Many entrepreneurs often think of a holding company as large, international companies with opaque structures, but a holding company is also very useful for small entrepreneurs. Almost every entrepreneur who sets up a BV also sets up a holding company at the same time, if he doesn’t already have one. A holding company is a BV that stands as a parent above an operating company, usually also a BV. Privately you own all the shares of your own holding company and that holding company in turn owns shares of the operating company. This is also possible if you set up a company with others; they each have their own holding company. The shares of the operating company are then distributed among the participating holding companies.
The actual activities take place in the operating company: the purchase and sale of goods or services, the office, the employees, the investments, the website, the logo, the stocks, etc. The holding company can then be used for a management fee, capital accumulation or pension accrual. A holding company is sensible if you have valuable items in the operating company or if you want to sell your business one day. You can then sell the shares in the operating company that will benefit the holding company. You do not have to settle the earnings in the holding with the tax authorities immediately. If you do not have a holding company and you have private shares in an operating company and you sell shares in that operating company, you must report this on your income tax return.
Due to the participation exemption, the profit you have made in the operating company is not taxed again in the holding company. After all, you have already paid tax on the profit you made. Money that you can then pay out to yourself as a dividend from your holding company. You can also choose to use the money in your holding to buy new shares from another BV or to invest in a new project or to use it for a mortgage if you want to buy a house.
There are more tax advantages, such as hedging risks and using the work-related costs scheme, but there are also disadvantages to having a holding company. For example, every BV must annually prepare annual reports, so also every holding company. You must also keep records of your holding company and in order to be able to get a salary, your holding company must send management invoices to your operating company and a salary administration must be set up in your holding company. All doable, but you have to think about it for a while and then set it up correctly.
By the way
If your holding company owns 95% or more of the shares of the operating company, the BVs can enter into a fiscal unity. You can then offset the turnover and all costs of the BVs against each other for tax purposes to save tax.