Cross-Border Investment Legal Environment: Post-Brexit Opportunities & Challenges

Key Legal Considerations for Foreign Investors

National Security and Investment Act 2021 (NSIA 2021)

1. The UK government has increased scrutiny over foreign direct investments (FDI) in strategic sectors such as technology, infrastructure, defense, and data security.

2. Transactions triggering national security concerns may require governmental approval.

Changes in Taxation for Non-Resident Investors

2. Non-UK residents are now subject to UK capital gains tax (CGT) on UK property transactions.

3. Real estate investments through offshore companies are now taxable, making tax-efficient structuring essential.

4. Withholding tax on dividends is now a critical factor for overseas investors, requiring careful structuring of holding entities.

Investment Strategies for Post-Brexit UK

• Using UK Holding Companies: Establishing UK-based SPVs or holding entities in Luxembourg, the Netherlands, or Ireland can optimize tax efficiency.

• Restructuring Real Estate Investments: Given CGT implications, Trusts and UK REITs (Real Estate Investment Trusts) can offer more tax-efficient ownership structures.

• Leveraging Double Taxation Treaties: Non-resident investors should explore UK tax treaties with countries like Hong Kong, Switzerland, and the UAE to mitigate tax liabilities.

Conclusion

Despite increased regulatory scrutiny, the UK remains a highly attractive investment destination. By adopting strategic legal structuring, investors can ensure tax efficiency, compliance, and long-term stability in their UK holdings.