Taxation of the holding parent company
In most cases, the holding makes an operating profit as well as a profit from the sale of shares.
Operating profit from operations
The operating profit of the holding subsidiary is transferred to the holding parent company unless it is required for operations or reserves.
This shows the main advantage of the holding: only 5% of the profit is subject to the usual taxes, which are then also incurred in the parent company. Thus, 95 % of the profit is not taken into account.
The 5% of the profit transferred by the holding subsidiary to the holding parent is subject to:
- corporation tax at 15% and
- the solidarity surcharge at 5.5% of the corporation tax.
Moreover, 5% of the profit transferred to the parent company is also subject to trade tax.
Sales profit on exit
The same particularly advantageous tax rate of 5% applies to the capital gain from the sale of a subsidiary (or shares in it) by way of an exit. The profit can be left in the holding, increased tax-free through investments (bank, shares, etc.) or, for example, through the acquisition of real estate, vehicles, etc., including for your own use and for other undertakings of the holding. In the event of an exit without a holding, the seller would have to tax the profit extremely disadvantageously at their personal income tax rate.
Excursus: Vote pooling and profit transfer agreement
A vote pooling and profit transfer agreement, also known as a control agreement or profit and loss transfer agreement, leads to an “automatic” transfer of profits from the subsidiary or subsidiaries to the parent company. The holding is automatically regarded as a group (“fictional group”).
This has the advantage that 0% of the subsidiary’s profit is taxed: 100% of the subsidiary’s profit goes to the parent company tax-free.
However, this is countered by the disadvantage that the parent company is liable for the subsidiaries’ liabilities. The advantage of risk separation is completely absent in this case. We therefore advise against entering into such a contract in most cases.