What Is a Redomiciliation?

Redomiciliation Definition and Meaning

If you’re wondering what redomiciliation is, then this article is for you. In short, it is the process by which a company changes its jurisdiction while maintaining its business structure. This process is often referred to as corporate migration. It has become particularly widespread in countries such as the United Arab Emirates (UAE), Malta, Cyprus, and Singapore in recent years, as the need to change jurisdictions has become more common, and these countries offer attractive business conditions.

Why Companies Choose Redomiciliation

There are many reasons for corporate redomiciliation, but legal, commercial, and practical reasons remain among the main ones. When a company relocates, it continues to operate while gaining additional benefits from the new jurisdiction, such as new commercial opportunities and higher tax efficiency. So, here are the main reasons for the redomiciliation process:

• Businesses relocate for stronger legal systems and better protection of shareholder rights.

• Access to capital & markets.

• Operational flexibility.

• Simple compliance.

• Reduced reporting burdens.

• Easier business administration.

• Access to professionals, banking and modern ecosystems.

• Improved image & credibility.

Redomiciliation of Companies Explained

The process of changing the place of registration is sometimes equated with registering a subsidiary or opening a branch abroad, but this is incorrect. When you decide on company redomiciliation, you change the registration and that's it. The legal entity, structure, history, documents, rights, and obligations remain the same, except that the company's activities will now be regulated by different legislation. 

Key Situations When Redomiciliation Is Used

Applying the appropriate procedure can be effective when legislation changes for the worse in the place of initial registration, such as in the tax or financial sphere. It can also be effective when regulatory requirements become more stringent and difficult to comply with. What are the main reasons for the redomiciliation of companies?

• Seeking a more favorable tax regime;

• Ensuring regulatory stability;

• Looking for a more favorable business environment;

• Expanding their global presence;

• Improving their reputation.

  
  

They may also do so to secure business continuity in cases of political instability, sanctions, or unfavorable legislative changes in the country of origin.

Benefits of Redomiciliation

Tax Advantages and Regulatory Benefits

Some jurisdictions offer attractive tax regimes and related benefits. These regimes involve granting tax breaks that allow companies to reduce their tax burden. Thus, a foreign company may consider redomiciliation if it was originally registered in a country with an unfavorable tax system or if changes in local legislation have led to higher tax rates. In such circumstances, it becomes economically unreasonable to continue operations in that jurisdiction.

Access to Better Business Environments

Your choice of jurisdiction affects how attractive you are to potential investors who prefer companies to be registered in economically stable areas with developed legal systems. Thus, choosing the most favourable jurisdiction adds credibility in the eyes of potential investors.

It is also worth considering the company's plans and developing a strategy that considers the needs of customers and their preferred location. Choosing a jurisdiction closer to your customers improves and strengthens your interaction with them.

Continuity of Corporate Identity

One of the crucial benefits of redomiciliation is that your company's activities will not cease or change. This means that your data, credit history, commercial transactions, contracts, and documents will remain valid.

Unlike liquidation and the creation of a new legal entity, redomiciliation allows a company to maintain its legal identity. This means that the company's corporate history and data remain in force, so there is no need for renegotiation. Additionally, bank accounts and intellectual property rights do not require re-registration or re-evaluation.

Redomiciliation Process

The process of changing registration may vary depending on the country of the new registration. Below are the general steps that must be followed in any case.

First, confirm that the company meets all the requirements for changing its country of registration. Next, select a new jurisdiction that meets the company's needs. Prepare the necessary documents and verify the possibility of changing the registration. Review the corporate records, financial statements, and regulatory requirements of both jurisdictions. Verify whether the current company name can be used in the desired jurisdiction. Submit a request to change the company's jurisdiction to the relevant authorities in both the current and new jurisdictions.

Once all steps have been completed, finish the post-relocation formalities, including updating licenses, contracts, and bank accounts, as well as notifying partners, employees, and regulators.

Countries That Allow Redomiciliation

It is important to know when the procedure for changing a company's jurisdiction is permitted, as some countries prohibit it. For example, in Poland, it is not possible to transfer a company, and the only option is to liquidate the company and establish a new legal entity.  Changing the place of registration is possible in countries where it is established by law.

Such countries include Cyprus, Singapore, Malta, the United Arab Emirates (UAE), Panama, and the Seychelles.

Challenges and Considerations

The following should be taken into account when deciding on corporate redomiciliation:

Compliance with regulatory and legislative requirements. The transfer process is not available in all countries, and the list of countries that allow redomiciliation is quite limited. It is important to comply with the local laws of the new jurisdiction and investigate the possible risks of non-compliance between the laws of the country of origin and the new jurisdiction.

Pay close attention to taxation, including potential liabilities and loss of tax benefits in both countries, as well as the need to properly structure the company's taxes.

Be prepared for possible administrative difficulties when interacting with government agencies in both countries. Remember that the transfer process will incur additional costs and require more time.

Select a jurisdiction that is well-regarded by clients and investors, as a negative image of the jurisdiction will directly affect your company.

FAQ – Company Redomiciliation

What is redomiciliation in business terms?

Redomiciliation meaning in business terms is the process of transferring a company’s legal seat from one jurisdiction to another while keeping the same legal entity, history, and obligations.

What are the benefits of redomiciliation?

It allows businesses to move to a more favorable jurisdiction while maintaining corporate identity, contracts, assets, licenses, and reputation without liquidating and starting over.

Which countries allow redomiciliation?

Many jurisdictions, such as Cyprus, Luxembourg, Malta, the UAE, Singapore, and some low-tax centers (e.g., BVI, Cayman Islands) permit redomiciliation, but rules may differ.

What is the difference between incorporation and redomiciliation?

Incorporation means creating a new company from scratch, while the redomiciliation process is relocating an existing company to a new jurisdiction without breaking its continuity.

How long does the redomiciliation process take?

Depending on the jurisdiction, documentation, and complexity, corporate redomiciliation typically takes between 1 to 3 months.