Starting a Holding Company
Since 2003, Healy Consultants Group PLC has assisted our Clients to register holding companies across the globe. Please find below a sample of popular options.
Examples of good Holding Companies
Qualities of a good Holding Company
- Zero corporate income tax on annual net profits;
- Access to an extensive double taxation treaty network, e.g. Ireland LLC holding company;
- Incorporated in a reputable stable country with robust commercial law, e.g. Singapore LLC holding company;
- Business friendly jurisdiction, allowing to raise capital easily through issuance of debt instruments, private equity, venture capital etc. For example, a UK LLC;
- A gateway for an IPO. For example, a Delaware LLC listed on the NYSE;
- Zero withholding tax on annual distributions to shareholders;
- Receive Government incentives for establishing a global or regional headquarters. For example, Jordan or Thailand;
- The Government is willing to issue a Certificate of Residence (COR).
Reasons to create a Holding Company
- To significantly reduce the international tax burden of the Group;
- To avail double taxation avoidance treaties, extracting profits from subsidiaries located in i) high tax countries or ii) politically unstable emerging markets and iii) countries with repatriation and currency controls;
- To raise funds including debt instruments and private equity. It is important to produce annual audited consolidated financial statements to give certainty to third party investors;
- In some countries, consolidated corporation tax returns reduce the tax burden of the subsidiary, e.g. USA;
- To sell a subsidiary while legally minimizing capital gains tax, e.g. Hong Kong;
- Legally minimizing international tax on passive income including IP, royalties and investment income. For example, a Dutch LLC;
- Preparation for an IPO.
Types of Holding Companies
Ultimate holding companies
- An ultimate holding company exercises complete control over the Group’s subsidiaries and assets. Such company is usually owned directly by the individual owner(s) of the Group (ultimate beneficial owner) and often has employees who are supervising the Group’s activities;
- Important country considerations for this setup include: i) availability of DTAAs; ii) existence of an attractive holding regime minimizing corporate income tax; iii) low personal income tax rates for the business owners and staff of the company; iv) low salary costs and v) ability to secure work permits for foreign staff;
- Popular business vehicles include: i) Singapore resident company; ii) Hong Kong resident company; iii) Thailand operating headquarters; iv) Dubai and other United Arab Emirates free zone companies; v) Swizterland mixed company; vi) Ireland limited company and vii) Luxembourg SPFs and SOPARFIs.
Intermediate holding companies
- An intermediate holding company (also known as a conduit company) usually has no staff or management activities and is usually owned by the ultimate holding company. Such an entity is used to channel investments made by the Group, distribute and retain earnings and manage a portfolio of investments in a flexible manner;
- Important country considerations include: i) flexible corporate regulations allowing for share transfers and increases in capital with minimum costs and timelines ii) minimum substance requirements for DTAA access and iii) existence of an attractive holding company regime;
- Popular business vehicles include: i) Singapore non resident company; ii) Hong Kong non resident company; iii) Labuan IBC; iv) Lebanon offshore company and v) Uruguay offshore company.
IP holding companies
- To hold intellectual property assets, such as patents, licenses and trademarks. Such type of entity can also have local staff conducting R&D for the Group and producing IP assets;
- Important country considerations include: i) availability of a license box or equivalent scheme allowing to reduce taxation on IP income ii) strong intellectual property regulations iii) availability of R&D engineers and research clusters iv) attractive taxation system for R&D expenses and v) Madrid Protocols membership for international IP protection;
- Popular business vehicles include: i) Switzerland holding company (Niwalden license box); ii) Ireland IP holding company and iii) Netherlands license box company.
Country comparison of IP holding companies View invoice PDF USA Clients' and IP holding company View invoice PDF
Family wealth holding companies
- To offer asset protection to owners and to minimize tax on inheritance. Such entity can also setup be a private foundation or a trust;
- Important country considerations include : i) low corporate and personal income tax rates ii) absence of inheritance tax iii) existence of alternative business structures such as foundations and trusts and iv) no limit on the maximum duration for the entity;
- Refer to this web page (click link) to view a comparison of global solutions;
- Popular business vehicles include: i) Luxembourg SPF ii) Liechenstein private foundation iii) Jersey trust iv) New Zealand foreign trust and v) Singapore resident company.
Financial holding company
- A financial holding company (also known as a bank holding company) is used to hold stakes in banks and other financial institutions (such as insurance companies and brokerage firms). They are usually structured as a public limited companies and their main purpose is to raise funds through issuance of public equity of listed debt instruments;
- Important country considerations include: i) low corporate income tax rates; ii) availability of liquid securities exchanges; iii) stable and developed financial markets; iv) existence of specific Government regulations re financial holding companies and v) business friendly requirements to setup and maintain public limited companies;
- Popular business vehicles include: USA bank holding company.
- We do not recommend the use of tax haven companies (click link) to be a quality holding company. These companies are neither long term solutions nor attractive to international banks and Governments;
- Engage Healy Consultants Group PLC to project manage the A to Z of holding company set up in every country on the planet.