Going crazy; just want a holding company for future

[wimikap]

Thank god I found this forum and and also thank you in advance for taking the time
to read this thread.

I am in desperate need of a holding company for my future companies.
I do not want any pensions or salaries (perhaps occasional dividends), I simply
want to let the majority of the capital rest in the holding company until the day I decide to move to
a low-tax country and withdraw the capital as dividends, or invest in other businesses.

The subsidiary companies, owned by the holding company, will be located in a Sweden (working "digitally") with
high taxes and a efficient tax authorities so I definitely want to conduct myself by the book.
Anonymity is not necessary. The holding company will also have permanent establishment in Sweden, that is something
I do not want to avoid (simply want to be able to move in future and then reap the benefits).

I have spent countless of hours looking at different options trying to find the best one
but right now I just want to pull my hair out.

Even though Sweden has a tax treaty with Estonia, the Estonian 20% tax on dividends paid to non-resident is
considered as corporate tax in Sweden (so 20% tax in Estonia, then dividends tax in Sweden) so that is not a viable option.

Belize and Seychelles IBC seem very attractive (low accounting requirements, no taxes) but (it seems) hard to get a good bank
account created. Plus they are viewed by many as "sketchy locations" by nature and could perhaps thus cause
future issues.

Cyprus seems viable but very expensive so I would rather try find a better cheaper alternative.

What would you guys recommend in my situation? I just want a simple easy-to-maintain holding company
that I can funnel my company money to and store for future.

 

[fshore]

Did you consider a Swedish holding company? I don't see how you would benefit from a foreign company if it will be tax resident in Sweden and pay Swedish taxes anyway.

 

[wimikap]

Did you consider a Swedish holding company? I don't see how you would benefit from a foreign company if it will be tax resident in Sweden and pay Swedish taxes anyway.

Because when I permanently move in the future and do a company exit.

 

[fshore]

A UK Ltd Company could be a good option.

 

[wimikap]

A UK Ltd Company could be a good option.

UK tax on dividends (up to 38.1% when writing this) is not very favorable if I move to a low-tax country.

 

[TurnedToRobot]

I would start to ask a local tax advisor and find some tax attorney spend some money on them before you go further from here. Ask them what they think about what you consider to do and how tax can be reduced to a minimum if you go this way or a similar.

 

[fshore]

UK tax on dividends (up to 38.1% when writing this) is not very favorable if I move to a low-tax country.

There is no UK tax on dividends from a UK company.

 

[Martin Everson]

Even though Sweden has a tax treaty with Estonia, the Estonian 20% tax on dividends paid to non-resident is
considered as corporate tax in Sweden (so 20% tax in Estonia, then dividends tax in Sweden) so that is not a viable option.

What 20% tax on dividends?

Tax is actually zero on holding companies in Estonia as part of EU parent subsidiary directive. Estonia has no Withholding tax on dividends paid to non-residents in general also. However under the Sweden/Estonia tax treaty they apply a max of 15% withholding tax. So just don't pay out any dividends and pay yourself via local subsidiary. You also only need to make sure the centre of control is in Estonia for holding company.

 

[wimikap]

What 20% tax on dividends?

Tax is actually zero on holding companies in Estonia as part of EU parent subsidiary directive. Estonia has no Withholding tax on dividends paid to non-residents in general also. However under the Sweden/Estonia tax treaty they apply a max of 15% withholding tax. So just don't pay out any dividends and pay yourself via local subsidiary. You also only need to make sure the centre of control is in Estonia for holding company.

Thank you for the answer.
I do not want to put time and effort towards ensuring centre of control is in Estonia so Estonia is unfortunately not an option.

I was advised that a UK LTD do not apply withholding tax on dividends paid to non-residents, has an excellent reputation and
over 100 tax treaties with different countries (including Sweden) thus allowing me to request settlement of the UK tax here in Sweden (which
is not needed from my understanding due to no existing withholding tax?).
Dividends received to UK LTD from subsidiary abroad are exempt from corporate tax as well.

I do business currently with companies and individuals in the UK so I suppose this a perfect option for me? Would anyone advise
against starting a UK LTD for holding purposes?

 

[fshore]

So is the plan to save up 1m or something in the UK Ltd then move out of Sweden to take out dividends, so that you don't have to pay personal tax on those dividends?
You might face exit tax on the capital gains from holding the UK Ltd.

Also keep in mind that when you still live in Sweden the UK company will be tax resident in Sweden and follow Swedish corporate tax rules, not UK ones.

 

[Martin Everson]

I do not want to put time and effort towards ensuring centre of control is in Estonia so Estonia is unfortunately not an option.

Fair enough

I was advised that a UK LTD do not apply withholding tax on dividends paid to non-residents, has an excellent reputation and
over 100 tax treaties with different countries (including Sweden) thus allowing me to request settlement of the UK tax here in Sweden (which
is not needed from my understanding due to no existing withholding tax?).
Dividends received to UK LTD from subsidiary abroad are exempt from corporate tax as well.

So I guess you will put "time and effort towards" applying center of control in UK also?

I do business currently with companies and individuals in the UK so I suppose this a perfect option for me? Would anyone advise
against starting a UK LTD for holding purposes?

No.

 

[myhand]

If you have that much money I don't understand why you are not setting up a real office somewhere in a low tax country / jurisdiction like the large firms do?

 

[Martin Everson]

If you have that much money I don't understand why you are not setting up a real office somewhere in a low tax country / jurisdiction like the large firms do?

Sometimes you have to let people find out the hard way . Failure if the best teacher in life.

 

[fshore]

If you have that much money I don't understand why you are not setting up a real office somewhere in a low tax country / jurisdiction like the large firms do?

There are still CFC rules even with a real office.

 

[myhand]

It's not about CFC - if you have the money you can hire a tax consultancy service either advisor or lawyer, go to a low tax jurisdiction and setup everything, it may cost you money but you will have a perfect legal setup to reduce your overall tax.

For the small fish, which are the most around here, this is not an option and that's why we discuss it on this forum.