Holding company (Holding)

In practice

A holding company may be advisable where a sale or the arrival of an investor is conceivable. Under German law, gains from the sale of a corporate subsidiary generally remain 95% tax-free in a holding company that is itself a corporation, and are available there for new investments. Only the distribution to the private individual is taxed in the normal way. In addition, risks can be separated, for example the operating business from real estate, trade marks or software. On the other hand, the red tape is also doubled. Separate bookkeeping, separate financial statements and separate resolutions for each company are required. Anyone who wants a holding company should set it up from the start, because contributing existing shares later can trigger a seven-year holding period for tax purposes. Tax advice is generally called for here.