The Lemon Fool

EAT (European Assets Trust) announces its maiden dividend: https://www.investegate.co.uk/article.a ... 700082632E

I had been vaguely aware of an administrative move, but I hadn't realised that meant one company had been dissolved and another sprung up in its place, with all the same owners and assets (less no doubt some attrition due to the move).

On the assumption that losses from the move will be a one-off, does anything else change for the company or for those who hold it within a tax-shelter?

UncleEbenezer wrote:EAT (European Assets Trust) announces its maiden dividend: https://www.investegate.co.uk/article.a ... 700082632E

I had been vaguely aware of an administrative move, but I hadn't realised that meant one company had been dissolved and another sprung up in its place, with all the same owners and assets (less no doubt some attrition due to the move).

On the assumption that losses from the move will be a one-off, does anything else change for the company or for those who hold it within a tax-shelter?

It changed its domicile from The Netherlands to the UK on 18th March 2019 with a 1-for-1 exchange of shares in the NV to shares in the plc. No cash was distributed and there was no sale for CGT purposes. Keep your original acquisition dates and costs.

So European Asset's dividends from that date are no longer classified as foreign income for the tax return. There won't be any Dutch withholding tax to allow for (and which could reduce your UK tax liability). From the RNS:

"European Assets Trust PLC ("EAT PLC" or the "Company") announces the completion of the migration of the legal seat and structure of European Assets Trust N.V. ("EAT NV") from the Netherlands to the United Kingdom by means of a cross-border merger by absorption with EAT PLC (the "Migration"). "

https://www.investegate.co.uk/european- ... 00030774T/

UncleEbenezer wrote:On the assumption that losses from the move will be a one-off, does anything else change for the company or for those who hold it within a tax-shelter?

I'd say "no change" for the very last part of your question.

Here's a link to an earlier Lemon discussion on EAT from the start of this year. The divi was cut due to a fall in the net asset value and their policy of distributing based on 6% of NAV - but the measurement was at the start of the year (when the market was "low").

viewtopic.php?f=54&t=15620

So let me get this right.

Despite Brexit ....a Dutch company moves to the UK.....and gets lower taxes.....

If the move had been the other way around then it would be a Remainer talking point.

JoyofBrex8889 wrote:
If the move had been the other way around then it would be a Remainer talking point.

Possibly, but not on this board which is Sectors and General Share Dealing > Investment Trusts and Unit Trusts.

RC

It seems odd that they would set up a high yield company intent on a 6% dividend in a jurisdiction with withholding tax, which isnt very investor friendly. London by comparison is a much better place to be an income investor: No withholding tax on dividends!

I guess their main operations are on the Continent, so that may be a factor.

JoyofBrex8889 wrote:It seems odd that they would set up a high yield company intent on a 6% dividend in a jurisdiction with withholding tax, which isnt very investor friendly. London by comparison is a much better place to be an income investor: No withholding tax on dividends!

I guess their main operations are on the Continent, so that may be a factor.

I believe that it was because the dividend was set at 6% of the previous year end's NAV, much higher than the portfolio's yield.

UK investment trusts used to be unable to pay dividends out of capital. But you could do this in The Netherlands so that is where it was established. When this was changed the company moved to the UK

SalvorHardin wrote:I believe that it was because the dividend was set at 6% of the previous year end's NAV, much higher than the portfolio's yield.

That seems a marginally strange approach for a property company. If it is fully invested it might not have 6% of NAV in cash to pay the dividend. Perhaps it could always rely on borrowing facilities.

Alaric wrote:

SalvorHardin wrote:I believe that it was because the dividend was set at 6% of the previous year end's NAV, much higher than the portfolio's yield.

That seems a marginally strange approach for a property company. If it is fully invested it might not have 6% of NAV in cash to pay the dividend. Perhaps it could always rely on borrowing facilities.

All part of the job of managing it, to be ready for such things at the appropriate time.

And it's quarterly dividends, so that 6% is only 1.5%.

Alaric wrote:

SalvorHardin wrote:I believe that it was because the dividend was set at 6% of the previous year end's NAV, much higher than the portfolio's yield.

That seems a marginally strange approach for a property company.

EAT isn't a property company, it's a European (ex-UK) Smaller Companies IT. https://www.theaic.co.uk/companydata/232