International financing companies
The establishment of international financing companies can serve many purposes. First of all they fulfill treasury management functions on behalf of natural entities or corporate groups. The interest payments to the subsidiaries might be subject to withholding taxes, but the latter are usually lower than the corporate taxes, which are levied otherwise. However, this interest payment is a deductible cost, thus the consolidation of payments for the international financing companies may provide tax advantages, just like in the case of intellectual property licensing companies .
International financing companies are also used as part of structures for acquiring real estate, entities or other investment choices. They protect any capital funds introduced from abroad, it’s a way of achieving tax mitigation on the cost of borrowing the funds and finally they offer the freedom to return interest on funds lent to the tax haven, in order to be reinvested at a better tax-free level.