Establish a holding company and benefit from tax advantages

A holding company is a parent entity that owns shares in one or more subsidiary companies. It does not typically engage in day-to-day operations but exists to manage and control the subsidiaries, often for strategic, financial, or tax optimization purposes.

A holding structure offers several benefits, including tax advantages (e.g., exemption on dividends between parent and subsidiary companies), simplified asset management, and liability protection. It is also useful for managing multiple businesses or investments efficiently.

To set up a holding company, you need to: Choose a legal form for the holding and subsidiary companies (e.g., GmbH, UG). Draft and notarize the partnership agreements. Register the companies with the commercial register and tax authorities. Organize the financial and operational structure for effective management.

A holding company is ideal for entrepreneurs managing multiple businesses, investors consolidating assets, or companies seeking tax efficiency. It is particularly useful for start-ups planning to expand and attract investors.

A Holding GmbH offers several advantages, particularly in terms of tax benefits. Profits from subsidiary companies can flow into the holding with significant tax reductions, freeing up capital for reinvestment. Additionally, it provides a clear structure for managing business shares, better liability protection, and flexibility for succession planning. These benefits make the Holding GmbH attractive for growing businesses and investors.

The costs for establishing a Holding GmbH include: - Notary fees: Around €600 to €1,200, depending on the articles of association and share capital. - Commercial register entry: Approximately €150. - Share capital: A minimum of €25,000, with at least €12,500 to be deposited initially. Additional costs may arise for legal or tax advisor consultations to design the optimal structure. In total, the setup costs usually range between €2,000 and €5,000.

The primary reason to establish a holding company is to optimize taxes and manage assets efficiently. Through the 95% tax exemption, dividend distributions from the subsidiary to the holding are almost entirely tax-free. Additionally, a holding structure facilitates diversification of business areas, provides liability protection, and serves as a foundation for international expansions or long-term wealth building.

Yes, a Holding GmbH can establish a UG (haftungsbeschränkt). The UG would become a subsidiary of the holding. This allows the holding to explore new business areas with minimal capital investment while maintaining control through the parent company.

Yes, it is possible to establish a holding structure retroactively. This can be done by placing an existing GmbH or UG as a subsidiary under a newly formed Holding GmbH, often through a share exchange. This process requires legal and tax advice to ensure compliance and take advantage of potential tax benefits.

Yes, private individuals can establish a holding company. In this case, the individual acts as the shareholder of the Holding GmbH. A holding is particularly useful for consolidating business investments, managing capital in a tax-efficient manner, and building wealth over time. The key requirement is providing the necessary share capital for the setup.