Setting up a holding company in another country is a great way to save money on taxes and expand your business’s reach internationally.
This strategy can save your company thousands or even millions of dollars through double tax treaties, exemptions on dividends and capital gains, and other relief, provided you choose a jurisdiction that you can take full advantage of.
So what’s the best country for holding companies in 2025? Let’s look at five unique destinations for setting up a holding company and the benefits they offer.
The UK Boasts a Robust Double Tax Network
The UK is a highly attractive target for holding companies because of its extensive double tax treaty network and a number of other benefits. Plus, its reliable regulatory environment will allow your business to build a trustworthy reputation.
Here are the details:
- Double tax treaty network: The UK has one of the largest double tax treaty networks, featuring agreements with over 120 countries. This can reduce or eliminate the taxes that you pay when based in multiple regions.
- Moderate corporate tax rate: The UK imposes a standard 25% tax rate on corporations, with marginal relief if your profits are under £250,000.
- Substantial Shareholdings Exemption (SSE): Shareholders are exempt from corporate tax when selling shares if they meet requirements around holding percentage, duration, and other criteria, as explained by Pinsent Masons.
- Dividend exemptions: The UK offers exemptions on dividends from subsidiaries and other advantages. See this description from advisory firm Alliott’s for details.
- Favorable regulation and policy: UK asset protection rules can shield your company’s intellectual property, real estate, and cash from risk, assuming the holding company is properly administered under the UK Companies Act 2006.
- Best suited industry: The UK is ideal for financial services and technology firms due to its status as a global financial hub and a large local talent pool.
- Cryptocurrency policy: The UK’s Financial Conduct Authority (FCA) offers a strong but strict crypto compliance model, allowing companies in the crypto and digital asset sector to operate in a trustworthy manner.
Estonia Charges No Taxes on Retained Profits
Estonia is a highly desirable destination for holding companies and other businesses due to its friendly tax policies. Notably, Estonia ranks at #1 in the Tax Foundation’s International Tax Competitiveness Index (ITCI) with a score of nearly 100.
Here’s why it’s so popular:
- No corporate taxes on retained profits: Estonia imposes a 22% corporate tax on distributed profits but charges 0% tax on retained profits, allowing you to reinvest, grow, and accumulate resources within your company.
- Double tax treaties: Estonia has 62 double taxation agreements in effect, relieving taxes paid across more than one jurisdiction.
- No withholding tax on dividends: Dividends paid to foreign corporate owners are generally not subject to an Estonian withholding tax.
- EU membership: As a European Union member, Estonia provides other regulatory and policy benefits, including access to international markets, strong investor protections, and adherence to EU corporate governance standards.
- Best suited industry: Thanks to its e-Residency program, Estonia is ideal for fintech, IT, software, and other highly digital companies. It allows companies to register and operate in Estonia even if they operate fully remotely.
- Crypto laws: Estonia is one of the most crypto-friendly jurisdictions. It’s broadly supportive of digital currency businesses even as it imposes strong AML/KYC controls and abides by the EU’s Markets in Crypto-Assets Regulation (MiCA).
Cyprus Offers a Strong Central Location With Low Taxes
Cyprus offers numerous tax advantages and operational benefits, and it’s strategically located at the center of Europe and the Middle East and North Africa (MENA) region.
Here’s what it offers:
- Low corporate taxation: Cyprus has a fairly low standard corporate tax of 12.5%. Dividend income is usually exempt from this corporate tax, allowing holding companies to receive dividends from subsidiaries tax-free.
- No withholding tax on dividends: Additionally, dividends paid to foreign corporate owners are generally not subject to a withholding tax. There are some exceptions: Cyprus is introducing a 17% dividend withholding tax that applies if the dividend recipient is in a low-tax or blacklisted jurisdiction.
- Double tax treaties: Cyprus has tax treaties with about 70 jurisdictions, reducing or eliminating the need to pay tax in both locations.
- Capital gains tax exemptions: Cyprus charges a 20% capital gains tax only on immovable property (real estate) located in Cyprus, or on shares of companies that mainly own such property. Other shares and property abroad are exempt.
- EU membership: Cyprus is a member of the EU, meaning that it provides market access, investor protections, and benefits similar to those of other EU regions.
- Best suited industries: Cyprus is suited to investment holding companies, financial, and IT companies. Real estate holding companies may also benefit from Cyprus’s exemptions on real estate outside the country.
- Cryptocurrency: Cyprus is permissive of digital asset businesses. Like other EU members, it is implementing rules that comply with MiCA.
Malta Has Zero Tax After Refundable Credits
The island of Malta offers a fairly unique approach: its refundable tax system can potentially reduce your holding company’s taxes to zero. Here are the details:
- Refundable tax system: Malta has a high corporate tax rate of 35%, but companies may claim up to a full refund after distributions, either through the country’s participation regime or other mechanisms, per KPMG.
- No withholding tax on dividends: Malta doesn’t apply withholding tax to interest, royalties, dividends, or proceeds from liquidation.
- Double tax treaties: Malta has double tax treaties with just under 80 countries, meaning businesses can reduce or eliminate taxes paid in multiple locations.
- Best-suited industry: Malta is ideal for tech-focused industries, including fintech, IT, software, and more. It’s well-suited to online gambling with its landmark policy, the Malta Gaming Authority (MGA) Regulatory Framework.
- Crypto-friendly: Malta is sometimes called “Blockchain Island” for its permissive crypto regulations. Its policies are aligned with EU MiCA rules.
The United Arab Emirates (UAE) Has Tax-Free Zones
The UAE is located at the heart of the MENA region, with tax-free zones that can provide immense benefits to foreign holding companies. Here’s why:
- Zero corporate tax in free zones: The UAE has a 9% corporate tax rate but offers a 0% tax rate for entities located in free zones. You must show local economic activity and meet other conditions to take advantage of this.
- No withholding tax on dividends or other payments: The UAE has applied a 0% withholding tax rate on dividends, royalties, and service fees to most non-resident entities since 2023. See ClearTax’s explanation for more details.
- Double tax treaties: The UAE has over 140 double tax agreements, allowing companies to reduce or eliminate taxes across multiple jurisdictions.
- Best-suited industry: The UAE is well-suited to trade, logistics, and finance businesses due to its strategic position.
- Crypto: The UAE is highly crypto-friendly, especially as its recent Virtual Assets Regulatory Authority (VARA) provides a unified licensing framework.
Tips for Choosing the Right Location
No matter what jurisdiction you choose, there are several considerations that can help you make the most of your decision. Consider these tips during your search:
- Assess the local corporate tax regime: Each jurisdiction has numerous tax rules that may (or may not) be beneficial given your specific situation.
- Understand the requirements: Tax rules and other benefits hinge on how your holding company is organized, how it’s operated, ownership percentages, and holding durations. Don’t simply assume that you’ll receive benefits by default.
- Look for double tax treaties: Double tax treaties are often the most effective way to save on tax because they eliminate or reduce the need to pay taxes in two locations. Make sure these treaties cover the countries that you operate in.
- Find stable, business-friendly countries: Consider whether a country’s business landscape is workable — not just affordable — for doing business.
- Choose regions with a strong international reputation: Doing so can help you reduce operational issues and avoid controversies.
- Avoid regulatory risk: Be sure that you can operate within a jurisdiction’s regulations and watch for sudden changes that may impact your ability to do so.
- Think about banking availability: It may be difficult to transact in some countries that are otherwise appealing, so be sure to select one with a financial system that’s closely connected to your main base of operations.
Payset Can Provide Global Payment Services for Your Holding Company
If you have a holding company, Payset can support your key financial transactions and simplify your most complex business structures. Our payment platform helps you move funds efficiently, fast-track member compliance, and manage your accounts.
Plus, you can transact with over 180 countries, hold 34 currencies in your account, and trade currencies at real-time rates with our built-in FX exchange.
Not sure Payset is right for you? Learn more about how we serve holding companies or get in touch with us if you have questions.
