Starting a Holding Company

CLA Consultants Group has assisted our Clients to register holding companies across the globe. We offer guaranteed solutions with business setup without travel and payment by installments.

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 high tax countries or politically unstable emerging markets and 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
• Usually owned directly by the individual owner(s) of the Group (ultimate beneficial owner)
• Often has employees who are supervising the Group's activities
• Popular options: Singapore resident company, Hong Kong resident company, Thailand operating headquarters, Dubai and other United Arab Emirates free zone companies, Switzerland mixed company, Ireland limited company, Luxembourg SPFs and SOPARFIs

Intermediate Holding Companies

• Also known as a conduit company
• Usually has no staff or management activities and is usually owned by the ultimate holding company
• Used to channel investments made by the Group, distribute and retain earnings and manage a portfolio of investments in a flexible manner
• Popular options: Singapore non-resident company, Hong Kong non-resident company, Labuan IBC, Lebanon offshore company, Uruguay offshore company

IP Holding Companies

• To hold intellectual property assets, such as patents, licenses and trademarks
• Can have local staff conducting R&D for the Group and producing IP assets
• Popular options: Switzerland holding company (Niwalden license box), Ireland IP holding company, Netherlands license box company

Family Wealth Holding Companies

• To offer asset protection to owners and to minimize tax on inheritance
• Can be setup as a private foundation or a trust
• Popular options: Luxembourg SPF, Liechtenstein private foundation, Jersey trust, New Zealand foreign trust, Singapore resident company

Financial Holding Companies

• Also known as a bank holding company
• Used to hold stakes in banks and other financial institutions (such as insurance companies and brokerage firms)
• Usually structured as public limited companies
• Main purpose is to raise funds through issuance of public equity or listed debt instruments

Conclusion

CLA Consultants Group can project manage the A to Z of holding company setup in every country on the planet. Our "think outside the box" approach allows us to help restructure your Group for optimal tax efficiency and business operations.