In creating of the offshore company, holding offshore company structure is a model of more attractive particularly in terms of tax benefits. An offshore holding company is a company whose purpose is to hold interests in other companies but to take control and manage property without having own business. It is a structure appropriate to recover dividends owned by companies with tax benefits arising therefrom. A financial company is a company (can be holding company) making the financing of another company through a loan. The tax benefit may lie in the deduction of interest paid or non-taxation interest of income. Then it is possible for a group of companies to organize a system of loans within its subsidiaries.
The creation of an offshore holding company is a primarily matter of choice of the host country. This choice is not only to fiscal concerns. Luxembourg has a special regime for the benefit of holding companies under the law (July 1929), with a general exemption from corporate taxes. Other jurisdictions also have system of financial companies, allowing the exemption of dividends from subsidiaries and disposals on gains of investments. In 2002 the UK adopted a system of exemption of capital gains on disposals of equity investments. Tax havens also have focused their development on offer particularly attractive tax conditions for the creation of offshore companies to host offshore activities: banking or financial activities, insurance activities, service activities or management heritage.
A company may wish to invest in a country with no tax treaty with the country of residence. The tax on this investment can be detrimental. In this case, intermediary holding company may be validly established in a jurisdiction with favorable bilateral tax treaties and adapted with the two countries. For example, Cyprus has signed a number of bilateral agreements with the countries of Eastern Europe and the countries of the former USSR. That is why the Cypriot court is frequently used by entrepreneurs who wish to invest in these favorable tax conditions countries.