Deloitte – UK tax structure a right move

A new tax transparent vehicle to be launched in the UK could prompt an additional £20bn in multinational pension fund investments into the UK, according to Deloitte.

A tax transparent vehicle is an entity which allows beneficial double tax treaties between investors and investments to be accessed.

Gavin Bullock, a Deloitte partner commented: “Over the past 10 years Deloitte has worked closely with multinational companies and investment management groups in establishing tax transparent investment vehicles. For multinationals these have resulted in material economies of scale and improved governance for their international pension funds. In addition, leading investment managers have gained a competitive edge by taking advantage of the tax efficiencies that these vehicles can offer.

“The announcement is a proactive move by the Treasury that will significantly increase the competitiveness of the UK financial services sector. Countries such as Ireland and Luxembourg which have already established tax transparent vehicles had gained a competitive advantage that lead to the establishment of centres of asset management activity outside the UK.”

In terms of assets invested in tax transparent vehicles, Deloitte estimates that around £20billion of additional multinational pension fund investments would be made in the UK each year. The potential for third party investment management funds to be transferred to such vehicles will be far more significant, because a tax transparent vehicle can support a master-feeder fund structure and allow asset managers to realise economies of scale through fund rationalisation.

Said Bullock: “This is a great opportunity for the UK to enable UK companies and fund managers to increase their competitive performance and to encourage those providers considering setting up a tax transparent vehicle to look again at the UK, especially in response to regulatory changes such as those under UCITS IV.”

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Caroline Allen
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