Holding companies are essential instruments for managing and restructuring corporate and family wealth. They offer significant tax advantages and enable effective asset protection.

What are holding companies and what types exist?

Holding companies are entities that hold stakes in other companies and/or assets such as real estate, trademarks and patents. There are two principal categories:

Mixed holdings: in addition to managing shareholdings, they carry out their own operational activities.
Holding companies may be constituted by both commercial and non-commercial entities.

Pure holdings: they do not carry out operational activities and confine themselves to managing shareholdings.

What is the structure of a holding company within a corporate group?

Holding companies may operate at two levels:

Family holding: holds the industrial holding and serves as an instrument of wealth control and family governance.
This structure helps to separate risks and optimise corporate management.

Industrial holding: controls and manages shareholdings in the operating companies.

How is a holding company established?

The establishment of a holding company depends on the specific corporate requirements. The most common operations include:

Corporate demerger: the division of an existing company into multiple entities.
These operations allow fiscal and civil-law risks to be ring-fenced, transferring them to the contributing company whilst the holding company remains protected.

Contribution of business assets: the transfer of assets to new companies, thereby creating a holding of shareholdings.

What are the tax advantages of a holding company?

Holding companies benefit from various tax advantages, including:

Partial exemption on capital gains: upon the disposal of shareholdings, capital gains may be taxed at a reduced rate compared with the sale of corporate assets.

Fiscal neutrality: avoids the immediate taxation of capital gains arising from the transfer of assets, unless fiscal revaluations have been carried out.

Group tax consolidation relief: allows the losses of one company to be offset against the profits of another within the group.

What is the role of a holding company in merger and acquisition (M&A) transactions?

Holding companies facilitate corporate merger and acquisition (M&A) transactions by means of two principal transfer methods:

Asset deal (disposal of corporate assets): involves the direct sale of the company’s assets.
The differences between these methods concern the taxation of capital gains and the impact on corporate balance sheets.

Share deal (disposal of shareholdings): allows control of the company to be transferred without directly alienating its assets.

Why engage an independent financial adviser for the management of a holding company?

Transactions involving holding companies are complex and require careful tax and corporate planning, drawing on the expertise of dedicated professionals. An independent financial adviser can assist in:

  • Evaluating the most appropriate structure for one’s business.
  • Optimising tax and wealth management.
  • Reducing risks associated with corporate transactions.

Engaging an expert allows one to make the most of the opportunities offered by holding companies and to ensure efficient management that is fully compliant with current regulations.