For a country to be an attractive location from a tax planning point of view for setting up a holding company, four criteria must be satisfied:

Incoming Dividends: Incoming dividends remitted by the subsidiary to the holding company must either be exempt from or subject to low withholding tax rates in the subsidiary's jurisdiction.

Dividend Income Received: Dividend income received by the holding company from the subsidiary must either be exempt from or subject to low corporate income tax rates in the holding company's jurisdiction.

Capital Gains Tax on Sale of Shares: Profits realized by the holding company on the sale of shares in the subsidiary must either be exempt from or subject to a low rate of capital gains tax in the holding company's jurisdiction.

Outgoing Dividends: Outgoing dividends paid by the holding company to the ultimate parent corporation must either be exempt from or subject to low withholding tax rates in the holding company's jurisdiction.

The same criteria are valid for royalty and financing companies.

A suitable jurisdiction for the set-up of an entity will be subject to the client's individual requirements and depends on contemplated activities as well as the client's country of residence, domicile and citizenship.

All relevant offshore and onshore jurisdictions have advantages of their own, but in practice these advantages depend greatly on the legal and financial infrastructure and the related costs. Also certain jurisdictions have wider experience in the field of international tax planning. Routing through jurisdictions like the Netherlands and the Netherlands Antilles are motivated with guarantees of jurisprudence while other jurisdictions cannot give that kind of clarity because these jurisdictions are novice in the field of international tax planning.