The non-EU group can set-up a “Regional Holding Company” (RHC) in Europe. This RHC can incorporate a number of operating subsidiaries in other EU countries.
Under the EU Parent Subsidiary directive, there will not be any withholding tax when dividends are paid by the operating subsidiaries to the RHC. The RHC should be located in a EU jurisdiction which has the best double tax agreement or tax treaty network with the group’s home jurisdiction.
If the correct jurisdiction for the RHC is selected, the following tax advantages can be obtained:
1. No capital gains tax on disposable of the shares of underlying subsidiaries.
2. Tax exemption of dividends from underlying subsidiaries.
3. No withholding tax on payment of dividend by RHC back to head office.
4. No capital duties or taxes on capital / subscriber share capital base.
5. Relatively benign or friendly regulatory regime overall.
RKG Consulting can assist you in choosing the most suitable location(s) in Europe in which to base your regional holding company and your operating subsidiaries.
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