An offshore holding company can be used to hold the shares of subsidiaries located in high tax countries. Most high tax countries impose witholding tax on dividends paid to non-residents. In these situations the availability of a double-tax-avoidance treaty between the country where the subsidiary is located and where the holding company is established may help avoid some or all of the witholding tax.
Many of the difficulties and expenses associated with investment in overseas property, such as holiday villas, may be avoided through the use of an offshore company to hold the title of the property. Re-sales of the property can be accomplished quickly and easily by simply selling the shares in the underlying offshore holding company. This may also save on some legal fees, transfer taxes and duties levied by the state.
As offshore companies are not subject to capital gains taxes at home, they can be used to hold investment assets with high appreciation value.
Where an individual owns assets (for instance, real estate) located in a foreign country, such assets may be protected against inheritance tax and higher rates of taxation by holding the assets through an offshore investment company. A high net worth individual with properties or other assets in a number of countries may wish to hold these through one personal holding company so that upon his demise the need to obtain probate in each country is avoided. This saves legal fees and avoids publicity.
If a holding company is registered in a suitable offshore jurisdiction with appropriate double-tax avoidance treaties in place with the owners` home jurisdiction, such holding company may be used to hold shares in various offshore trading companies owned by the same owner. Such layout would solve one of the most acute problems with offshore arrangements – repatriation of offshore profits. By properly utilizing an offshore holding company, overseas profits can return to the owner for his enjoyment and consumption with minimum or no tax liability at home.
