The Henderson Diversified Income Trust is considering leaving its offshore locations in Luxembourg and the island of Jersey to move to the United Kingdom in order to simplify its structure and reduce costs for its investors.
In a statement to the London Stock Exchange, the Jersey-based investment company stated that its subsidiary in Luxembourg had recently been affected by changes in the tax policy of the Grand Duchy.
Fiscal policy around transfer prices (which sets the price of goods and services sold between a subsidiary and the head office) have caused the fund's structure to become more complicated and risky.
Transfer pricing has always been at the core of all discussions. To avoid this, many multinationals like Amazon, Apple and Starbucks have reduced their tax bills by diverting services to subsidiaries in low-tax jurisdictions such as Ireland o Luxembourg.
The investment company explained that the board of directors was considering the possibility of simplifying its tax structure through the option of joining the investment tax regime of the United Kingdom. This would also include the change of place of incorporation to the United Kingdom.
The director of the fund stated that the transfer to the United Kingdom would avoid the cost of transfer prices, a measure that was agreed by the member countries of the Organization for Economic Cooperation and Development. He also explained that this relocation movement in the UK would offer more advantages. Among them, the fact that investment firms can now benefit from “current” interest on bonds and loans to shareholders.
When Henderson Diversified was launched in 2007 this was not possible so it was incorporated into Jersey. A Luxembourg subsidiary was later added to organize portfolio loans and avoid double taxation. According to the managers this is no longer necessary.
Henderson Diversified will make a decision at the end of the year after formally consulting shareholders. If they agree, the fund and its subsidiary will be liquidated and replaced by a new investment company in the United Kingdom.
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