Holding entity arrangement- Things to consider
Holdings have become a common part of the business for many years now. By utilizing such entities, individuals around the world can easily structure, maintain control and manage their assets on their own, or while taking part in a larger group of investors, who unite their efforts for mutually beneficial cooperation.
A holding company is an entity able to engage in ownership of various financial and other types of assets in personal possession, intellectual and physical property, stocks, etc. Being a beneficial owner, engaged in such a structure allows indirect management of all dependent assets using resolutions produced by the board of directors of the holding.
However attractive, due to rapid changes in the economic and legislative environments happening around the world, holdings introduce a number of challenges for those willing to use their benefits.
Among the most important questions to address before starting a holding:
- Presence of a double taxation relief treaty between the applicant’s home country and planned to hold jurisdiction.
- Presence of income taxation
- Is there a dividend tax relief mechanism
- What is the income repatriation tax at the holding destination
- Is local presence a “must”
In many cases, the main factor of income tax regime would be the percentage amount of the capital, contributed by a given holding to its daughter company.
Below listed are examples of several countries and their regulations towards holdings. These examples provide a basic vision of what the general requirements look like.
Cyprus legislation system guarantees direct control over nominee directors and shareholders, therefore providing extra security for beneficial owners.
- Taxation system benefits accessible if the holding management activity is conducted from within the jurisdiction.
- In addition, physical managerial presence provides access to local residency rights.
- Denmark requires any registered entity to have a locally based manager.
- Minimal starting capital has to be paid and reaches 60,000 EUR in some cases. Zero tax regime provided for income from international property transactions.
- Among obligatory requirements are a local registered office, as well as revision officer.
Spain partial physical presence is required. Minimal paid capital for LLC’s is 60,000 EUR.
Netherlands requires holding manager’s physical presence to enable tax relief benefits.
- A Registered office is a “must”
- Mandatory annual audit and tax report
- The United Arab Emirates provides a wide range of holding opportunities.
- Virtually any locally registered entity can become a holding.
- Physical presence and/or locally-based manager is not an obligatory requirement.
- Paid capital is not required.
- Zero income repatriation tax
- Zero corporate tax
- Double taxation avoidance treaties with more than 60 countries worldwide
There are many other nuances to address while considering the most appropriate holding jurisdiction, such as ease of banking, the ability to arrange personal tax residency for managers and owners, and many more.
To find out more, simply contact Adam Global Dubai. One of our specialist advisors will assist you shortly.
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