Holding company
Holding company
A company that does not run a business itself — it only owns stakes in other companies. Why: asset protection, tax optimisation, easier group management. Popular in Cyprus, the Netherlands, Luxembourg, and Malta.
- What it is
- A company that owns stakes in other companies and assets
- What it does
- Owns and manages, but carries on no operating activity
- Why
- Structuring a group, taxes, inheritance
- What to take into account
- Substance, CFC rules and exchange of information
- Can you prepare
- Yes: choose the jurisdiction and ensure presence
In plain words
A holding company is a company that owns stakes in other companies and assets but carries on no operating activity itself: it does not sell goods or provide services. Its job is to hold and manage: to accumulate dividends, own real estate and intellectual property, and structure a group of companies.
Why a holding is created: convenience in managing a group, optimising taxes on dividends and capital gains (in jurisdictions with preferential regimes and a network of tax treaties), asset protection and simpler inheritance. A properly built holding can lawfully reduce a group’s tax burden.
But modern rules call for caution: without real presence (substance), a holding risks being deemed an “empty shell” and its income taxed in the owner’s country through CFC rules. Data on the structure are visible through the exchange of information. That is why a holding is built with real presence, transparent ownership and the taxes calculated, not as a screen.
Why a holding is needed
How a holding is structured
- Owns stakes
- Holds assets
- Carries on no operations
- Taxes on dividends
- Capital gains
- Inheritance
- Real presence
- Management on the spot
- Against shells
- CFC rules
- Exchange of information
- Disclosing the beneficial owner
How to build a holding
- 01Define the purpose and the group
- 02Choose the jurisdiction and regime
- 03Ensure substance
- 04Take account of CFC rules and exchange
- 05A lawful structure
What you need to know
- A holding owns stakes and assets but carries on no operations
- It is used for taxes, inheritance and asset protection
- A proper holding lawfully reduces the group’s burden
- Without substance it risks being an “empty shell”
- Income without presence will be taxed through CFC rules
Common mistakes
- Creating a shell holding without substance
- Ignoring the CFC rules of the country of residence
- Choosing a jurisdiction without a network of tax treaties
- Not disclosing the beneficial owner
- Treating a low tax rate as sufficient in itself
What this means for a BRIDGES client
We build holding structures lawfully: we choose the jurisdiction for the purpose and its tax treaties, ensure substance and take CFC rules and exchange into account. That way the holding optimises the group’s burden and protects assets rather than creating risks.
Frequently asked questions
01 /What does a holding company do?
It owns stakes in other companies and assets and manages them, but carries on no operating activity itself — it does not sell goods or provide services.
02 /Why is a holding needed?
For structuring a group, optimising taxes on dividends and gains, protecting assets and simplifying inheritance.
03 /Does a holding need substance?
Yes. Without real presence a holding risks being deemed an empty shell and its income taxed in the owner’s country under CFC rules.
04 /Does a holding reduce taxes?
A properly built one can lawfully reduce a group’s burden through regimes and tax treaties. But only with substance and transparency.
05 /How do you choose a jurisdiction?
By the purpose, taking into account tax treaties, substance requirements and the CFC rules of your residence. We choose the optimal structure.
06 /Is the structure visible to the tax authority?
Yes, through the exchange of information and beneficial ownership registers. That is why a holding is built transparently, not as a screen.
See also
Read next
This material has undergone editorial review by BRIDGES.
Structuring a group of companies?
We will build a holding lawfully — with substance, tax treaties and regard for CFC rules — to optimise and protect assets.