Case Study: Establishing a Cyprus Holding Company for an Agricultural Business

Case

The owner of a Ukrainian agricultural company approached Feod Group with the objective of establishing an international holding structure to consolidate corporate ownership rights and optimize the receipt of dividends from the Ukrainian business.

The project involved a corporate restructuring with the participation of specialists from multiple jurisdictions and required compliance with corporate, tax, and international law.

Objectives of the Project

The key objectives included:

• incorporation of a holding company in Cyprus;
• transfer of the corporate rights in the Ukrainian agricultural company to the Cyprus holding company;
• development of an international ownership structure compliant with both Ukrainian and Cypriot legislation;
• creation of a legal framework for receiving dividends under the provisions of the Double Tax Treaty between Ukraine and Cyprus;
• preparation of the corporate structure for future business expansion and the potential attraction of foreign investors.

Project Implementation

The project required the simultaneous involvement of professionals from several jurisdictions. The Feod Group team coordinated the work of Cypriot lawyers, corporate administrators, tax advisors, Ukrainian lawyers, and accountants, providing the client with comprehensive support throughout every stage of the project.

The engagement began with a comprehensive analysis of the existing ownership structure, assessment of corporate and tax risks, and verification of the possibility of applying the international tax treaty following the completion of the restructuring.

After designing the optimal structure, the specialists developed a step-by-step implementation plan that enabled the transfer of corporate rights without disrupting the ongoing operations of the Ukrainian company.

The project included the following key tasks:

• incorporation of the holding company in Cyprus;
• conducting a comprehensive legal and tax analysis of the ownership structure;
• assisting with the transfer of the corporate rights in the Ukrainian agricultural company to the Cyprus holding company at nominal value;
• preparation of the complete set of corporate documentation and legal support for the transaction;
• coordination of all project participants and management of the corporate restructuring process at every stage.

Upon completion of the restructuring, the Cyprus holding company became the owner of the Ukrainian agricultural company and obtained the ability to receive dividend distributions from the Ukrainian business within the newly established international corporate structure.

Result for the Client

As a result of the project, the client obtained an international holding structure that centralized business ownership and improved the efficiency of managing corporate assets.

Following the restructuring, dividends are distributed by the Ukrainian company to the Cyprus holding company under the provisions of the Double Tax Treaty between Ukraine and Cyprus. Subject to compliance with the requirements of the treaty and Ukrainian legislation, including confirmation of tax residency and beneficial ownership status, a 10% withholding tax rate applies instead of the standard 15% withholding tax rate.

In addition, the established structure provided the client with:

• centralized ownership of corporate rights;
• a transparent international ownership structure;
• opportunities for the further corporate development of the group of companies;
• a solid foundation for preparing the business to attract foreign investors or sell individual assets in the future;
• simplified management of corporate changes within the group.

Book a Consultation

Every international holding structure requires an individual approach. We analyze the business owners’ objectives, the specifics of the business, the existing ownership structure, and the tax implications of the planned restructuring in order to develop a solution that complies with the legislation of Cyprus and other relevant jurisdictions.