Establishing a holding company: what is a holding company?

Introduction

Do you have a large business and want to spread business risks? Then it may be wise to set up a holding company. A holding company is hierarchically above an operating company or several operating companies. Establishing a holding company has several advantages, both in terms of spreading risks and tax issues.

What is a holding company?

The holding company is a limited liability company that stands above a company or several companies (operating companies). The holding company is also called the parent company, and the operating companies are the subsidiaries. The subsidiaries are also BVs. Read more about establishing a BV here .

What does a holding structure look like?

A holding structure consists of a holding company and one or more operating companies. The operating company is a limited liability company that performs day-to-day, high-risk operations. The holding BV does not perform business activities. The holding company manages assets, such as shares, cash or real estate. The holding company's other duties include holding shares in other companies, management work, investing and building up pensions.

Establishing holding company BV: how does it work?

If you have several limited liability companies, it may be wise to control them from a single point. That is the holding company. You can then handle payroll from one BV and the capital flows between the different BVs are easier to manage. Moreover, you can separate your valuable assets from risky activities. If something goes wrong with the risky part of the business, it does not immediately lead to bankruptcy for the entire company.

Establishing a holding company with an operating company can be done with either an existing or new company:

Existing business

If your company already exists, you have two choices: convert your sole proprietorship to a holding company and operating company or form a new holding company and operating company and take over your sole proprietorship with your new operating company.

Convert sole proprietorship to a holding company:

1. If you choose to convert your sole proprietorship into a holding BV and operating company, the first step is to establish a holding BV at the notary. The value of the shares of the new holding BV is paid for with the contribution of occupancies and debts of your sole proprietorship. These are included in the contribution deed by the notary.
2. You then have to establish an operating company from the holding company. The value of the contribution deed can then be used to pay for the shares of the new operating company. For this, another new deed of contribution must be drawn up. The activities of your company are now carried out from the new operating company.

Establish holding company BV and operating company and take over sole proprietorship:

1. In this case, you first set up a holding company and operating company and pay for the shares with cash.
2. Then you take over your old sole proprietorship through the operating company. The occupation and debts then belong to the new operating company.
3. To complete the process, you can terminate the sole proprietorship and continue your operations from your operating company.

New venture

1. If you did not already have a company, you can set up a holding company at the notary.
2. From the holding company you can then establish the operating company.
3. The notary registers the holding company BV and operating company with the Chamber of Commerce trade register and registers you as UBO.

What does it cost to set up a holding company?

The start-up costs of a holding company are low, because since 2012 you are no longer obliged to deposit start-up capital. However, you must take into account about € 1000 in notary fees, because, among other things, a deed of incorporation must be drawn up. Accountant fees can also add up. Your tax affairs must be arranged by an accountant god.

Intermediate holding company BV

An intermediate holding company is often chosen when working together with other entrepreneurs. The holding companies of the entrepreneurs together are shareholders of the intermediate holding company. The entrepreneurs then have control over the intermediate holding company and the risk lies with the operating company.

Benefits of setting up a holding company

• Less risk:
  As an entrepreneur, you own the holding company. The holding company owns the operating company. This is how you spread the risks within your company. You place important parts of your assets in the holding company and the business activities are carried out by the operating company. Does the operating company go bankrupt? Then your assets are still safe in the holding company.
• Tax advantages:
  There are several tax advantages associated with the holding company. For example, because of the participation exemption, the profits of the operating company can be transferred tax-free to the holding company. These profits are then taxed only at the operating company. Moreover, if the holding company owns at least 95% of the shares of the operating company, the BVs can form a fiscal unity. This can provide tax benefits.
• Arranging for pension accrual:
  As a business owner, you can build up your pension in the holding company. Does the company go bankrupt? Then your retirement provision will not be at risk.
• Borrowing from the holding company:
  If you have a personal holding company, you can give yourself a mortgage loan from the holding company. This allows you to arrange a mortgage outside the bank, and you don't have to pay the bank any interest either. You pay the interest to your holding company and you can deduct it on your income tax.
• More flexibility:
  With a holding company, you have more flexibility because you can better separate matters within your company. You make selling or acquiring separate business units easier, for example.
• Company structure becomes clear:
  If you want to establish multiple limited liability companies, the holding company offers a clear business structure. The holding company holds the shares of your limited liability companies and you can take advantage of the holding company's tax facilities.

What do you call your holding company?

If you set up a holding company, it is important not to give it your own name. This is a common mistake. A holding company is often registered at your residential address and your numbers are public. Therefore, for your own protection, it is important to choose a neutral name that is not automatically linked to you as a person.