Once a founder has companies in more than one country, the question comes up: should one company sit on top and own the others? A holding company can make it easier to bring in investors, sell one business without touching the rest, keep risk in one subsidiary away from the others, and move profits between them in an orderly way.
Where to put it depends on four things: how the holding country taxes the dividends it receives, how it taxes a gain when it sells a subsidiary, whether it takes tax when it pays dividends out, and what substance it expects. This guide compares Hong Kong, Singapore, the BVI and the UK on each, from official sources checked in October 2026. It describes the rules; it is not advice on your structure, which depends on where you and your companies are.
At a glance
| Dividends it receives | Gain when it sells a subsidiary | Dividends it pays out | Substance | |
|---|---|---|---|---|
| Hong Kong | Foreign dividends not taxed, except for members of multinational groups, which need substance or the participation exemption | No capital gains tax; same multinational-group rule for foreign gains | No withholding tax | Only under the multinational-group rule: for a pure holding company, adequate people and premises in Hong Kong |
| Singapore | Foreign dividends taxed when received, unless taxed abroad at a headline rate of at least 15% (with other conditions) | Not taxed if 20% or more was held for 24 months (s.13W), subject to exclusions | No withholding tax | No separate economic substance law; where it is managed still matters |
| BVI | No tax | No tax | No tax | Economic substance law: a pure holding company needs adequate people and premises in the BVI |
| United Kingdom | The great majority of dividends exempt | Exempt if 10% or more held for 12 months and the subsidiary trades (SSE) | No withholding tax | UK resident by incorporation; other income taxed at 19% to 25% |
Hong Kong
Hong Kong taxes only profits arising in Hong Kong, has no capital gains tax, and doesn’t withhold tax on dividends it pays. For most small founder groups, dividends from foreign subsidiaries simply aren’t taxed.
The exception is the foreign-sourced income exemption regime, which applies only to members of multinational groups. For them, foreign dividends and gains on selling shares received in Hong Kong stay exempt if the company meets an economic substance requirement (for a pure equity-holding company: registration and filing obligations, plus adequate people and premises in Hong Kong) or the participation exemption: at least 5% held continuously for 12 months, with a 15% subject-to-tax test and anti-abuse rules.
Hong Kong’s particular strength is its tax arrangement with Mainland China: dividends from a Mainland company to a Hong Kong company that beneficially owns at least 25% of it are taxed at no more than 5%, against 10% otherwise. The arrangement also has a principal-purpose test, so the benefit isn’t available to a structure set up mainly to get it. For founders who own a Mainland subsidiary, see our post on China’s dividend tax on foreign individuals.
Sources: IRD: profits tax · IRD: FSIE regime · FSTB: tax policy · IRD: Mainland arrangement (consolidated text)
Singapore
Singapore taxes foreign dividends when they are received in Singapore, but exempts them if they were taxed abroad, the foreign headline rate is at least 15%, and the tax authority is satisfied the exemption is beneficial. Dividends Singapore companies pay are not taxed in shareholders’ hands and carry no withholding tax.
For selling a subsidiary, section 13W gives certainty: a gain on disposing of ordinary shares isn’t taxed if the company held at least 20% for a continuous 24 months before the sale. Budget 2025 removed the scheme’s end date, and from 2026 the 20% can be counted across the group. Exclusions apply.
Singapore has tax agreements or arrangements with around 100 jurisdictions. Whether a company run from abroad can rely on them depends on where it is managed and on each treaty’s own tests, so take advice before you count on a treaty rate.
Sources: IRAS: foreign income · IRAS: s.13W e-Tax Guide · IRAS: no withholding on dividends · IRAS: DTA list
The British Virgin Islands
The BVI levies no corporate income tax and no capital gains tax, which makes it tax-neutral: what you pay depends on the countries where the subsidiaries and the owners are. That is why it is common for joint ventures and investment holding.
Tax-neutral isn’t substance-free. Under the BVI’s economic substance law, a pure equity holding entity (one that only holds shares and earns dividends and gains) must comply with its company-law obligations and have “adequate employees and premises” in the BVI for holding those shares, and more if it also manages them. Expect banks and counterparties to ask harder questions than for a Hong Kong or Singapore company.
Sources: BVI Economic Substance Act s.8(2) · BVI FSC: tax structure
The United Kingdom
The UK is a less obvious choice, but a real one. A UK company is UK resident by law, yet the dividend exemption in Part 9A of the Corporation Tax Act 2009 is designed so that “the great majority of dividends and other distributions will be exempt,” from UK and foreign companies alike. The substantial shareholding exemption normally takes the gain out of tax when the company sells at least 10% of a trading company that it has held for 12 months. And the UK doesn’t withhold tax on dividends paid to shareholders abroad.
The trade-off is that any other income is taxed at 19% to 25%, the company files accounts publicly, and its owners appear on the public register. See our UK limited company guide.
Sources: HMRC INTM651020 · HMRC INTM651010 · HMRC CG53078 · HMRC CG53104 · business.gov.uk: UK tax
Your own country often decides more than the holding country
- CFC rules. Many countries have controlled foreign company rules, which, in the OECD’s words, “generally apply to foreign companies that are controlled by shareholders in the parent jurisdiction” and attribute their income to those shareholders. If yours does, a low-tax holding company may not change what you pay.
- Where it is managed. A holding company run by you from home may be treated as resident where you live. See company in one country, you in another.
- Treaty purpose tests. Most treaties now deny a benefit where “obtaining that benefit was one of the principal purposes” of the arrangement. A holding company in the middle needs a reason beyond the treaty rate.
- The global minimum tax applies only to groups with consolidated revenue of EUR 750 million or more in two of the previous four years. It doesn’t affect founder-sized groups.
Sources: OECD: BEPS Action 3 (CFC rules) · OECD: MLI · OECD: Pillar Two fact sheets
An example
Invented for illustration. Marco lives in Milan. He owns a manufacturing company in Guangdong, a sales company in the UK and a small software company in Singapore, all directly. He wants to bring in an investor for the whole group and, one day, sell the software business on its own. His adviser compares a Hong Kong holding company, which would let dividends from the Guangdong company qualify for the 5% rate if it holds at least 25% and meets the arrangement’s tests, with a UK one, whose dividend and substantial shareholding exemptions suit a future sale. Before choosing, they check two things in Italy: how its CFC rules treat each option, and whether a holding company Marco runs from Milan would be treated as Italian.
When you don’t need one
- You own one company and don’t plan to add more or bring in investors.
- Your country’s rules would tax you on the holding company’s income anyway, and the extra filings cost more than they save.
- You can’t give it a reason to exist beyond tax. Banks, investors and tax authorities all ask that question.
Thinking about a holding structure?
Tell us where your companies are, where you live and what you want the structure to do. We set up holding companies in Hong Kong, Singapore, the BVI and the UK, and we work with your adviser on the tax side.
Talk to us about structuresFrequently asked questions
What is the best country for a holding company?
It depends on where the subsidiaries and the owners are. Hong Kong suits groups with a Mainland China subsidiary, Singapore suits Southeast Asian groups that will run it from Singapore, the BVI is tax-neutral for joint ventures and investment holding, and the UK’s dividend and share-sale exemptions suit groups with UK or European operations.
Does a holding company pay tax on dividends from its subsidiaries?
Often not, if conditions are met. Hong Kong doesn’t tax most foreign dividends, Singapore exempts them if they were taxed abroad at a headline rate of at least 15%, the UK exempts the great majority, and the BVI has no corporate income tax.
Does a BVI holding company need substance?
Yes, in a reduced form. Under the BVI economic substance law, a pure equity holding entity must comply with its company-law obligations and have adequate employees and premises in the BVI for holding its shares.
Will a holding company reduce the tax I pay personally?
Not necessarily. Many countries’ controlled foreign company rules attribute a foreign company’s income to the shareholders who control it, and a company you run from home may be treated as resident there. Ask an adviser in your own country first.
Does the 15% global minimum tax apply to small groups?
No. Pillar Two applies to groups with consolidated revenue of EUR 750 million or more in two of the previous four years.
General information on how each place treats holding companies, not tax or legal advice for your structure. The result depends on the countries where you, your holding company and your subsidiaries are. Confirm your position with a qualified adviser in each country before acting.