxation agreements, with numerous countries.

• Skilled Workforce: Switzerland has a highly educated and skilled workforce. The country invests heavily in education and vocational training, ensuring a competent labour pool for businesses. The Swiss labour market is respected, for its; productivity, reliability, and multilingual abilities.

The factors above, combine to make Switzerland an appealing location for corporates, attracting a wide range of industries, including; finance, pharmaceuticals, technology, manufacturing, and many international organisations. Learn more here: The Advantages of Switzerland as a Corporate Location.

• How Easy or Difficult is it to Establish a Swiss Company?

Setting up a Swiss company involves putting in place a number of administrative obligations, and the timescale and costs can vary depending on the type of company and specific circumstances.

A brief overview is provided below:

A Swiss bank account needs to be opened in the company’s name and the required share capital must be deposited.

The timescale can range from a few weeks to a few months, depending on various factors, including; the complexity of the corporate structure, the number of employees to be recruited and the type of business. Each of these can affect the appropriate administrative procedures. Read more here: Guide to Establishing and Managing a Swiss Company.

3.         What Criteria do I need to meet to Establish a Swiss Company?

General criteria for setting up a Swiss company include:

• Residence: While it is not mandatory to be a Swiss resident to set up a Swiss company, you will need at minimum, a local representative who resides in Switzerland to act as director of the company.

• Share Capital: The share capital of the company has to be paid into a Swiss bank account when initiating the incorporation procedure. The share capital amount varies depending on the legal structure chosen. For a stock corporation (SA/AG), CHF 100,000 minimum is the minimum requirement. For a limited liability company (Sàrl/GmbH), the minimum capital is CHF 20,000.

• Articles of Association: Prepare the Articles of Association, which outline the; purpose, capital, shareholder structure, and internal organisation of the company.

• Shareholders and Directors: Identify the shareholders and directors of the company. The shareholders can be individuals or legal entities, and there is no residency requirement for shareholders. However, at least one director must be a Swiss resident, for certain types of company.

• Bank Account: Open a Swiss bank account in the company’s name and deposit the required share capital.

• Permits and Licenses: Depending on the nature of the business activities, you may need to obtain specific permits or licenses from federal, cantonal, or municipal authorities. This requirement varies by industry and the location of your business.

• Compliance: Ensure compliance with Swiss laws and regulations, including tax laws, employment laws, and any business sector-specific regulations.

It is important to note that the criteria and requirements may vary depending on the canton (state) in Switzerland where you plan to establish your company.

4.         Does it Make a difference Which Canton I Establish my Company in?

Yes, the canton (state) in which you establish your company in Switzerland can make a difference in several aspects. Each canton has its own; regulations, taxation system, business-friendly policies, and incentives, which can influence the attractiveness and feasibility of setting up a company.

Detailed below, are some factors to consider regarding the choice of canton:

• Taxation: Cantons have the authority to set their own tax rates, which can significantly impact your company’s tax liabilities. Some cantons may have lower corporate tax rates, favourable tax incentives, or special tax regimes for specific industries. It is crucial to research and compare the tax systems of different cantons to determine which offers the most beneficial tax environment for your business.

• Legal Framework: Whilst Swiss federal law governs many aspects of business regulations, some areas, such as company registration procedures or commercial laws, may vary slightly at the cantonal level. It is important to be familiar with the specific legal requirements and regulations in the chosen canton.

• Cost of Living and Business Expenses: The cost of living and operating a business can vary from one canton to another. Expenses such as; office space, salaries, utilities, and administrative costs may differ, and it is essential to consider these factors when choosing a canton.

• Infrastructure and Accessibility: Cantons may vary in terms of infrastructure, transportation networks, and access to markets. Some cantons may have better connectivity, proximity to international airports, or superior logistical infrastructures, which can be advantageous for certain industries.

• Industry Focus: Different cantons may have a particular focus or strength in specific industries. For example, Zug is known for its favourable tax environment and concentration of companies in the cryptocurrency and blockchain sector. Zurich is a hub for finance and technology companies, while Basel is renowned for its pharmaceutical and life sciences industries. Choosing a canton aligned with your industry can provide access to specialised networks, talent pools, and support services.

• Economic Stability and Support: Economic stability, access to funding, and the availability of business support services can vary across cantons. Some cantons may have a more diversified economy, stronger entrepreneurial ecosystems, or specific support programmes for startups and foreign businesses.

You need to conduct thorough research and we recommend that you seek professional advice from local experts or business service providers, and consider your business’s specific needs and objectives, when selecting the canton for your company’s establishment.

5.         I Anticipate that Swiss Corporation Tax is High – Am I Correct?

Swiss corporation tax rates vary depending on the canton and municipality where the company is registered. Whilst Switzerland is generally considered to have a competitive tax system, it is true that the overall tax burden for corporations in Switzerland can be relatively high compared to some other countries. However, it is essential to consider several factors when evaluating the tax landscape in Switzerland:

• Federal vs. Cantonal Tax: Switzerland operates a federal tax system where both the federal government and the cantons levy corporate taxes. The effective federal tax rate is uniform, at 7.8%, across all cantons, whilst additional cantonal tax rates can vary significantly. This means that the total tax burden will depend on the specific canton where the company is located.

• Cantonal Tax Rates: Cantonal tax rates range from relatively low to relatively high, depending on the canton. Some cantons, such as Zug and Schwyz, are known for their low corporate tax rates and favourable tax environments, which attract many businesses. On the other hand, some major cities like Zurich and Geneva may have higher tax rates but offer other advantages. It is important to research and compare the tax rates of different cantons to find the most advantageous option for your business.

• Tax Incentives: While the overall tax burden may be high, many cantons in Switzerland offer tax incentives and special regimes for specific industries or activities. These incentives include; reduced tax rates, tax holidays, or deductions for research and development (R&D) expenses. Taking advantage of these incentives can help mitigate the tax impact.

• Overall Tax Efficiency: It is important to consider the broader tax environment in Switzerland, including factors such as the stability of the tax system, the availability of double taxation treaties, and the potential for tax planning and optimisation. Switzerland’s stable political and legal framework, as well as its extensive network of double taxation agreements, can provide opportunities for efficient tax planning and international tax optimisation strategies.

• Other Factors: While corporate tax rates are an essential consideration, it is also important to evaluate the overall business environment, including factors such as; political stability, the legal system, infrastructure, and access to: markets, skilled labour, and quality of life, each of which Switzerland generally excels in.

In summary, while Swiss corporation tax rates can be relatively high, the specific tax burden will depend on the canton and municipality in which the company is registered. In addition, Switzerland offers a competitive tax system, tax incentives, and opportunities for tax planning and optimisation, which can help mitigate the overall tax impact.

6. Why is Dixcart Switzerland Based In Geneva?

Geneva is a hub for private banking and hosts a significant number of international organisations including; the World Trade Organisation (WTO), World Health Organisation (WHO), International Red Cross, Red Crescent Movement, and various United Nations agencies. It is a city that attracts a diverse and international community, fostering a cosmopolitan atmosphere.

Geneva has a well-established financial infrastructure, including numerous banks, asset management firms, and financial institutions. The city has a long history of banking and wealth management, dating back centuries, which has contributed to its reputation as a prominent financial centre.

It offers a very competitive combined federal and cantonal tax rate of 13.99%, compared to Zürich, for example, with an equivalent rate of 19.17%.

Summary

• One final factor to consider is that having a Swiss company can enhance a business’s reputation and branding. Switzerland is globally recognised for its quality, precision, reliability, and innovation across various industries. Associating your business with the Swiss brand can provide a competitive advantage and create additional confidence for customers, partners, and investors.

It is important to note that the advantages offered by a Swiss company vary depending on the; industry, location within Switzerland, and specific circumstances. Conducting thorough research and seeking professional advice will help assess how these advantages align with your business objectives and determine the feasibility of establishing a Swiss company.

Advice and Additional Information

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

Introduction

If you are considering establishing a business in the UK, ensuring the compliance and administrative elements are setup at an early stage is crucial, to allow the business to grow efficiently.

Similarly, when any move of residence to a new jurisdiction takes place, a thorough review of how a family’s wealth is held, needs to be undertaken, in order to avoid any potentially costly errors. This should take place before the move has occurred.

This Article details the main checklists of items that you need to take into consideration. Dixcart in the UK has extensive expertise in assisting individuals and families to set up businesses and to move to the UK and can guide you through the process and actions that you need to take: advice.uk@dixcart.com

1. Compliance Checklist for a New UK Business

• Immigration: unless you are looking to only employ workers already with the right to work in the UK, you may need to consider business related visas, such as a sponsor license or sole representative visa.
• Employment contracts: all employees will need to have an employment contract compliant with UK employment laws.  Many businesses will also need to prepare staff handbooks and other policies.
• Payroll: UK income tax rules, benefits-in-kind, pension auto-enrolment, employer’s liability insurance, all need to be understood and implemented correctly.  Administering a UK compliant payroll can be complex. 
• Book-keeping, management reporting, statutory accounting and audits: well- maintained accounting records will help provide information for considered decision-making and financing, and will ensure that you remain compliant with Companies House and HMRC.
• VAT: registering for VAT and filing, in compliance with requirements, will help ensure there will be no unexpected surprises and, if dealt with promptly, can help with early-stage cash-flow. 
• Commercial contracts: whether an agreement with a; vendor, supplier, service provider or customer, a well prepared and robust contract will help protect your business and ensure it is well placed for any future exit strategy. 
• Premises: whilst many businesses are operating more and more online, many will require office or warehousing space.  Whether renting or purchasing space we can assist. We also have a Dixcart Business Centre in the UK, which may be helpful if a serviced office is needed, with professional accounting and legal services being available, in the same building.  

2. Matters to Consider Prior to Moving to the UK

As indicated at the start of this Article, it is important that families evaluate  arrangements, including tax and succession matters, well ahead of any move. A practical list of some of the factors that should be taken into consideration is detailed below.

Practical matters:

• Travel documents (visas)
• Formal enrolment in country/jurisdiction of ‘arrival’, including communication with tax authorities, healthcare and schooling.

Taxation matters:

• Confirm the arrangements that affect heirs and family in other countries.
• Plan for the optimal timing of loss of tax residence, and any exit charges.
• Consider any action that needs to be taken to ensure assets are held in the  optimal way, prior to moving. Leaving this until after arrival can result in unexpected and large tax bills that could have been avoided.
• Plan the timing of disposals and acquisitions, to ensure the best possible tax outcome.
• Consider establishing new banking arrangements to segregate income and gains.

Succession and inheritance:

• Confirm which laws govern succession and if a choice of different jurisdiction law is available.
• Confirm whether marital/family laws are affected and whether a choice of different jurisdiction law is available.
• Review estate planning documents (wills, succession, and prenuptial documents), and consider the interaction of wills, appropriate for different jurisdictions.
• Consider the use of trusts for estate planning, not forgetting that the timing of the settlement of trusts could be key to the taxation outcome.

Implications of transferring physical wealth:

• Family heirlooms, jewellery, works of art, aircraft, cars and yachts: can they be transferred, are import duties applicable?

Gifts and Donations:

• Confirm whether gifts or donations should be executed, in advance of acquiring the new residency.

Ongoing Matters to be Reviewed at Least Annually

There are a series of important reviews, that should be taken at least annually, to take into account both changes in personal circumstances and the law:

• Review of estate planning documents. These include wills, succession and prenuptial documents.
• Review of trusts arrangements, structures, and bank accounts.
• Review of any changes to tax laws and the implications in relation to existing agreements and structures.

How can Dixcart Help?

Dixcart can assist with:

• Establishment, management and on-going corporate compliance
• Pre-arrival and departure tax planning.
• Advice and assistance with visas for residence in the UK.
• Accounting, legal and taxation advice.

Additional Information

If you would like to discuss planning, for the potential setting up of a business in the UK or move of location to the UK, please contact Peter Robertson or Paul Webb, at the Dixcart office in the UK: advice.uk@dixcart.com.

It is now May 2023 and the deadline of 31 January 2023, for the registration of overseas entities with property interests in the UK, with Companies House has passed, with no announcement of any further extension. An estimated 13,000 relevant overseas entities had not registered by the deadline, approximately 40% of the total.

All overseas entities that do not register on the Register of Overseas Entities, can face a fine of up to £2,500 per day and potential criminal charges.

Unless the registration process has been dealt with and the information is up to date, it will now no longer be possible for Overseas Entities to buy, charge, sell or lease property (for more than seven years).

If you are involved in any property transaction involving a UK Overseas Entity, you need to take appropriate action now to make sure that any registrations are completed.

What is the Register of Oversea Entities (ROE)?

The ROE is operated by Companies House, and registers information relating to overseas entities who own/ ill own property or are tenants of leases (for a term of over 7 years). The information held on the ROE includes, most importantly, the beneficial owners of the overseas entity or in the absence of such, the managing officers.

In order to register on the ROE, the Overseas Entity (OE) must have their information verified by a UK regulated ‘relevant person’ (as defined in the Money Laundering Regulations), this person can be a solicitor, accountant, or registered agent. Once successfully registered, Companies House provide an Overseas Entity ID Number which will be used by the Land Registry in property dealings.

A closer look at the consequences of failing to register:

An overseas entity that fails to register with Companies House and provide the required information on its beneficial owners will not be registered as the legal owner and will, therefore, be unable to sell or lease the land, or create a charge over it (other than in limited circumstances).

The overseas entity and its officers will also be liable to civil and criminal penalties for failing to register. Such penalties include:

• daily fines
• prison sentences for managing officers.
• limits on the ability to deal with the land (see below).

How will non-compliance be policed at the Land Registry?

The Land Registry is obliged to enter a restriction on the title to any UK land where it is satisfied the registered proprietor is an overseas entity registered on or after 1 January 1999.

The restriction will broadly prohibit the registration of any:

• transfer
• lease for a term of more than seven years from the date of the grant
• charge, unless the overseas entity has fulfilled its registration requirements or is exempt at the date of such disposition.
• An overseas entity purchasing UK land will be unable to be registered as proprietor of that land without demonstrating to the Land Registry that they have complied with the registration requirements (by producing an overseas entity ID).

Summary

It is now more important than ever, if you are involved in any property transaction involving a UK Overseas Entity, that you take appropriate action now, in order to avoid fines and/or potential criminal charges.

If you think you may need to register your overseas entity, please get in touch with the Dixcart office in the UK who will be able to assist you throughout the process: advice.uk@dixcart.com

Overview

Malta has become a popular choice for an increasing number of multinational groups seeking an efficient holding structure. In the article below we examine the Participation Holding Exemption and how it could be of benefit to you, should you consider setting up a Holding Company in Malta.

What is the Maltese Company Participation Holding Exemption?

Participation Holding Exemption is a tax exemption available to Maltese companies that hold more than 5% of the shares or voting rights in a foreign company. Under this exemption, dividends received from the subsidiary company are not subject to taxation in Malta.  

Malta’s participation exemption relieves 100% of the tax on both the dividends derived from a participating holding and on gains derived from the transfer thereof. This exemption is designed to encourage Maltese companies to invest in foreign companies and to promote Malta as an attractive location for holding company structures.

Participating Holding: Definition

 A participating holding is where a company resident in Malta holds equity shares in another entity and the former:

a. Holds directly at least 5% of the equity shares in a company, and this confers an entitlement to at least two of the following rights:

i.    Right to vote;

ii.   Right to profits available on distribution;

iii.  Right to assets available for distribution on a winding up; OR

b.  Is an equity shareholder and is entitled to purchase the balance of the equity shares or has the right of first refusal to purchase such shares or is entitled to sit as, or appoint, a director on the Board; OR

c.  Is an equity shareholder who holds an investment of a minimum €1.164 million (or the equivalent sum in another currency), and such investment is held for an uninterrupted period of at least 183 days; or the company can hold the shares or units for the development of its own business, and the holding is not held as trading stock for the purpose of a trade.

For a holding in a company to be a participating holding, such a holding must be an equity holding. The holding must not be in a company holding, directly or indirectly, immovable property situated in Malta, subject to a few minor exclusions.

Other Criteria

With respect to dividends, the Participation Exemption is applicable if the entity in which the participating holding is held:

1. Is resident or incorporated in a country or territory which forms part of the European Union; OR
2. Is subject to tax at a rate of at least 15%; OR
3. Has 50% or less of its income derived from passive interest or royalties; OR
4. Is not a portfolio investment and has been subject to tax at a rate of at least 5%.

Tax Refunds for Participating Holding Entities

Where the participating holding relates to a non-resident company, an alternative to Malta’s participation exemption is a full 100% refund. The respective dividends and capital gains will be taxed in Malta, subject to double tax relief, however, on  dividend distribution, the shareholders are entitled to a full refund (100%) of the tax paid by the distributing company.

In summary, even when Malta’s participation exemption is not available, Maltese tax may be eliminated through application of the 100% refund.

Domestic Transfers

Malta’s Participation Exemption also applies with respect to gains derived from the transfer of a participating holding in a company resident in Malta. Dividends from companies ‘resident’ in Malta, whether participating holdings or otherwise, are not subject to any further taxation in Malta in view of the full imputation system. For further information please speak to Dixcart: advice.malta@dixcart.com

Sale of Shares in a Malta Company by Non-Residents

Any gains or profits derived by non-residents on a disposal of shares or securities in a company resident in Malta are exempt from tax in Malta, provided:

• The company does not have, directly or indirectly, any rights with regards to immovable property situated in Malta, and
• the beneficial owner of the gain or profit is not resident in Malta, and
• The company is not owned and controlled, directly or indirectly by, nor acts on behalf of an individual/s ordinarily resident and domiciled in Malta.

Additional Benefits Enjoyed by Maltese Companies

Malta does not levy withholding taxes on outbound dividends, interest, royalties and liquidation proceeds.

Maltese holding companies also benefit from the application of all EU directives as well as Malta’s extensive network of double taxation agreements.

Dixcart in Malta

The Dixcart office in Malta has a wealth of experience across financial services, and also offers legal and regulatory compliance insight. Our team of qualified Accountants and Lawyers are available to set up structures  and to manage them efficiently .

Additional Information

For further information about Maltese companies matters please contact Jonathan Vassallo, at the Dixcart office in Malta: advice.malta@dixcart.com.

Alternatively, please speak to your usual Dixcart contact.

Do you have a business in Cyprus and are you looking for accounting services?

Cyprus companies: Accounting, Annual General Meeting and Annual Return Requirements

• Under the Cyprus Companies Law, the directors of every company are responsible for the bookkeeping necessary for the preparation of the financial statements of the company that need to be filed with the Registrar of Companies. The financial statements are accompanied by the Management Report. Newly formed companies do not have to submit financial documents for the first year of activity, but the documents must be registered at the Registrar of Companies within 18 months of the date of incorporation.

• Under the Cyprus Companies Law, all companies must have their financial statements audited and signed by a Cyprus registered auditor.

• Companies with subsidiaries need to present consolidated financial statements.

• Cyprus companies must hold an Annual General Meeting (AGM) every year and no more than 15 months should lapse between the first AGM and the subsequent one.

Tax Obligations of Cyprus Companies

Cyprus Companies, for tax purposes, are identified as tax resident or non-tax resident. A company, irrespective of where it is registered, is taxed only if it is a tax resident of Cyprus.

A Cyprus company is tax resident in Cyprus if the management and control is in Cyprus, regardless as to whether the company is also registered in Cyprus. Generally, tax resident companies are taxed at 12.5% of their business profit.

• All companies have a default year-end of 31^st December, but may elect another date. Companies must file an income tax return and financial statements within 12 months of their year-end.

How Can Dixcart Help?

Dixcart can assist with the accounting process and help ensure that the process is as simple and timely as possible.

We are also experienced in liaising with the chosen auditor and can suggest a number of competent auditors, if required.

Please speak to Katrien de Poorter, at our office in Cyprus: advice.cyprus@dixcart.com

Malta Enterprise currently offers a variety of diverse funding options, aimed at developing and enhancing small to medium sized businesses on the island. In this article we focus on the Soft Loan. It is designed to support existing businesses to; accelerate plans to establish new products, enter a new geographic market, address environmental concerns, and/or digitise processes.

Companies that meet the requirements can benefit from a Soft Loan covering part of the funding requirements, up to €1,000,000.

How Does it Work?

An eligible undertaking may be supported through a soft loan to:

a) facilitate a development or expansion project based on a business plan to develop a new product or enter a new geographic market

b) address environmental issues such as; water usage, water treatment, waste treatment, reduction, and reuse

c) optimise business processes through digitalisation and advanced technologies

d) projects aimed to achieve a high level of sustainability

Supported projects must have an implementation period which is not longer than eighteen months and the loan may cover up to 75% of the costs related to the proposed project, including the; procurement of assets, wage costs, know-how and other non-recurring costs.

Details About the Loan

It is important to note that the loan is by way of collateral, secured by a special ‘hypothec’ covering at least fifty percent (50%) of the loan amount. The loan amount cannot exceed:

a) €1,000,000maximum fundingthat must be repaid over a five year term. For organisations involved in road freight transport, the maximum funding is €500,000.

b) Alternatively, if the loan is to be re-paid over ten years, the maximum funding is €500,000, or €250,000 for organisations involved in road freight transport.

Interest Rate

Malta Enterprise charges a very competitive rate of interest that is not lower than 0.5%, established after considering the project and the prevailing European Central Bank reference rate.

The amount not covered by the loan issued by Malta Enterprise, must be financed through a loan issued through a commercial bank and/or through the reserves of the organisation, or other funds considered to be the organisation’s own funds, which must be specifically allocated to the project and deposited with a Commercial Bank.

The loan is repayable within a period of five years, or ten years as outlined above, and Malta Enterprise may agree a moratorium of a maximum twenty-four months for the loan to the relevant organisation, as long as the repayment remains scheduled to be completed within the five or ten year period, as applicable.

Additional Assistance in Malta

This support measure can be combined with the other assistance, such as: The Research and Development Grant: https://www.dixcart.com/setting-up-a-company-in-the-eu-malta-funding-solutions/

How Can We Help You?

Dixcart Malta have a wealth of experience across financial services, offering legal and regulatory compliance insight and helping to implement transformational technology and organisational change. 

Our team of professionals can assist you with the application process and make recommendations with regards to the funding being proposed, as well as preparing the relevant paperwork to ensure a smooth and seamless process, to obtain the relevant finance required.

We will guide you each step of the way and detail the specific criteria required, depending on the activity of the company.

Additional Information

For further information about Malta and the assistance available to companies, please contact Jonathan Vassallo, at the Dixcart office in Malta: advice.malta@dixcart.com. Alternatively, please speak to your usual Dixcart contact.

Action Still Needed

The Deadline Has Passed – Action Still Needed

The deadline of 31 January 2023, for the registration of overseas entities with property interests in the UK, with Companies House has now past.

An estimated 13,000 relevant overseas entities had not registered by the deadline, approximately 40% of the total. 

Considerable work needs to be committed to the verification process, before an application for registration can be made.  

In addition, overseas entities that owned a qualifying estate on February 28, 2022 and have subsequently disposed of their interest, are also caught by the rules.

A summary is listed below. For comprehensive detail, please see our previous article here.

Who needs to register?

The beneficial owner of any overseas entity (being a corporate body, partnership or other legal person) governed by the laws of a country or territory outside of the United Kingdom that owns, leases or disposes of qualifying real estate.

Submission of information and verification

The register is a digital service with information submitted in English.

Before any application for first registration or later updating applications/rectifications and amendments can take place, the information will be subject to formal verification by a relevant person.

Broadly, a relevant person includes an independent legal professional, financial institutions, auditors, estate agents, auction platforms etc. 

Once the information has been verified the relevant person will need to confirm to the  Companies House Registrar that it has completed verification in accordance with the new Act and regulations and provide a  statement complying with Part 2 (5) of The Register of Overseas Entities (VPI) Regulations 2022.  If the relevant entity has made no relevant dispositions between 28 February 2022 and the date the application is made, the application must state this.

The information itself must be retained by the relevant person for a period of 5 years.

What happens once registration is accepted?

Companies House then publish the identity on a public register and assign a unique Overseas Entity ID. The name of the relevant entity and their agent will be available to the public on the Companies House website. The Overseas Entity ID will be required by the Land Registry before it registers any dealings relating to real estate in England & Wales.

The 2022 Act requires registered entities to update their information annually.

Secondary legislation allows individuals to be able to protect some of their information from public disclosure in limited circumstances (if it can be shown that an individual, or the people they reside, with will be at serious risk of violence or intimidation).

Failure to comply with registration and/or within the time limits imposed?

In England and Wales a person guilty of an offence is liable on summary conviction to a daily fine of up to £2,500 or unlimited fines and a prison sentence of up to 5 years. Failure to register will also prevent any dealings with the real estate in question.

What can Dixcart do to help you?

We can keep you up to date of the latest developments, assist and advise you on your obligations and aid in collecting the required information.

We can also verify the required information for you and make the application for registration to Companies House and communicate the unique Overseas Entity ID number to you as well as process annual returns.

Additional Measures in the Future

Following the introduction of the  Economic Crime (Transparency and Enforcement) 2022 Act (“ECTE ACT”), which came into force on 01 August 2022, the UK Government is now seeking further measures with the introduction of the Economic Crime and Corporate Transparency Bill, which is already past Committee stage in the House of Commons. 

The register of overseas entities will be amended to maintain consistency with changes intended to the Companies Act 2006.

Amongst the other far reaching and significant changes intended by the Bill are:

• reforms to Companies House including the introduction of identity verification for all new and existing registered company directors
• reforms to prevent the abuse of limited partnerships by tightening registration requirements and increasing transparency
• additional powers to seize and recover suspected criminal crypto assets by boosting criminal confiscation powers
• reforms to give businesses more confidence to share information in order to tackle money laundering and other economic crime
• new intelligence gathering powers for law enforcement and removal of nugatory burdens on business.

Additional Information

If you have any questions or think you may need to register your overseas entity, please get in touch with the Dixcart office in the UK: advice.uk@dixcart.com.