---
title: "A company that changes tax residence is taxed as if it sold everything"
url: https://www.boruconsulting.com/blog/company-exit-tax-uk-ireland-uae
category: "Taxation Strategy"
author: "Ruairi Laughlin-McCann"
published: 2026-11-05
modified: 2026-11-05
---

# A company that changes tax residence is taxed as if it sold everything

> When a company's management moves abroad, its tax residence can move with it, and the UK and Ireland treat that moment as a sale of everything the company owns at market value. A move to the UAE gets none of the deferral an EEA move would, and the UAE charges nothing on the way in or out.

## Key Takeaways
- A company's tax residence follows where it is managed as well as where it is incorporated, so a company can migrate without anyone deciding it should, when its directors relocate and start taking decisions abroad. This is the company's exit charge, separate from the individual director's own position.
- A UK-incorporated company cannot leave the UK by moving its board to Dubai. It is UK resident by incorporation under section 14 of the Corporation Tax Act 2009, and under the UK-UAE convention only a company incorporated or recognised under UAE law is a UAE resident. A company incorporated elsewhere but managed in the UK can leave, and that is when the charge bites.
- A company that ceases to be UK resident is treated under section 185 of the Taxation of Chargeable Gains Act 1992 as selling and reacquiring its assets at market value. It must first notify HMRC and have arrangements for its tax approved under section 109B of the Taxes Management Act 1970, and exit charge payment plans are only available for moves to an EEA state.
- Ireland charges exit tax at 12.5% on unrealised gains when a company migrates its residence or moves assets out of the Irish tax net, under sections 627 to 629C of the Taxes Consolidation Act 1997, with a higher rate where the exit is part of a plan to sell. Payment over six instalments is available only for moves within the EU or EEA.
- Australia applies CGT event I1 when a company stops being an Australian resident, treating its assets other than taxable Australian property as sold at market value, without the deferral choice available to individuals. The UAE has no exit charge, so the cost of moving to Dubai is paid entirely in the country being left.

## The company that migrates by accident

A company does not need a board resolution to change its tax residence. In most of the corridor's tax systems, residence follows where a company is really managed, and that can move the day its directors do.

The founder relocates to Dubai. The other directors are there too, or join board calls from there. The strategic decisions that used to be taken in London or Dublin are now taken in the UAE. Nobody has filed anything or decided anything about the company's residence. For a company incorporated outside the UK, the UK may stop treating it as resident, and the UK and Ireland both treat the moment a company leaves their tax net as a sale of everything it owns.

That is the subject of this note: the company's own charge on leaving. The individual director's position on moving abroad is a separate question, covered for the UK in the note on [selling a business after moving to Dubai](https://www.boruconsulting.com/blog/selling-business-crypto-after-moving-to-dubai) and for the Scandinavian systems in the note on [Norway, Sweden and Denmark exit taxes](https://www.boruconsulting.com/blog/norway-sweden-denmark-exit-tax-moving-to-dubai). The mechanics of where a company is managed are set out in the analysis of [central management and control across the corridor](https://www.boruconsulting.com/blog/central-management-control-corridor-residence).

## Who can actually leave the UK

The first question is whether the company can stop being UK resident at all, and for many owners the answer is that it cannot.

**A UK-incorporated company stays.** Under section 14 of the Corporation Tax Act 2009, a company incorporated in the UK is UK resident whatever happens to its board. The only exception is where a double tax treaty awards its residence to the other country, in which case section 18 of the same Act treats it as not UK resident. The UK-UAE convention of 2016 does not do that for a UK company run from Dubai. Under Article 4(1)(a)(ii), a person other than an individual is a UAE resident only if it is incorporated or otherwise recognised under UAE law. A UK company whose directors all live in Dubai is still a UK resident company, and still files in the UK.

**A company incorporated elsewhere can leave.** A company incorporated in the British Virgin Islands, Jersey or the UAE but managed in London is UK resident on the central management and control test. When its management genuinely moves to Dubai, it ceases to be UK resident. That is the case the UK exit rules are built for.

**A UAE company managed from London is caught in between.** A company incorporated in a UAE free zone but run from London is UK resident by management and UAE resident by incorporation. Under Article 4(4) of the convention, the two competent authorities try to agree its residence; if they do not, it cannot claim most of the treaty's benefits. Ending that position by moving management to the UAE is a UK exit.

This is also why a UK company cannot simply be moved to the UAE by redomiciliation, the subject of the note on [moving a company to another country](https://www.boruconsulting.com/blog/move-company-to-another-country).

## The UK charge on leaving

When a company ceases to be UK resident, section 185 of the Taxation of Chargeable Gains Act 1992 treats it as having disposed of its assets immediately before it left, at market value, and reacquired them. The gains that had built up in those assets are charged to corporation tax at that moment, although nothing has been sold and no cash has come in. Intangible assets and loan relationships have parallel rules under the corporation tax code.

Three further rules make the UK exit a formal process rather than a change of address.

**Notice and approval before leaving.** Section 109B of the Taxes Management Act 1970 requires a company, before it migrates, to notify HMRC of its intention to cease to be resident and of the date, provide a statement of the tax it owes and will owe for periods before migration, propose arrangements for paying it, and obtain HMRC's approval of those arrangements.

**Penalty for leaving without approval.** A company that migrates without meeting those conditions is liable under section 109C to a penalty of up to the amount of its outstanding tax at the date of migration.

**Recovery from others.** Where tax of a migrated company remains unpaid six months after it was due, section 109E allows HMRC to recover it from other group companies and from controlling directors.

**Deferral stops at the EEA border.** The UK allows the exit charge to be paid over time under an exit charge payment plan, but only where the company, on leaving, carries on business in an EEA state and becomes resident there. A company that moves its residence to the UAE pays on the normal timetable.

## Ireland's exit tax

Ireland applies a broad exit tax, introduced with effect from 10 October 2018 to implement the EU Anti-Tax Avoidance Directive, under sections 627 to 629C of the Taxes Consolidation Act 1997. It applies when an Irish-resident company transfers its residence abroad, and when a company moves assets or a business out of an Irish permanent establishment to another territory.

The charge treats the assets as sold at market value. The rate is 12.5%, deliberately aligned with the trading rate rather than the capital gains rate. An anti-avoidance rule applies the higher capital gains rate instead where the exit forms part of a transaction to dispose of the asset and its purpose is to secure the lower rate. The standard capital gains rate was cut from 33% to 31% for disposals on or after 7 October 2026.

Three features matter in practice.

- **Assets that stay in Ireland.** The charge does not apply to assets that continue to be used in Ireland by a permanent establishment of the company after it migrates.
- **Instalments only within Europe.** A company can opt to pay the exit tax in six equal instalments over five years, with interest, where the exit is to another EU or EEA state. A move to the UAE gets no instalments.
- **Recovery from others.** Exit tax unpaid by a non-resident company can be recovered from another Irish-resident member of its group or from a controlling director resident in Ireland.

An Irish-incorporated company is Irish resident under section 23A of the same Act unless a treaty treats it as resident elsewhere, so, as in the UK, the companies that can actually leave Ireland are mostly those incorporated abroad and managed in Ireland, or Irish companies that a treaty awards to another country.

## Australia, and the other origin countries

**Australia.** When a company stops being an Australian resident, CGT event I1 under section 104-160 of the Income Tax Assessment Act 1997 treats it as having disposed of its assets at market value, other than assets that are taxable Australian property, which remain within Australian tax anyway. Individuals can choose to defer that event; the choice is not available to companies. A foreign-incorporated company stops being Australian resident when its central management and control leaves Australia and its voting power is no longer controlled by Australian residents, so an Irish or Singapore parent managed from Sydney that moves its board abroad can trigger the event. The way an Australian group gains a foreign parent without moving its Australian company is set out in the note on [giving an Australian group an Irish parent](https://www.boruconsulting.com/blog/australian-company-irish-holding-company).

**Hong Kong and the offshore centres.** Hong Kong taxes by source rather than residence and has no exit charge on a company leaving; the British Virgin Islands and the Cayman Islands have no corporate income tax to leave. For a group moving from those places, the exit cost is in stamp duty, transfers and the country the directors are leaving, as set out in the note on [moving a Hong Kong company to Dubai](https://www.boruconsulting.com/blog/move-hong-kong-company-to-uae).

## What the UAE charges, coming and going

The UAE has no exit charge. A company that ceases to be UAE resident does not pay to leave, and nothing in UAE law charges unrealised gains on departure.

Arrival is a different matter. A company incorporated abroad becomes a UAE resident taxable person if it is effectively managed and controlled in the UAE, under Article 11 of Federal Decree-Law No. 47 of 2022, and is then taxed at 9% on taxable income above AED 375,000, or 0% on qualifying income as a Qualifying Free Zone Person where it is a free zone company that meets the conditions. Whether the UAE recognises a market-value base for assets a company brings with it is a specific question for those assets under the UAE rules, not something to assume.

The asymmetry is the point. The cost of moving a company's residence to Dubai is paid in full in the country being left, on the day it is left, and the UAE does nothing to offset it.

## The exit charge across the corridor

| Country being left | Who can leave | What is charged | Deferral for a move to the UAE | Before leaving |
| --- | --- | --- | --- | --- |
| United Kingdom | Companies incorporated outside the UK and managed in the UK; not UK-incorporated companies | Corporation tax on gains deemed realised at market value, section 185 TCGA 1992 | None. Payment plans only for EEA moves | Notify HMRC and obtain approval of payment arrangements, section 109B TMA 1970 |
| Ireland | Mostly companies incorporated abroad and managed in Ireland, or treaty-awarded Irish companies | Exit tax at 12.5%, higher rate in anti-avoidance cases, sections 627 to 629C TCA 1997 | None. Instalments only for EU or EEA moves | Recovery possible from group members and controlling directors |
| Australia | Companies ceasing Australian residence | CGT event I1 on assets other than taxable Australian property | None; the deferral choice is for individuals only | Australian residence tests under section 6(1) ITAA 1936 |
| UAE | Any company | Nothing | Not applicable | Not applicable |

## Planning the move rather than discovering it

A company's exit charge is almost always cheaper when it is planned than when it is discovered, because discovery happens after the gain has been crystallised and the deadline has passed.

1. **Establish where each company is resident today.** For every company in the group, record where it is incorporated and where its board actually meets and decides.

2. **Identify which companies a director's move would carry with it.** A UK-incorporated company will stay; a BVI or UAE company managed in London may not.

3. **Value the assets that would be deemed sold.** Shares in subsidiaries, intellectual property, property and goodwill are where the large unrealised gains sit.

4. **Check the reliefs that survive the exit.** A UK company's substantial shareholding exemption or an Irish company's section 626B exemption may cover a deemed disposal of qualifying shareholdings, which can reduce the charge to very little.

5. **File the notice before the move.** In the UK, notify HMRC and agree payment arrangements under section 109B before management leaves, not after.

6. **Decide whether the company should move at all.** Often the better answer is to leave the company where it is, put a UAE parent above it, or keep its board where it is, rather than let it migrate. Where a company is really run from Dubai but incorporated in the UK, the position examined in the note on [running a UK business from Dubai](https://www.boruconsulting.com/blog/dubai-company-from-uk-tax-residence) is the more common problem.

## Five traps

**Trap one: assuming a director's move leaves the company where it was.** For a company incorporated outside the UK, residence can move with management. Map the board before anyone relocates.

**Trap two: assuming a UK company can follow its directors to Dubai.** It cannot. It stays UK resident by incorporation, and the UK-UAE convention does not award it to the UAE. The founder who expects the company to leave with him ends up with a UK company run from abroad.

**Trap three: migrating without telling HMRC.** A company that ceases to be UK resident without the section 109B notice and approved arrangements faces a penalty of up to its outstanding tax, and its directors can be pursued for the tax itself.

**Trap four: expecting the European deferral.** The UK payment plans and Ireland's instalments are available for moves within the EEA or EU. A move to the UAE is taxed at once.

**Trap five: forgetting the reliefs.** A deemed disposal is still a disposal, so exemptions for qualifying shareholdings can apply to it. Ignoring them overstates the cost; assuming them without checking the conditions understates it.

## Frequently asked questions

### What is corporate exit tax?

Corporate exit tax is a charge on the unrealised gains of a company when it stops being resident in a country, or moves assets out of that country's tax net, without actually selling them. The company is treated as having sold its assets at market value at the moment it leaves. The UK charges it under section 185 of the Taxation of Chargeable Gains Act 1992, Ireland under sections 627 to 629C of the Taxes Consolidation Act 1997, and Australia through CGT event I1. The UAE has no exit tax.

### Does a UK company pay exit tax if its directors move to Dubai?

Not if it is incorporated in the UK, because it cannot leave. A UK-incorporated company is UK resident under section 14 of the Corporation Tax Act 2009, and under the UK-UAE convention only a company incorporated or recognised under UAE law is a UAE resident, so the treaty does not move it. A company incorporated elsewhere but managed in the UK is different: when its management moves to Dubai it ceases to be UK resident and the exit charge applies.

### What happens when a company ceases to be UK resident?

Under section 185 of the Taxation of Chargeable Gains Act 1992, it is treated as having sold and reacquired its assets at market value immediately before leaving, and the gains are charged to corporation tax. Before it leaves, section 109B of the Taxes Management Act 1970 requires it to notify HMRC, give a statement of its tax liabilities and obtain HMRC's approval of arrangements to pay them. Leaving without doing so carries a penalty of up to the outstanding tax.

### Can the UK exit charge be paid in instalments?

Only for a move to the EEA. An exit charge payment plan is available where the company, on ceasing to be UK resident, carries on business in an EEA state and becomes resident there. A company that moves its residence to the UAE, or anywhere else outside the EEA, cannot use a payment plan and pays the charge on the normal corporation tax timetable.

### What is Ireland's exit tax rate for companies?

12.5% on unrealised gains when a company migrates its tax residence or moves assets or a business out of an Irish permanent establishment, under sections 627 to 629C of the Taxes Consolidation Act 1997, in force since 10 October 2018. A higher capital gains rate applies where the exit is part of a transaction to dispose of the asset to secure the lower rate. The standard capital gains rate is 31% for disposals from 7 October 2026. Instalment payment is available only for moves within the EU or EEA.

### Does the UAE charge exit tax on a company leaving?

No. The UAE has no exit charge on a company that ceases to be resident. A company that arrives becomes a UAE taxable person if it is effectively managed and controlled in the UAE, under Article 11 of Federal Decree-Law No. 47 of 2022, and is taxed on its income from then on. The cost of moving a company's residence to the UAE is paid in the country it leaves, not in the UAE.

### Does Australia tax a company that moves its residence abroad?

Yes. When a company stops being an Australian resident, CGT event I1 under section 104-160 of the Income Tax Assessment Act 1997 treats it as having sold its assets at market value, except taxable Australian property, which stays within Australian tax. Individuals can choose to defer CGT event I1, but companies cannot. A foreign-incorporated company managed from Australia can trigger it by moving its board abroad.

### Can a company migrate by accident?

Yes, where it is incorporated outside the country it is managed in. Residence for tax follows central management and control as well as incorporation, so when the directors of a BVI or UAE company that was run from London move to Dubai and take their decisions there, the company can cease to be UK resident without anyone intending it. That is when the exit charge arises, and the UK notice requirement applies before the move, not after.

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**Critical advisory.** The exit charge is the line in a relocation plan that nobody costs, because the move feels administrative and the company has not sold anything. In my experience it is discovered after the director has moved and the board has started meeting in Dubai, when the gain is already fixed and the notice the UK wanted before the move was never given.

We map where every company in the group is resident before anyone relocates, value what a move would deem sold, apply the shareholding reliefs where they fit, and decide whether the company should move at all or stay where it is under a new parent. If your directors are moving abroad, speak to us through our [services page](https://www.boruconsulting.com/services) before the first board meeting is held from the new country. This article is general information and not legal or tax advice; your own position should be confirmed against your specific facts before you act.

## Glossary concepts in this article
- [Exit Tax](https://www.boruconsulting.com/glossary/exit-tax): A charge on unrealised gains that arises when a company or individual ceases to be tax resident in a country, treating the assets as sold at market value on departure.
- [Central Management and Control (CMC)](https://www.boruconsulting.com/glossary/central-management-and-control): The long-standing test that treats a company as tax resident where its real top-level decisions are actually made, rather than where it is registered.
- [Permanent Establishment (PE)](https://www.boruconsulting.com/glossary/permanent-establishment): A fixed place of business, or a dependent agent, through which a company carries on business in another country.

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Source: https://www.boruconsulting.com/blog/company-exit-tax-uk-ireland-uae