You have decided to register a company in the United Arab Emirates, but you are still hesitating between a holding company and an offshore company.
It is important to clearly distinguish between the two models before making a decision, as their uses, permitted activities, and operations are not the same.
The difference between a holding company and an offshore company
Definition of a holding company
A holding company is a company that can bring together several small or large businesses under a single control and management structure.
Definition of an offshore company
An offshore company is a structure that notably allows international business operations to be managed while benefiting from a jurisdiction-specific tax framework.
The main differences
It is recommended to seek assistance to structure financial operations within a legal and transparent framework.
Permitted activities
The main difference concerns the activities permitted by legislation. An offshore company is more limited than a holding company or a Free-zone structure.
Local staff
An offshore company does not allow you to hire local staff, unlike a structure suited to a holding company activity.
Account opening and transfers
Banking issues and fund transfers are handled differently depending on the chosen structure.
Create a holding company with an offshore company?
It is not possible to directly carry out a holding company activity through an offshore company.
With an offshore company, certain activities are possible, including import-export, consulting, and investment.
For a holding company activity, a Free-zone structure is more suitable: it allows a wider range of activities, including trading, consulting, and holding company activities.
An offshore company does not allow you to own offices in the United Arab Emirates or hire local staff, unlike a Free-zone structure that can support a holding company.
Offshore and holding companies: two complementary tools?
It is possible to own both an offshore company and a holding company. The two structures can then be used complementarily within an international organization.
Financial flows between the structures must be organized precisely in order to remain legal. Have the strategy approved by an accountant or lawyer.
Taxation depends on the structure chosen: each organization must be examined on a case-by-case basis.
To go further
Get guidance to make the right choice
Merritt assists foreign entrepreneurs with establishing companies in the Emirates, both offshore structures and Free-zone companies.
It is recommended to choose the structure based on the project, the planned activities, and long-term needs rather than focusing solely on tax considerations.
Where should you establish your holding company?
Compare the criteria to consider when choosing the jurisdiction for your parent company: economic stability, business environment, international reputation, and the group's needs.