Swedish to UK debt relief, Tax

Uk subsidiary has lots of tax losses, what’s tax efficient?

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Uk sub of Swedish parent has loans with parent.

 

UK sub has lots of cf tax losses to utilise.

 

If loan is written off, is this a loss for the Swedish parent so they can offset their profits, and a profit for Uk sub to utilise against tax losses?

 

 

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By Bobbo
21st Jul 2022 20:44

Truecon wrote:

If loan is written off, is this a loss for the Swedish parent so they can offset their profits 

This is a question for accountingweb.se

Truecon wrote:

and a profit for Uk sub to utilise against tax losses? 

Others here can better comment but i'm vaguely aware there's some restriction on connected company write offs for tax purposes (loss on write off not a deduction for lender and 'profit' on release from loan not a taxable credit for loanee). *If* that is the case then your answer would be no.

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By David Ex
21st Jul 2022 22:51

It’s a call for the Swedish parent company who would be invited to waive the debt so that would be the first conversation. There will be local tax rules generally and possibly transfer pricing considerations. Unless you’re a tax specialist (in all the relevant jurisdictions), I wouldn’t have a go.

As a general rule, transactions shouldn’t be undertaken purely for tax purposes.

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