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Important aspects when creating a foreign holding structure

Important aspects when creating a foreign holding structure

The option of structuring business via the foreign holding company provides significant benefits and new opportunities for business.

Foreign holding is the possibility of tax optimization, business protection, optimization of management and financing of the group over one center and a range of the other features and advantages.

There is a list of countries for registration of the foreign holding company, which are mostly given preference when resolving this problem. This list includes, for example, Austria, Liechtenstein, Cyprus, etc. At the same time such holdings have the potential risks of taxation in the country of registration in the case of non-performance of all the necessary formal requirements in the country where they are registered.

There no such risks in the case of registration of foreign holding structure in the United Arab Emirates, as this type of companies, in the case of full tax residence in the country, is totally exempted from all kinds of taxes in the UAE.

Two main components should be taken into account when registering holding abroad:

  • The tax regime and the possibility of using the holding in accordance with the legislation of the country of incorporation of the holding company;
  • Possibilities of its usage in other countries for tax and other optimization with the maximum minimization of risks.

The legislation of the majority of countries, when registering and using the holding structure, provides for mandatory compliance of the holding with certain requirements, which prove the real operation of the holding, and the availability of all the conforming attributes of the really working company.

The factors which determine the presence of real economic activity, are:

  • Availability of a real control / management in the country of incorporation of the company;
  • Availability of a real office – the virtual office, as a rule, is not recognized;
  • Personnel – depending on the volume and type of activity;
  • Place of signing and keeping of the documents.

In the case of absence of the abovementioned conditions, a holding, despite the place of its registration abroad, may be considered as a tax resident of that country where it is actually controlled from.

According to the abovementioned reasons, the choice of jurisdiction for a holding, its proper structuring and provision of a holding with all the necessary factors of residency are crucial for the successful implementation of the task of structuring and business protection.

Email or call us to register a holding company in the UAE and to get answers for questions about the possibilities of its implementation.

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