“The hardest thing in the world to understand is tax" – Albert Einstein (1879 – 1955)

We were introduced to a company with a significant borrowing exposure upon which 20% income tax at source had to be deducted before payment of the interest was made. This effectively left the non-resident lender with a 20% tax charge on their income. With appropriate tax planning this has now been restructured and interest is now paid over gross – effectively improving the lenders return by that 20%.

The payee company is still able to obtain a deduction for the payments that it now continues to make. The lender now receives an increased tax-free return.