If you want to open a holding company in Germany, you can rely on our local specialists for support in registration and compliance with the local regulations.
| Quick Facts | |
|---|---|
| Applicable legislation | German Company Law. |
Available legal forms | – private limited liability company, – joint stock corporation. |
Possibility to complete commercial operations (YES/NO) | No, the holding company is set up to control other businesses (subsidiaries). |
| Activities permitted | – control its subsidiaries’ policies, – oversee operational decisions. |
| Types of assets a holding can own | – real estate, – shares in other companies, – intellectual property rights, etc. |
| Types of holding companies | – financial, – organizational, – operational, – strategic. |
| Shareholding structure | The shareholder is the parent company which can be a domestic or foreign enterprise or a German or foreign national. |
| Management capacity (YES/NO) | The holding company can have management capacities, however, it can not run the daily activities of subsidiaries. |
| Protection from losses (YES/NO) | Yes, the holding company is protected from the losses incurred by the subsidiaries. |
| Minimum capital | – EUR 25,000 for the private company, – EUR 50,000 for the public company. |
| Taxation | Holding companies are subject to the corporate tax rate of 15.825% |
| Accounting and reporting requirements | Tax returns must be filed annually before the 31st of July of the current year for the past one. |
| Possibility to use a holding company as a tax minimization structure (YES/NO) | Yes, it can reduce its tax liability by setting up subsidiaries in countries with low corporate taxes. |
| Advantages | – access to tax incentives, – access to the EU Parent-Subsidiary Directive, – no capital duty, – no stamp duty. |
| Support in registering a holding company in Germany (YES/NO) | Yes, we can assist with the creation of a holding company in Germany. |
Table of Contents
What is a holding company?
A holding company is a business created with the purpose of owning and controlling stock in other companies, called subsidiaries. This is a generic definition of the holding entity that also applies in Germany.
What legal entity can I use to open a holding company in Germany?
Many investors in Germany choose to open a private limited company because the shareholders enjoy limited liability for the debts of the company and their personal assets are protected.
What are the requirements to open a holding company in Germany?
The following:
- to have at least one shareholder;
- to have at least one director, who must not be a German resident;
- to ensure the minimum capital of the selected business form;
- to have a German registered address.
What are the steps to register a holding company in Germany?
The registration of a holding business follows the usual company formation steps in Germany, namely:
- company name reservation;
- establishment of the legal form for the holding company;
- preparation of the Articles of Association;
- the creation of the bank account and deposit of the share capital, based on the selected type of structure;
- the submission of the documents to the German Trade Register.
We also have an infographic on this type of company:
What is the minimum capital to open a holding company in Germany?
- EUR 25,000 if you opt for a private limited liability company;
- EUR 50,000 if you register it as a joint stock corporation.
NOTE: In case of financial holdings, the amount depends on the type of license required.
Is it possible to open a holding company in Germany remotely?
Yes, it is. Through our dedicated company registration services.
How long does it take to register a holding company in Germany?
Approximately one month with all due diligence completed, if you are a foreign shareholder.
What are the activities I can undertake through a German holding company?
- owning shares in one or more subsidiaries;
- owning intellectual property rights;
- e-commerce operations;
- managing one or more subsidiaries.
What types of holding companies can I set up in Germany?
The following 5 types of holding companies can be set up in Germany:
- financial holdings;
- management holdings;
- operational holdings;
- organizational holdings;
- strategic holdings.
Here is also our video on this subject:
How are German holding companies taxed?
One of the most important characteristics of a good taxation regime for holding companies is the avoidance of double taxation. This is possible in Germany through the large number of double tax treaties that exist between this country and other ones around the world.
Because it is a member of the European Union, Germany enforces the provisions of the Parent-Subsidiary Directive, a law that influences holding companies. If a German company owns at least 10% of the shares of an EU subsidiary for at least one year, then any dividends from that subsidiary to the German holding company are exempt from the withholding tax.
What are the advantages of a holding company in Germany?
The German holding company has several advantages, among which:
- it can be used as a tax minimization vehicle – based on their respective legal structures, the parent business and its subsidiaries are subject to taxes. When the earnings made by the subsidiary companies are sold to the parent company, however, just 5% of the proceeds are subject to taxes;
- another benefit of forming a holding company is that 95% of the money received from the sale of company shares is tax-free;
- liability exclusion and insolvency protection: generally speaking, the parent business is not accountable for its subsidiaries;
- redomiciliation options: it can be feasible to move the holding company’s registered office to a country with better tax laws.
If you are interested in opening a company in another jurisdiction, like South Africa, we recommend our partners – South-African.Lawyer.
Feel free tocontact our German company formation consultants for detailed information on how to set up a holding company.