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If you are considering starting your own business, it may be a good idea to start a holding company beforehand. There are in fact many benefits to setting up a holding company as the owner of one's operating company. Learn more about the benefits of starting a holding company in this article.
What is a holding company?
The primary function of the holding company is to own shares in one or more other companies. The holding company is not an independent company form, but an ordinary company in the form of either a private limited company or a public limited company.
There is usually no operation in the holding company, which therefore will not be VAT registered either. The operating company will operate the actual business, while the holding company will only own shares in one or more operating companies. There are both holding companies where there are several owners in one joint holding company, and several different holding companies, each owned by one of the owners.
The benefits of setting up a holding company
One of the primary benefits of creation of holding company is that there can be a tax-free transfer of profits between the operating company and the holding company.
In addition, you have the option of making a holding structure, which means that the parent company acts as a money tank. In this way, the risk of operating in one company is limited by transferring the savings on an ongoing basis to another company.
It is also an advantage to have a holding company in connection with the sale of your company. If the owner of a company owns the company through a holding company, then it is the holding company that sells the company, which can be done tax-free. If, on the other hand, the owner does not own the company through a holding company, the company will be sold as a private individual, which will result in higher taxation. Following the sale, the company owner can decide whether the amount from the sale is to be distributed as dividends from the holding company, or whether the amount is to be reinvested in other existing or new companies.
If you need to change the ownership of the company, it is also an advantage to have a holding company, as you can receive tax-free dividends and sell tax-free. In addition, you will have the opportunity to slim down the operating company before a divestment, whereby new owners do not have to pay for saved profits.
Create an easy and fast holding company with Legal Desk
With Legal Desk you can easily make the necessary documents to set up a holding company. All you have to do is fill out the form online and pay for the documents, after which they will be signed by the owners. After this, the company must be registered online with the Danish Business Authority to become valid, which Legal Desk ensures. As soon as the registration is completed, you will receive a CVR number for the company, and you are thus ready to run your company.
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