Tax (Reporting & Relief)
Disclaimer: This is not tax advice. Please seek independent tax advice.
The tax-related information provided here and anywhere else on Odin’s website is for informational purposes only and should not be considered tax advice. We recommend consulting a qualified tax advisor to understand how the topics discussed may apply to your specific situation.
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EIS and SEIS
(You can find a guide to the end-to-end S/EIS process here)
The Enterprise Investment Scheme and Seed Enterprise Investment Scheme are government schemes which incentivise investment into U.K. companies via tax relief. Claims can either be submitted for the current tax year or backdated into a previous tax year.
If you’ve specified your deal as being eligible for EIS, SEIS, or both, and have provided Odin with Advanced Assurance of this during the deal review process, investors will be able to claim relief via the relevant scheme after the deal has closed on Odin.
If you are making use of Odin’s rolling close facility, please note that you won’t be able to access the information needed for S/EIS submissions until the deal has fully closed on Odin.
If your investors have questions, please refer them to the Investor Guide, where we elaborate on the process from their perspective. The following two points are the most common queries we see:
Where is my S/EIS certificate?
Odin is dependent on how soon your company can obtain the S/EIS UIR in order for the S/EIS3 certificates to be generated.
If Odin is handling the S/EIS3 certificates we will do so as quickly as possible. However, we have no control over how quickly your company obtains and distributes these, and would advise the investor defer to you.
The tax year is approaching and I’m worried I can’t submit my claim in time
If it’s unlikely that the certificates will be generated and distributed to investors before the tax year- end deadline, please advise your investors that their relief claim can be backdated into a previous tax year.
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U.S. Investor Reporting (PFIC/FATCA)
All Odin entities are considered Passive Foreign Investment Companies (PFICs) under the Foreign Account Tax Compliance Act (FATCA). FATCA requires Foreign Financial Institutions to report information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest, directly to the Internal Revenue Service (IRS).
Odin’s U.S. advisors, Bennett Thrasher, assist us with additional documentation so that there are no tax implications for U.S. investors. As such, Odin can accept funds from U.S. investors without issues. Please note, however, that Odin does not provide tax advice, and if you or your investors have any concerns we’d recommend speaking to qualified accountants and enquiring independently about PFIC taxation.
U.S. investors are either investors who have provided Odin with a registered address in the U.S. during their account setup, investors who have completed the verification checks with a U.S. passport, or investors who have otherwise informed Odin of their U.S. nationality and/or taxpayer status.
- Please note that if one of your investors has U.S. tax liability, but has provided Odin with a passport and residential address from another country, you’ll have to notify Odin that they’re a U.S. investor.
Odin does not handle blue-sky filings. If you require this our advice is to seek a provider. Odin also does not deal with K-1 forms, as they aren’t applicable to PFICs.
Odin’s process for ensuring tax compliance for U.S. investors is as follows:
- Once per year, in January, Odin provides FATCA and PFIC documentation to U.S. investors, so that they may make a Qualified Electing Fund (QEF) special election and report annual earnings under the QEF regime (instead of being subject to the Excess Distribution Regime, which incurs additional taxation). This ensures no additional tax liability on their investments held via Odin vehicles.
- U.S. investors have additional reporting requirements regarding their investment in a PFIC. We advise U.S. investors to file Form 8621.
- Additionally, if the value of your investor’s investments is greater than $50k, (or greater than $100k if they are married and file jointly with their spouse), they will also have to submit Form 8938. You can find more guidance here.
- Those investors required to file Form 8938 must do so annually as part of their personal tax returns. Since the PFIC has no income in Odin's case (no dividends are paid), investors may choose only to file form 8621 once an exit event occurs, in order to make a QEF election on the capital gain. However, we advise investors to take independent tax advice on this matter.
- Odin provides the information needed for all of these filings, but don’t handle the filings for the user. They need to fill out the forms themselves with the data we provide.
Odin does not charge your U.S. investors for any of this.
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Tax reporting in other domiciles
Because Odin uses a United Kingdom Bare Trust structure to administer investments, there is complete tax transparency. This means that in practice, there are no geographic restrictions around where investors can invest from, or the companies they can invest into.
Because of this tax transparency, any of your investors, as beneficial owners of the shares, would pay tax wherever they were tax residents upon a liquidity event. Investors do not have tax liability in the U.K.
Odin does not provide tax advice in any geography, and if you or your investors have any questions we’d recommend seeking independent advice and/or speaking to qualified accountants.
The same applies to any other government-sponsored tax relief scheme operated in the investor’s home country. If they need to process a claim for tax relief based on these schemes, Odin’s advice is to seek advice from a qualified accountant in the country they’re claiming the relief in.