Start with what the company will do
A holding company can do many things: hold shares in operating subsidiaries, hold investments, own property, receive and pass on dividends, lend to group companies, act as a joint venture vehicle or sit under a trust as the company that actually holds the assets. The right jurisdiction depends heavily on which of these it will do, where the subsidiaries and owners are, and who else will need to deal with the company.
Before comparing jurisdictions, write down a short brief. It should record where the owners are resident, where the subsidiaries trade, whether there will be outside investors, lenders or a future buyer, whether the company will have staff, which currencies it will receive and pay, and which regulators or counterparties in particular countries will need to deal with it. A brief of half a page saves a great deal of time later, and it is exactly the kind of description a payments provider will ask for at onboarding.
The factors below are the ones groups commonly weigh. Tax is clearly one of them, but this article does not discuss tax treatment, which depends on the facts and on the laws of several countries at once. That part needs specialist advice.
Legal system and courts
A holding company is, in the end, a bundle of legal rights. The quality and familiarity of the legal system that governs those rights matters, especially if the company will have outside shareholders, lenders or a future sale.
Most of the jurisdictions discussed here use legal systems based on English common law: the Cayman Islands, the BVI, Nevis, the Cook Islands, the Isle of Man, Cyprus and Hong Kong. That gives lawyers in many countries a familiar starting point, and in several of these jurisdictions final appeals go to the Judicial Committee of the Privy Council in London. Poland, by contrast, has a civil law system, and its company law follows continental European models. Malta has a mixed system, and Seychelles combines civil law with common law influence.
Consider also the quality of the commercial courts and the availability of experienced local lawyers. The Cayman Islands and the BVI have well developed commercial courts that handle large international disputes. Cyprus and Hong Kong have large professional communities. Smaller jurisdictions may have fewer local practitioners, which can matter if something goes wrong.
Reputation and how counterparties react
Reputation is hard to measure but easy to feel. It shows up in how banks, payments providers, investors, auditors and tax authorities react when they see the company's name and jurisdiction.
A few factors shape reputation:
- International listings. Whether the jurisdiction appears on lists maintained by international bodies, such as the EU list of non-cooperative jurisdictions for tax purposes or the FATF lists of jurisdictions under increased monitoring. These lists change, and positions should be checked at the time.
- Regulatory reputation. Whether the local regulator is seen as competent and active.
- History. Whether the jurisdiction's entities appear often in enforcement cases and public leaks.
- Use by institutions. Whether major funds, listed groups and financial institutions use the jurisdiction routinely.
Reputation can cut both ways. Asset protection jurisdictions such as Nevis and the Cook Islands are respected for the strength of their laws, and for the same reason some counterparties look at entities from those places more carefully.
Registries and transparency
Different jurisdictions make different information available. Some, such as Poland, Cyprus and Hong Kong, have public company registers that show directors and, to varying degrees, shareholders and financial statements. Others, such as the Cayman Islands, the BVI, Nevis and Seychelles, keep shareholder and beneficial ownership information with registered agents or in secure systems available to authorities rather than the public.
Groups sometimes value privacy, and that is a legitimate preference. The trade-off is that less public information means more documents at onboarding. A Polish company can often prove much of its position with a KRS extract and a CRBR printout. A Nevis LLC needs certified documents from its registered agent and a full copy of its operating agreement. Neither is wrong, but the amount of paperwork differs, and that difference repeats every time the company opens an account or undergoes a review.
Banking and payments access
For many groups, the practical question that decides everything is whether the company can open and keep accounts. A holding company that cannot receive dividends or pay its service providers is of little use.
Banking access depends on more than jurisdiction. The provider looks at the owners, the business, the countries involved and the quality of the documents. Jurisdiction still matters, though, because most providers set their risk appetite partly by country of incorporation. In general terms, EU and Crown Dependency companies, and companies from large financial centres such as Cayman and Hong Kong, are accepted by a wider range of providers than companies from jurisdictions that are newer to international standards or have appeared on international lists.
Ask potential banks and payments providers early, before the company is formed, whether they would accept an entity from the jurisdiction you are considering. The answer can change your choice.
Substance and where the company is run
Since 2019, economic substance rules in Cayman, the BVI, the Crown Dependencies and other centres have required entities carrying on certain relevant activities to show substance locally. Pure equity holding companies usually face a lighter test, but a holding company that lends, provides services or holds intellectual property may be held to a stricter standard. See our explainer on economic substance rules.
Separately, the countries where the owners and managers live may treat a company as resident or as having a permanent establishment there if it is in fact run from there. That is a tax question for advisers, but it has a practical side: if a group wants its holding company to be run from Cyprus or the Isle of Man, it needs directors there who take real decisions. Groups that want the company run where the owners live may be better served by a jurisdiction where that is consistent with the structure.
Treaty networks and international recognition
Some jurisdictions have extensive networks of double tax treaties and, for EU members, access to EU directives that affect payments between group companies. Cyprus and Malta are examples of EU members with treaty networks. Poland, as an operating jurisdiction, also has a wide treaty network. Classic zero tax jurisdictions such as Cayman, the BVI and Nevis generally have few or no comprehensive double tax treaties, though they participate in information exchange arrangements.
Whether a treaty helps any particular structure is a technical question. Treaties often contain anti-abuse rules, and the countries on the other side may look closely at whether a holding company has real substance before granting benefits. This is one of the areas where specialist tax advice is essential. For payments purposes, the main relevance is that groups using treaty jurisdictions tend to have more local substance, which in turn makes them easier to onboard.
Jurisdictions compared
The table below compares the jurisdictions covered in this series. It is qualitative, simplified and general. It is not a ranking, and it says nothing about tax.
| Jurisdiction | Legal system | Typical vehicle | Public registry information | Common use | Onboarding notes |
|---|---|---|---|---|---|
| Cayman Islands | Common law | Exempted company | Limited | Funds, group holding, finance vehicles | Widely recognised, documents via registered office provider |
| BVI | Common law | BVI business company | Limited, directors filed | Private group holding, joint ventures | Very familiar, purpose and ownership closely examined |
| Nevis | Common law | LLC or corporation | Limited | Asset holding, trust underlying companies | Operating agreement central, asset protection questions |
| Cook Islands | Common law | International trust | Limited | Family wealth and asset protection | Trustee company leads, source of wealth detailed |
| Isle of Man | Common law | 1931 or 2006 Act company | Moderate | Holding, gaming, insurance, private wealth | Crown Dependency, often real local presence |
| Cyprus | Common law based | Private limited company | Good, with audited accounts | EU holding company | EU member, EUR, audited accounts help |
| Poland | Civil law | sp. z o.o. or S.A. | Good, KRS and CRBR | Operating subsidiaries | Public records do much of the work |
| Hong Kong | Common law | Private limited company | Good, with audit | Asian trading and regional holding | Trading evidence important |
| Malta | Mixed | Limited liability company | Good | Gaming groups, EU holding | Licences and group flows reviewed |
| Seychelles | Mixed | IBC | Limited | Low cost holding and trading | Often treated as higher risk, file quality decisive |
Each entry is expanded in its own guide: the Cayman exempted company, the BVI business company, the Nevis LLC, Cook Islands trusts, Isle of Man companies, Cyprus holding companies, Polish companies, Hong Kong companies, Malta gaming companies and the Seychelles IBC.
Currency and day to day running
Finally, think about the money itself. A holding company's base currency, the currencies of its subsidiaries and the currency its owners spend all affect how often it will need to convert. A Cyprus parent with euro accounts and subsidiaries paying dividends in dollars and zloty will convert regularly. A Cayman fund vehicle in US dollars with mainly dollar investments may rarely convert at all.
Running costs, the availability of directors and secretaries, audit requirements and filing calendars all add to the practical burden. A jurisdiction that looks simple on paper can become hard work if the group has no one nearby who knows how to keep the company in good order.
General information only
This article provides general information on factors groups consider when choosing a holding company jurisdiction. It is not legal or tax advice, and no jurisdiction is recommended here. Take advice from qualified lawyers and tax advisers before forming or moving a company. CCYFX does not form companies. It regularly onboards entities from the Cayman Islands, the BVI, Cyprus, Nevis, the Cook Islands, the Isle of Man and Poland for FX and international payments, and considers other jurisdictions case by case. Our international companies page explains how.
