Where to put a holding company: the features that matter and the rules that follow

A holding company sits between the owners and the operating companies. It receives dividends, may sell subsidiaries, and pays money onwards to its shareholders. A good location taxes those three flows lightly and predictably, and is somewhere the company can genuinely be run.

What to compare

• Dividends received: whether dividends from subsidiaries are exempt, and on what conditions (minimum stake, holding period, whether the subsidiary must pay a reasonable level of tax).
• Gains on shares: whether a sale of a subsidiary is exempt, on conditions that often differ from those for dividends. Many countries exclude companies whose value comes mainly from property.
• Withholding on the way in: what the subsidiaries' countries withhold on dividends to the holding, which depends on treaties and, within the EU, the Parent-Subsidiary Directive.
• Withholding on the way out: what the holding country withholds on dividends to its shareholders.
• Treaty network, substance and cost: whether directors, decisions and staff can credibly be there, and at what annual cost.

Common locations, by principle

• Netherlands. A broad participation exemption for dividends and gains on qualifying shareholdings (generally 5% or more), with exclusions for low-taxed portfolio investments. Dividend withholding tax that can often be reduced or removed under treaties and EU rules, plus a conditional withholding tax on payments to low-tax jurisdictions and in abusive situations.
• Luxembourg. Participation exemptions for dividends and gains, subject to minimum stake or acquisition cost thresholds and a holding period. A wide treaty network and the service providers needed for real substance.
• Cyprus. Dividends received are generally exempt, gains on shares are generally exempt (with exceptions linked to Cypriot property), and dividends paid to non-resident shareholders generally carry no withholding tax, except for certain payments to companies in jurisdictions on the EU list of non-cooperative jurisdictions. Cyprus reformed its tax rules with effect from 2026, so the current rates need checking.
• Ireland. A low rate on trading income and a higher rate on passive income. An exemption for gains on substantial shareholdings in trading companies in the EU or treaty countries, and, from 2025, an elective participation exemption for certain foreign dividends.
• United Arab Emirates. A 9% corporate tax with a participation exemption for dividends and gains on qualifying shareholdings (conditions include a minimum 5% stake held for 12 months and the subsidiary being subject to a minimum level of tax), and no withholding tax on dividends paid out. The EU directives do not apply, so withholding in the subsidiaries' countries depends on treaties, and some countries apply defensive measures to payments to low-tax jurisdictions.

For large groups the differences narrow. Groups with consolidated revenue of €750 million or more face a 15% global minimum effective tax rate under Pillar Two in most major economies, including all five locations above.

Substance and anti-abuse rules

This is where most holding structures succeed or fail. The EU Anti-Tax Avoidance Directive (ATAD) requires member states to apply a general anti-abuse rule, controlled foreign company rules, limits on interest deductions and exit taxes. Most treaties now include a principal purpose test, added widely through the OECD multilateral instrument, which denies treaty benefits where obtaining them was one of the principal purposes of an arrangement. A company that passes every dividend straight on, with no decisions of its own, may also be treated as a conduit that is not the beneficial owner, and refused reduced withholding.

In practice, substance means qualified resident directors who actually decide, board meetings held there with proper minutes, and, depending on the activity, an office and employees. The shareholders' own country matters just as much. If the owner lives somewhere with controlled foreign company rules or a place of management test, a holding company run from their kitchen table can end up taxed there.

Before you sign

• Before incorporating, map every flow: dividends in, gains, dividends out, interest and fees, and the withholding on each.
• Test the participation exemption conditions against your actual shareholdings and your plans for selling.
• Decide who the directors will be and where the company will really be run, and budget for it.
• Check whether moving shares into the holding is itself taxable, and whether a relief or clearance applies.
• Review the owners' own countries' rules on foreign companies, exit taxes and place of management.

Setting up a holding company? Call us before you incorporate or sign any share transfer. The first 30-minute consultation is free, your dedicated consultant is available 24/7, and every request is answered within 24 hours.

General information, not advice. Tax rules change and depend on your facts. Greyridge Global coordinates and delivers cross-border tax and corporate work through appropriately licensed professionals in each jurisdiction. Legal, tax, immigration, fiduciary, and regulated services are provided by qualified advisors engaged for your matter. Nothing on this page is tax or legal advice.