Establishing and Maintaining a Holding Structure

Holding Structures – Advantages & Benefits

A holding structure is an ideal way in which to manage diversification and growth of business operations.  There are a large number of benefits that can be seen by the implementation of a holding structure. A holding structure can address certain constraints, costs and risks; it ensures assets are managed efficiently and enables future growth to be managed more effectively. In summary a holding structure offers the following benefits:

• Unification of reporting and decision making;
• Portfolio optimization and increased ability to formulate group strategy management;
• Faster management decision making in response to changing market conditions;
• Increased ability to pursue business tie-ups, mergers and acquisitions and other strategies;
• Optimal allocation of management resources; greater ability to identify where resources need to be allocated or reduced;
• Overall stronger corporate governance and control;
• Reduction and isolation of risk;
• Optimal group structure in combination with International tax planning will enable group companies to significantly reduce amount of taxes paid;
• Low reorganization and legal expenses;
• Increased ability to obtain financing from reputable financial institutions internationally;
• Making easier exit and succession of the business;
• A well structured way to realize potential for shareholders;
• Best way to present a business as a whole in an understandable way for financial institutions and prospective investors by having a legal basis for preparation of consolidated accounts reflecting all sides of the business.

The formation of a holding company is a very logical way of integrating companies under one management system and achieving long term independent and self-sustaining management. A holding structure can provide valuable insight into the business performance as a whole and also assess the overall profitability and pinpoint where efficiencies can be made.

Cyprus Holding Structure

Cyprus has been a full member of the European Union since 2004 and a member of the Eurozone since 2008.  The strategic position of Cyprus, connecting Europe, Middle East and Asia as well as the simple and straight forward tax legislation with the lowest tax burden in the European Union naturally make the island a hub for business and trade.

In the last decade Cyprus has established itself as a reputable and trust-worthy financial centre complemented by an advanced legal, accounting and banking system, highly skilled and multilingual workforce, excellent telecommunications systems and convenient year round flight connections.

The Cyprus tax legislation is fully compliant with the EU Acquis Communautaire and EU Directives.  It is in full compliance with the code of Conduct for Business Taxation and against harmful tax competition.  As of April 2009, Cyprus proudly features on the white list of OECD.

Important advantages of Cyprus Holding Company

• Reputable trust worthy financial centre
• Part of EU and Euro zone
• Cyprus features on the white list of OECD
• Lowest tax rate in EU, 12,5% corporation tax
• Tax free Intercompany dividends
• Tax free income from trading in securities
• Tax losses group relief for group structures
• Large number of tax treaties with many countries internationally

Introduction of Eltoma Corporate Services

Eltoma Corporate Services was established in 2004 by highly qualified and experienced corporate finance and management professionals and now has offices located in Cyprus, Moscow, Singapore and Hong Kong.  Eltoma provides a comprehensive and complete service with regards to the establishment and maintenance of an appropriate holding structure domiciled in a tax efficient jurisdiction. One major advantage that Eltoma can offer is training on the management of the holding structure, including understanding how it operates whilst at the same time providing full support for any area of business.  Eltoma Corporate Services ensure that overview, control and uniform management of assets is provided and offer continuing company maintenance services including international taxation advice, accounting support, company maintenance, legal review and asset management.  We also do formation of international holding structure and it’s restructuring at minimum cost which allows benefiting from having consolidated accounts and achieving minimum tax burden at each jurisdiction where a Group has trading or investment companies.  Formation and re-structuring will include overall review of goods/services flow and cash flow.  Tax, operations and management matters will be taken into account.  In case of formation of a new holding structure, existing business will be absorbed without losing its history and reputation.  Re-structuring will be done with minimum changes required.

Eltoma Corporate Services provide the following:

Establishing an appropriate holding structure

Eltoma Corporate Services can determine and create an optimal holding structure taking into account the existing operations and planned future activities.

Legal Review

 Eltoma Corporate Services will undertake a regular legal review of the holdings structure and therefore negate any compliance risks that may arise.

Project Management

 Project Management services can be provided and Eltoma can assist in drafting documents, completing presentations, securing trade finance, assisting in research etc.

Training

Eltoma Corporate Services will provide comprehensive training in order that the structure and the interrelationships within the holding structure are fully understood. Training is provided on how to assess the current situation and make decisions with regards to future changes or planned expansions.

Full Accounting Support

Eltoma will produce quarterly Management Reports in order to provide a better summary of the financial position and in order to maintain full control. This will assist planning cash flow requirements, budget planning, timing decisions in investments and future planning decisions and tax planning.

Taxation Advice

 Eltoma Corporate Services will provide regular taxation reviews and offer tax optimization advice based on new and proposed regulations. Tax regulations are always under review and through our network of professionals we gain advance information on new regulations and provide pre-emptive advice in order to provide optimal tax planning solutions.

Summary

 Through the establishment and management of an appropriate holding structure it is possible to facilitate future international expansion and seize new opportunities by providing a more flexible structure for acquiring other businesses or entering into joint ventures whist keeping the operations and risks of existing businesses separate. It enables a solid foundation to exist outside of high tax jurisdictions and can take advantage of benefits in alternative, more favorable jurisdictions.