The holding structure is an attractive organisational form for entrepreneurs.
Anyone who has ever heard of the holding company structure knows that it is known for the fact that you can save taxes with a holding company. How can you save taxes with a holding company? Our team will show you how you can utilise the holding company and its advantages for your company.
The tax advantages of the holding company
The holding company is convincing in terms of profit transfer and the taxes that have to be paid on it. The holding company benefits from Section 8b of the German Corporation Tax Act (KStG). This stipulates that 95% of profits from subsidiaries that are paid out to the parent company are tax-exempt. Only the remaining 5% is subject to a tax rate of approx. 30% (trade tax, corporation tax and solidarity surcharge). In order to guarantee the partial exemption from Section 8b KStG, the holding company must hold at least 15% of the shares in the subsidiary. This means that you only pay 1.54% tax on the sale of profits as a whole.
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What is a holding structure anyway?
A holding company is a form of organisation that allows you to coordinate different companies with different tasks. Classically, there is a parent company, the holding company, which holds shares (10-100%) in one or more subsidiaries. The parent company has a considerable say in the corporate organisation of the subsidiary. To do this, you need to set up two different companies (for example, two corporations: a UG or a GmbH), which do not have to have the same legal form. This can have some advantages.
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The advantages of a holding company
A holding company saves taxes. The holding structure also has other advantages:
Anonymity: sometimes it makes strategic sense for a subsidiary not to be directly associated with the parent company. Both companies do not have to have the same name and owner. You can use this as an advantage!
Exclusion of liability: The parent company is not liable for outstanding liabilities in the event of a subsidiary's insolvency
Securing property: The parent company can lend property (equipment, technology, etc.) to the subsidiary. If a subsidiary files for insolvency, you do not lose possession of the items.
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Examples of why a holding company is really worthwhile in terms of taxes!
Holding companies are particularly popular with start-up founders. If you want to run your start-up within a holding structure, the profits flow to the parent company at a reduced tax rate. You can reinvest the profits there. You can also save taxes with a real estate GmbH: If a subsidiary holds a property and it is sold, you can sell the proceeds to the holding company and reinvest them at a tax rate of 1.54%. In comparison: If you sell the property privately, you pay your personal income tax, which can be up to 47.48%.
The holding company and taxes - these points are important to understand
It's a well-known fact that you can save taxes with a holding company. To understand why this is the case and how you can utilise this advantage for you and your company, you should take a look at these points:
- What is a holding structure anyway?
- The advantages of a holding company
- The tax advantages of a holding company
- Examples of why the holding structure is really worthwhile
Why the holding structure can be useful
The holding structure is often mistakenly regarded as a separate legal form. However, it is only an organisational form with which you can coordinate your companies and divide up certain tasks. It is possible to save taxes with a holding company. You can find out how this works in this article.
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