Offshore Company Services Offshore Company Services

Offshore company services include a variety of company formation and support services for offshore...

Offshore Countries for Offshore Holding Offshore Countries for Offshore Holding

To register or form an offshore holding in a given location, various conditions should exist to...

Offshore Holding Company Offshore Holding Company

An offshore holding company can be a firm or company that owns shares in other companies.  These...

Offshore Holding

The use of an offshore holding must be carefully thought out and planned to ensure that the desired results are achieved.  Multinational or large to medium size corporations with various product offerings must carefully calculate the tax benefits and implications of their offshore holding strategy, while the ordinary individual must be certain that the right decision is being taken.

An offshore holding is principally created to hold or own the shares of and provide financing to subsidiaries, thereby seeking to direct the majority share ownership of individual offshore companies toward the offshore holding as owner of the offshore companies.  The companies may include joint ventures, private and publicly traded companies and subsidiaries or associations in which a ‘main’ corporation has interests or investments.  A majority shareholder, this corporation is referred to as the parent corporation/company and is transferred into an offshore holding because of its legal and corporate role.  An offshore holding, therefore, does not necessarily have to be involved in trade or any form of production and can be specifically created for this purpose.

As parent, all dividends, interests and capital gains on the sake of shares are allocated to the offshore holding, creating a situation where all corresponding withholding taxes are levied on the offshore holding and not on the individual offshore companies.  But, to effectively create this tax free framework to minimize taxes, the right conditions and environment must exist, especially with regard to the territory in which the offshore holding is incorporated and registered.  That territory must have a tax regime that is favorable and friendly to such offshore structures by granting a series of major tax incentives and exemptions that must apply to revenue collected by the offshore holding companies, and must have in place an extensive network of anti-double tax treaties that eliminate or reduce withholding charges on both incoming income and the recipients.

Low and zero tax havens have been pinpointed as the most ideal locations for setting up an offshore holding, since they would most like be the territories to offer such incentives and conditions for offshore holding companies.

Formation services for offshore holding companies are provided by trained professionals, to include lawyers, accountants, bankers and tax consultants that are licensed by the relevant authorities.  In the European Union, an international or offshore holding company can be used particularly if the jurisdiction is a member state of the European Union, which makes it possible to use the Parent-Subsidiary Directive for companies under which exemption from withholding tax can be obtained for dividend payments of offshore holding companies that are transacted between member states.

Some of the benefits of an offshore holding include reducing risk for the company’s owners, consolidating tax payments by having tax liability transferred to the offshore holding to avoid a separate set of taxes from being paid by each subsidiary and the considerable tax burden that could be created, being able to create a framework for the efficient management and ownership of several offshore companies which could be registered and operating in various locations worldwide, erecting a structure that provides a support system that would enable tax losses to be offset again the profits earned from other subsidiaries.

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