International Holding Company Definition and Structure

In this article we will clarify what a holding company is, provide the reader with a holding company definition, and explain how a international holding company structure can be effectively used for tax planning purposes.

A holding company is a legal entity that owns other companies by controlling a majority of other companies’ shares. This company structure typically does not involve active participation in the manufacture of any products, or offering of any services, that the company that is owned by the holding company provides. However, owning a majority share of a company’s shares gives the holding company the benefit of controlling the board of directors and may in certain jurisdiction provide opportunities for valuable tax benefits.

An international holding company that a business group would like to establish in Sweden will first and generally be formed as a regular Limited Liability Company; a Limited Liability Company can in Sweden be public or private depending on among other things the companies share value. If the company does not have any active business of its own, only own in to other companies, it will be defined as a holding company.

International Holding Company in Sweden

A large part of being successful in business is dependent on your ability to minimize costa and maximize profits. By minimizing your tax liability you can make maximize your profit margins and the opportunity for overall success.

Forming holding companies has become a popular business strategy primarily due to the tax benefits that are often realized while employing this technique. Setting up an international holding company in Sweden may provide the highest chance of profit and long term success for business owners all over the world.

International Company Structures for Tax Planning

Using an international company structure for tax planning purposes can result in a significant reduction in tax liability. The use of Swedish holding companies for tax benefits has been a successful endeavor for many international company groups. While Sweden levies a high tax on the income of individuals, the business tax structure used in Sweden allows companies to enjoy relatively low tax rates as compared to other countries. The two main tax planning benefits of maintaining a holding company in Sweden are listed below.

• As noted above, holding companies own a majority share of stock in another company. As a stockholder, these companies are entitled to benefits such as dividend payments. Dividend from all unlisted companies, so called business related shares, is tax-exempt in Sweden.

• Swedish holding companies that sell business related shares as defined above may be eligible for a tax exemption on any capital gains related to the sale.

The tax benefits of forming an international holding company in Sweden are likely to be lucrative for many company groups that are ready to expand and seize profitable opportunities across the globe. This jurisdiction is not well known in tax planning context but more and more tax lawyers and business owner around the world are becoming aware of the advantages of using this company structure.

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