Family Holdings: the way to reduce taxes and manage wealth
As the deadline for filing income tax returns approaches, families and investors are looking for alternatives to optimize resources. In this context, family holding companies have emerged as a strategic option for managing assets and businesses efficiently.
Read more about: What is the definition of an Asset Holding Company and what benefits does it offer?
What is a family holding company?
A family holding company is a legal structure that groups a family's assets and investments into a single entity. This entity, usually a company, is created with the specific purpose of managing family assets efficiently and strategically. Through the Family Holding Company, family members can centralize the management of their assets, facilitate inheritance, protect assets and often benefit from tax advantages. This modality offers an organized and planned approach to managing family assets, providing greater security and control over assets over time.
Read more about: Family Holding the essential strategy for asset management and protection in 2024
Benefits of Family Holding
More than just a legal structure, a family holding company is a powerful tool for asset management and planned succession. By concentrating assets and investments under a single legal entity, family members can simplify asset management and reduce the tax burden in a legal and ethical way.
Read more about: What is asset shielding?
Tax incentives
Legislation offers significant incentives for family holding companies. For example, profits distributed to shareholders are exempt from income tax at source, resulting in considerable tax savings. In addition, the taxation of rental income can be more advantageous for the holding company than for individuals, depending on the tax regime chosen.
Read more about: A company's tax obligations
What is the difference between a family holding company and an ordinary company?
The main difference is that a Family Holding is created for the specific purpose of managing a family's assets, while an ordinary company has operational activities. In addition, Family Holdings generally offer tax benefits and asset protection.
Read more about: Succession Planning via Holding How does it work?
What are the costs involved in setting up and maintaining a family holding company?
Costs can vary depending on the size and complexity of the holding company structure, as well as the legal and accounting fees involved. They generally include company incorporation fees, professional fees and recurring operating expenses.
Read more about: Accounting for Holdings see what the accountant's role is
Future prospects
Despite the possible changes with the Tax Reform, family holding companies remain a viable and attractive option. Although there may be an increase in the tax burden in some respects, the strategy of setting up a family holding company still offers significant advantages.
A CLM Controller offers the necessary support to help create and manage a Family Holding Company, providing specialized legal and accounting consultancy services. Our highly qualified team is prepared to guide entrepreneurs through every stage of the process, from setting up the company to defining the corporate structure and drawing up succession planning.
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