Shire Pharmaceutical’s decision last week to change tax residency to Ireland is likely to be the first of many, according to an authoritative study.

Michael Devereux, the director at the centre, has released a paper criticising the government's proposals to crack down on foreign profits.

'The government proposes to tax the worldwide "passive income" - interest, royalties and dividends - of any multinational companies headquartered in the UK. This goes far beyond the need to protect the UK tax base from profits being shifted out of the UK,' the paper says.

'If these proposals were implemented, the Shire example could be the first of many such relocations,' it adds.

Devereux argues countries which tax the receipt of dividends received from foreign subsidiaries, as the UK currently does, are less attractive locations for headquarters. The foreign profits proposals will drop the practice for the UK.

Another paper released by the Centre showed 6% of 200 companies surveyed had changed their location due to the tax regime of the country where they were headquartered.

Further Reading:

Centre for Business Taxation, Oxford University

Taxing Foreign Profit

Headquarter Relocations and International Taxation