A company established in a country with a mild fiscal climate can use any wealth accumulated or contributed in such company for the issue of loans to related companies located in high tax jurisdictions, which may lead to tax deductions for the interest payments in the high tax country and zero or low taxation over the corresponding interest income. Interest payments are often subject to withholding taxes. Therefore it may be important to choose a jurisdiction for the establishment of the finance company that has a wide tax treaty network that can ascertain reduction of or even exemption from withholding taxation over interest payments to the low taxed entity.

Examples of such jurisdictions are Cyprus, Malta, the Netherlands and Luxembourg.