Forming a holding company in Germany
A holding company in Germany is used by foreign investors to own shares in other companies. Although it does not offer any specialized services it acts as an investment vehicle and provides a way to manage income, gather shareholders with the same interest and finance other companies.
Businessmen interested in starting a holding company in Germany
, must know that this type of company is an efficient structure that ideally operates with minimal costs. These types of companies
can benefit from certain tax advantages and this is why investors choose Germany to base their holding company
Types of companies that can be used as holdings
Setting up a company in Germany
implies, among other requirements, choosing a legal structure for your future business. 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.
If you want to open a company in Germany
, one of our experts can give you detailed information about the particularities of the private limited company and other business forms that can be used to incorporate a holding company
. If you are interested in opening a company in another jurisdiction, like South Africa
, we recommend our partners - South-African.Lawyer.
Taxation of German holding companies
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.
German holding companies can be exempt from corporate income tax on the profitable sale of shares in a foreign subsidiary if they meet the criteria concerning the percentage of shares owned in that subsidiary and if the subsidiary is located in a country with which Germany has signed a double tax treaty.