Choosing the Right Jurisdiction for Holding Structures

 #Business Advisory Services

 Understanding Holding Structures

A holding company doesn’t typically trade or manufacture; its primary purpose is to own shares or assets in other entities. It can hold:

  • Equity in subsidiaries

  • Real estate and intellectual property

  • Cash reserves or investment portfolios

  • Interests in joint ventures and SPVs

The structure allows for strategic control, tax efficiency, and limited liability, making it a preferred vehicle for multinational groups, family offices, and investment funds.

2. Key Factors When Choosing a Jurisdiction

The “best” jurisdiction depends on the specific objectives of your business. The following criteria guide a sound choice:

a. Taxation and Double Tax Treaties
Look for jurisdictions with low or zero corporate tax rates and strong double taxation agreements (DTAs) with your operating countries. This reduces withholding tax on dividends, interest, and royalties.

b. Legal and Regulatory Stability
A credible and politically stable jurisdiction reassures banks, investors, and regulators. Common-law systems like those in Mauritius, the Cayman Islands, Luxembourg, and Singapore are particularly investor-friendly.

c. Repatriation and Profit Flow
Efficient jurisdictions allow seamless repatriation of profits through dividends or intercompany loans without excessive local taxation.

d. Substance and Governance Requirements
Regulators increasingly expect holding companies to demonstrate economic substance—local directors, office presence, or management activity. Choose a jurisdiction that balances credibility with operational flexibility.

e. Confidentiality and Reporting
While transparency is important, certain jurisdictions maintain corporate privacy within legal limits. Understanding FATCA, CRS, and beneficial ownership disclosure laws helps protect sensitive information.

3. Popular Jurisdictions for Holding Structures

Mauritius

A leading hub for investment into Africa and Asia.

  • 15% corporate tax, with effective rates often lower due to partial exemptions

  • Extensive DTA network (including India, South Africa, UAE, and France)

  • Well-regulated under the Financial Services Commission (FSC)

  • Recognized for its robust fund and trust ecosystem

United Arab Emirates (UAE)

A regional favorite for both holding and operational entities.

  • 0% tax for qualifying free-zone companies

  • Strategic location between Europe, Africa, and Asia

  • Substance-compliant free zones (e.g., Meydan, DMCC, ADGM, DIFC)

  • Excellent banking infrastructure and investor reputation

Luxembourg

Widely used by institutional investors and private equity funds.

  • Extensive DTA network across Europe

  • Sophisticated financial and legal ecosystem

  • Flexible structures (SOPARFI, Sàrl, SCSp)

  • Ideal for EU-based holdings and fund vehicles

Cayman Islands

Preferred for fund and asset-holding structures.

  • No corporate or income tax

  • Simple regulatory framework under the CIMA

  • Common-law jurisdiction with global recognition

  • Suited for SPVs, investment funds, and private wealth structures

British Virgin Islands (BVI)

A cost-efficient and globally accepted holding hub.

  • Zero corporate tax and flexible share structures

  • Simple compliance regime

  • Widely used for asset holding and M&A purposes

  • Beneficial ownership reporting required under modern AML rules

4. Balancing Substance and Flexibility

The global regulatory environment now prioritizes substance over form. Jurisdictions once chosen purely for tax benefits are evolving under OECD and FATF guidelines.
Today, a compliant structure must show genuine management presence — active directors, meetings, and local administration.

This makes mixed or layered structures common, for example:

  • A Mauritius GBL company holding African subsidiaries

  • A UAE Free Zone company acting as a top-tier holding entity for Middle East operations

  • A Luxembourg vehicle managing European fund interests

5. Legal and Banking Considerations

Banking access is often a decisive factor. Reputable jurisdictions offer smooth onboarding for multi-currency accounts and cross-border transfers. Banks and regulators also assess the structure’s purpose and transparency before approval.

Key tip: Align your corporate structure, tax residency, and banking arrangements under one coherent compliance framework to avoid delays and scrutiny.

6. The Role of Corporate Advisors

Establishing a holding structure requires cross-disciplinary planning — legal, fiscal, and operational.
Devenir Corporate Services assists clients in assessing jurisdictional suitability, setting up holding entities, and ensuring full compliance with international tax and reporting standards.

From UAE to Mauritius, Cayman, or Luxembourg, we help design structures that balance efficiency with long-term credibility.

Final Thoughts

Choosing the right jurisdiction isn’t just about minimizing tax — it’s about ensuring strategic alignment, transparency, and resilience.
A well-structured holding company not only simplifies ownership and capital flows but also strengthens your global business identity.

In today’s interconnected world, the right jurisdiction is not just a location — it’s your company’s financial anchor.

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