At Quantillion, we pride ourselves on offering a range of investment options to suit the needs of all types of investors (investment partners). We developed different investment strategies designed to provide a balance of risk and reward, ensuring that the investment partners can make the most out of their investments.
We also understand the importance of transparency and accountability in investment management. We strive to maintain open communication with our investors, providing regular updates and reports on the performance of the fund. That's why we advise all prospective partners who are not EU citizens to establish personal holding companies and use them for investment activity.
What is a Personal Holding Company?
A Personal Holding Company is a legal entity in which all shares are fully owned by one person (the owner), who makes all important decisions for this Personal Holding Company. At the same time, the owner may also perform the function of a managing director, although this is not required according to Estonian legislation.
The Advantages of a Personal Holding Company
Residency First
Unlike the change of citizenship, a legal entity can be registered in any country of the world and we highly recommend choosing Estonian jurisdiction (see the benefits below). Registration in another country (not a country of your nationality) allows, in a sense, to choose the legal system or rules of the game by which the company will live and operate. For example, in many countries, including Estonia, companies can carry out commercial activities in the field of cryptocurrencies, which is currently prohibited in some other countries.
Liability
The company (in the case of a private limited company) usually has limited liability. If the personal holding company goes bankrupt, the owner is liable to creditors only to the extent of his share in the authorized capital, of course, if his actions were not aimed at bankruptcy. However, it should be added that bankruptcy of a Personal Holding Company is an unlikely scenario, as it is never recommended to conduct risky activities directly through a Personal Holding Company.
Tax regulations
Before establishing a Personal Holding Company in a particular country, the owner has the opportunity to study in advance different tax systems and choose the one that is most suitable for him, taking into account his characteristics in terms of expected income and expenses. For example, some countries do not tax the income generated by companies from activities outside the country's borders.
Benefits of using a Personal Holding Company for Investments
A holding company that invests in funds can have several benefits, such as:
Diversification
By investing in a fund, the holding company can spread its investments across a range of assets, which can help to reduce risk and volatility in the portfolio.
Professional Management
The fund is managed by professional investment managers (like Quantillion) who have the expertise and resources to make investment decisions on behalf of the holding company. This can free up the time and resources of the holding company to focus on its core business activities.
Access to a Range of Assets
A fund can provide the holding company with access to a wide range of assets that may not be available to it directly. For example, a holding company may not have the resources to invest directly in real estate, but it can invest in a real estate fund that provides exposure to this asset class.
Liquidity
Investing in a fund can provide the holding company with greater liquidity compared to investing directly in assets. The holding company can buy and sell fund shares (investment units) on the open market, providing it with the flexibility to adjust its investment portfolio as needed.
Tax Benefits
Depending on the jurisdiction and the specific fund structure, there may be tax benefits to investing in a fund. For example, some funds may be structured in a way that allows investors to defer or reduce taxes on their investment returns. Also, the personal holding company has the right to reduce its taxable base for the amount of expenses directly related to its business activities.
Benefits of Estonian Jurisdiction for Personal Holding Company
We highly recommend establishing a personal holding company in Estonia. The Republic of Estonia is also known as one of the most attractive destinations in Central and Eastern Europe for foreign direct investment, due to its phenomenal economic growth and progressive and innovation-friendly business environment, known for its liberal tax system, transparency, and ease of doing business, as well as the creation and implementation of various modern IT solutions and electronic services.
The Republic of Estonia has set a course to attract foreign capital and has an excellent tax system. The company can have funds in any currency (including cryptocurrencies) and easily make international payments.
The peculiarity of the Estonian tax system is that the profits of companies are not taxed in the next tax period (e.g. quarter or year), but only when the net profit is distributed as a dividend. This rule is intended to encourage reinvestment of net profit in business development or asset acquisition instead of the distribution of dividends.
We cooperate with the AlphaLAW team for all corporate matters. AlphaLAW is an Estonian consulting firm that provides a wide range of corporate services, including tax planning, digital transformation, risk management, financial advisory, and more. They have a strong reputation for delivering high-quality services to their clients and have a team of experts.
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AlphaUMi - Fintech Services Advisory Group in Estonia
AlphaUMi - financial services advisory group in Estonia whose clients include funds, fintech start-ups, crypto companies, and payment e-money institutions.
AlphaLAW - Fintech Service Advisory Group in Estonia
](https://alphaumi.com/)
If you have any questions or concerns, please do not hesitate to contact us. Our Quantillion team is always available to provide assistance and support.