Why you should set up a holding company
30.11.2025
Daniel Donhauser ist Rechtsanwalt und Experte für Venture-Capital und Mergers & Acquisitions mit Schwerpunkt auf strategischer Beratung in wirtschaftlich relevanten Entscheidungssituationen.
Permitted holding tax saving model! Here you can find out everything you need to know about setting up with a holding company and why you should find out more about a holding company before setting up a company.
Founding with or setting up a holding structure is highly recommended for founders, start-ups and entrepreneurs, as there are a variety of possible applications and this is very advantageous under tax and liability law.
- Save taxes
- Build up wealth
- Reduce liability risks
- Create strategies for exit or restart
- Send professional signals
- and and and
According to your business case, your founding will either aim to set up a “cash cow” or an “exit scenario.” A holding company can and will give you an advantage in both variants if certain things are considered.
A holding company is a so-called parent company that holds company shares in one or more other companies. For liability and tax reasons, a corporation such as GmbH and UG has established itself as the most recommended legal form for a holding company, although, depending on the objective, a KG may also be considered.
This makes a holding company a vehicle through which you hold your start-up shares (in English to hold, hold) instead of holding company shares personally.
Of course, tax savings are only effective if you generate taxable profits from your sales. Although this is less likely to be the case in the first few years of your start-up, you should take this into account when planning ahead and include a holding company.
Because a holding company offers enormous tax advantages: For example, you pay around 25.5% less tax on sales proceeds and profit distributions than if you hold the startup shares without a holding company.
Sales of GmbH shares held personally and directly by a GmbH shareholder are discussed for tax purposes below. Depending on how high the Participation rate Within the last few years, the sales proceeds of a GmbH share are taxed as follows.
The more frequent case of founder exit will probably be the case that a GmbH shareholder sells shares in the start-up in which he has invested in the share capital of the GmbH within the last 5 years involved with at least 1% was. When selling shares in private assets, the sale proceeds are therefore generally taxed using the partial income procedure, which is effectively around 27% tax burden (for an exit that exceeds 250,000€)
However, if the company shares in the start-up are held by a corporation as a holding company, sales proceeds and profit distributions are almost tax-free: They are actually only taxed at the rate of 1.5%.
For example, if the purchase price for your share in the start-up is EUR 1,000.00, the holding company only pays around 15,000 euros in tax and 985,000€ remains after tax. Without a holding vehicle, you would have had to personally pay around 266,300€ in taxes and only around 733,700€ left after tax. With a holding company, around a third of the exit remains as €251,300. That is capital of over a quarter of a million euros, which you can then invest in further wealth creation.
The same usually applies to profit distributions, i.e. if you are more of a cash cow model. However, the following should be considered:
The investment through your holding company must hold at least 15% of the company shares. If your share is less than 15%, the exemption from business tax does not apply. If the share is below 10%, the exemption from corporation tax is also waived. The holding company must then pay the full rate of corporation and trade tax of around 30% on profit distributions instead of 1.5%.
For this reason, you should always keep an eye on these participation rates; however, this only applies to dividends and not to sales proceeds of GmbH shares, or shares from your share portfolio, which is part of your holding company. This ultimately leaves more capital for investments in your holding company.
As a rule, there is little talk about wealth and optimization, but the entries in the commercial register show who holds directly and who owns a holding company. In practice, it is becoming apparent that inexperienced founders usually do not hold a holding company and thus present both inexperience and lack of clarification and therefore a lack of understanding of a VC case or even few ambitions.
Of course, this is not a general rule, but you can say that no VC or business angel has noticed negatively about holding through a holding company, but is asked whether you save yourself the costs of the holding company because you don't believe in your company.
When it comes to costs, a distinction must be made between start-up costs and running costs. As a rule, a holding company is a capital company in the form of a GmbH or a UG.
Die Start-up costs consist of the costs:
- consulting/structuring and contract preparation in the amount of approx. 500, - € - 1,000, - €
- the notarial certification of approx. 300, - € — 850, - €
- registration in the commercial register in the amount of approx. 150, - €
Die running costs The holding company is:
- bookkeeping
- Financial statements
- IHK contribution
A total of around 1,000, - € per year. If you only have a few transactions and therefore few bookings in the holding company, the cost of tax advice is also manageable and you can usually negotiate a deal with the advisor here.
It can also be interesting to also take operational action with the holding company in order to generate running costs - possibly even with sales tax deduction - and build up a fortune for investments in the holding company
Roughly speaking, this means 500€ to 1,000€ when founded and 3,000, - € for 3 years, i.e. around 4,000, - € in three years. So if you generate around 15,000 euros in profit with your company in 4 years, the costs of the holding company have paid off.
If the operating company, i.e. your start-up, is not founded from the holding company, this in practice leads to the following situation.
1. You only get the full holding benefits after 7 years;
2. the transfer of your start-up shares to a later holding company as a rule with cash outflow connected.
As shown above, you benefit from a holding company when your company is successful, i.e. you receive profit distributions or sales proceeds. However, if these do not happen, you will only produce costs with the holding company.
A holding company therefore initially causes further effort in terms of formation, administration and costs, which is why the question for many founders is whether they can only set up a holding company later when it is foreseeable that the start-up will generate profits.
The answer is neither yes nor no. Where more no than yes!
From a corporate law point of view, it is possible to establish a holding company and transfer the company shares in the company to the holding company. From a tax point of view, however, this is not always tax-neutral. There is also a blocking period of 7 years. Sometimes, however, there is a work-around, but this involves consulting costs. You'll never get your holding company as cheaply as it was when you founded it.
The personally held company shares can be transferred to a holding company tax-free if and to the extent that you have the majority of the voting shares in the company. Majority in this case means 50% plus one vote.
If this is not the case (as with two start-up founders, each holding 50%), the following applies:
a) The shares are taxable when transferred to a holding company. This path is therefore actually ruled out if the current value of the shares is already very high. If the value of the shares is still manageable, but if it is becoming apparent that they are growing, it could actually be a way to tax them in order to then keep them in the holding company for the long term.
b) There are also other ways to transfer start-up shares tax-free to a later holding company using somewhat more complex constructs and structures, but this requires a more detailed examination, advice and structuring on a case-by-case basis, which is usually associated with costs and is only worthwhile if the shares are worth a great deal.
In both cases a) and b), however, the contributed shares are then deposited for a 7-year vesting period. This means that for 7 years, depreciating by 1/7, the taxation is mixed (between holding and private). A sale of start-up shares 3 years after the subsequent transfer to a holding company, i.e. 3/7 by holding company and 4/7 privately. However, depending on sales revenue, this alone can be a huge tax saving.
This also shows that it is advisable to set up a holding company as early as possible, preferably right at the time of founding it.
Rechtsanwalt Daniel Donhauser berät mit Schwerpunkt im Gesellschaftsrecht, Arbeitsrecht und Steuerrecht. Sein besonderer Fokus liegt auf der Optimierung und Gestaltung von VC und M&A Transaktionen. Durch seine Expertise aus der Beratung von Unternehmensverkäufen und Beteiligungen hilft er Gründern dabei, gleich von Anfang alles für eine Finanzierung oder Exit passend aufzubauen und vorzubereiten.
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