A holding company is a corporation that limits its business to the ownership of stocks in other companies. In addition, it can perform supervision or management functions for these companies. A holding company does not produce goods or services itself.
Why use a holding company?
There are a number of reasons for using a holding company.
First of all, holding companies achieve the reduction of risk for the ultimate owners of the assets. This is especially the case, when holding companies are located in countries with strong asset protection laws.
In addition, a holding company can help centralize the ownership and control of a number of different companies. For example, you could transfer the shares of a holding company to transfer a large number underlying assets, instead of going through the procedures of buying each asset individually. This characteristic can also be useful when transferring assets to the next generation.
And finally, a strategically located holding company can help reduce your tax burden.
Now, we provide two examples of often used holding companies.
Cyprus as the ultimate EU holding entity
As a former colony of the United Kingdom, Cypriot company law incorporated many features from its former ruler, and a Cyprus limited company shares the same basic architecture with UK Limiteds. But that is where the comparison ends.
When you set up business in Cyprus, you will enjoy much lower taxes
and the following Cyprus company benefits:
the lowest corporation tax in Europe 12.5%,
the most generous participation exemption,
no withholding taxes except on outgoing royalties paid on rights exercised in Cyprus,
no capital gains tax except on real estate located in Cyprus,
the lowest social security tax rates in the EU,
no CFC rules
When you set up business in Cyprus note that your company will be managed and controlled from Cyprus itself. This will provide the substance you need for your tax planning. Another reason for choosing Cyprus is its high confidentiality, with little information on public record, as well as its adequate banking secrecy.
Are you interested in setting up a company in Cyprus, and want to know what Freemont can do for you?
Do not hesitate to Contact us
A RAK offshore Company as a holding entity
The UAE is a white listed onshore jurisdiction that offers business opportunities that exist only in mature industrial and financial hubs. International companies moving to the UAE find themselves in a thriving market with excellent infrastructure.
The RAK/ RAKICC Offshore company is by far the most popular for international entrepreneurs looking to set up their business in the UAE. They have very interesting features from which you can highly benefit.
When you compare RAK offshore and other offshore jurisdictions your wealth is equally secure and confidential in either of them. But there are some important differences mainly in costs of registration, documents demanded from shareholders, permitted activities and property registration scope.
They are ideal for any type of business that does not require a local office, including passive investment activities. Examples our existing clients use include
Holding shares in international, local or free zone companies
Trading activities outside the UAE
Holding intellectual property
RAKIC/ RAK offshore companies have the following benefits
0% Corporation tax, 0% VAT and no income tax.
No requirement for the owner or director to visit the UAE in person
100% full foreign ownership
Confidentiality is preserved; there is no public record of shareholders or directors
No audit requirement or requirement to submit financial statements
Possibility to open a solid bank account in Dubai
A registered office in Dubai (through Freemont Group)
Just like local and free zone companies, these offshore companies can benefit from some of the tax treaties concluded by the UAE while still benefiting from the strong client confidentiality rules applicable in the UAE.
Using a RAK ICC company as a shareholder
of a freezone company can prevent otherwise significant legalization charges.
Do you want to know more about the perfect holding structure for you?
for a Free Consultation on your personal situation.
You might also be interested in our article on buying Dubai real estate with a holding company