For families with several companies, the double holding is the ideal approach to structuring. Both the optimization of taxes and the best order of participations and responsibilities for all family members are in the foreground. Even more exciting, however, is that the dual holding company also provides families with the freedom to move abroad without having to pay an exit tax. And also at the level of regular taxation, the double holding offers tax advantages.

1st Double Holding for Families – Introduction

Many entrepreneurs see their company as a multiple challenge. Products, marketing, financing and many other aspects of the business have to be decided carefully and wisely, and yet some things can take an unexpected turn. Especially in family businesses, management and family life quickly merge, thus placing special demands. But how does it have to be there if you run several family businesses? In addition, taxation is an always relevant topic that should be considered. Ultimately, however, it is also about the succession of companies and assets.

How good that there is an ideal solution for this, namely the double holding company for families. It is suitable both for structuring the shareholding relationships within the family and for integrating external partners, such as investors. This in turn facilitates a later exit, should this ever come into consideration. In the opposite case, however, the dual holding company is equally suitable for families to regulate the company succession. All this succeeds with the double family holding even tax-optimized. How? We show you that in this article.

2nd Double Holding for Families: Structuring Shareholdings

2.1. Entrepreneurial success leads to start-ups

Let’s start by looking at the investment structures in a family group. Usually it is the case that the parents or grandparents founded a company and this led to some success. And success is often a door opener for further entrepreneurial opportunities. The mere fact that you like to invest the company profits in real estate can lead to further start-ups. But also for innovations that have been conceived and developed, a new foundation can be worthwhile. Separating oneself from the main company gives oneself the space to take an entrepreneurial risk without endangering the existing foothold.

2.2. Requirement for structuring family businesses

Consequently, it may well happen that one day you realize that your own company portfolio has become quite extensive. At the latest when your own children develop interest in the management of one of these companies, it is time to think about the involvement of your own family members. This also includes the question of how they want to participate in one, several or all companies. Of course, this can be regulated individually for each family member and company. Or you look for an optimal solution, an overall structure that is also adaptable enough to welcome possible future changes without friction losses.

2.3. Double holding for families creates space for future changes

With a double holding for families, all this is particularly easy to implement. All companies are bundled under a common holding company, usually in the legal form of a GmbH. Above this, the holding of the family members is then positioned as a further level (often a GmbH & Co. KG). If you want to take investors, for example, they simply participate in the parent holding of the operating companies. Often they themselves use a holding company through which they participate in the company. They are thus equivalent to the family holding, are neither subordinate nor superior to it.

With the double holding company for families, you can also structure the shareholding relationships within the family without each family member having to set up their own holding company. This helps to save administrative costs. In the case of a family of four, for example, the parents can each participate in the family holding and the remaining 20% can be divided equally between the children.

3rd Double Holding for Families for Business Succession

And as far as the regulation of company succession is concerned, this is a suitable basis for shaping it. For example, one can consider transferring part of the parental involvement to the children every ten years. Depending on the initial situation, this can be done either via a sale or a gift. There is potential for tax optimization here, so a blanket recommendation is inappropriate at this point. Good tax advice will take you further. In any case, the company succession within the own family is regulated in the long term.

But under this heading we also want to include another aspect, namely the further life perspective of the entrepreneurial family. Should the necessary freedoms arise to enable individual or all family members to move abroad, the simple holding company with a GmbH as parent company is usually an obstacle. More specifically, in this case it is the exit tax according to § 6 AStG, which meets the willing GmbH shareholders. With a double holding company for families, in which the family holding is a GmbH & Co. KG, the exit tax can be avoided.

4th Double Holding for Families: Admission of Investors and Exit

So if such an entrepreneurial family wants to expand further and is willing to take on investors in the company built up by the family, then the dual holding company is also a suitable vehicle for this. Because the family remains shielded with its holding from the influences of the other investors. Finally, it is obvious that a family as a unit also has particular interests. It is just as obvious if she represents her through her own family holding. This gives it a special authority, which often acts independently of the actual participation relationships. This may be relevant, for example, in relation to the shareholder resolution on profit distributions.

And if at some point it means that you want to say goodbye completely to the corporate structure, so if the children are also open to a sale, then the double holding company for families is also equipped for this step. Because the new owners would then simply have to acquire the parent company of the operating companies, which is placed under the family holding. The family members then share the profit in proportion to their investments.

Taxation of the dual holding company for families

Last but not least, we have to talk about the tax advantages of a double holding company for families, because they still exist. We have briefly mentioned some tax advantages, for example in the context of a company succession. Others are the ones that a holding company offers anyway. Thus, a holding company taxes the distributed dividends of its subsidiaries particularly favorably if it operates in the legal form of a GmbH. Because then only about 1.5% of taxes are incurred; The actual taxation has already taken place at the level of the operative subsidiary GmbHs. This allows the parent company to use significantly more liquid funds for further investments than it could as a sole proprietor. In this way, the acquisition of real estate can also be realized faster – despite borrowing external capital.

Speaking of real estate, another way to incorporate companies into the family holding is to integrate real estate companies. This is especially useful with real estate GmbHs tax if these bring high returns. Then, under certain conditions, it is possible to save on business tax; Keyword is extended land shortening. If a real estate GmbH then also leases real estate to a sister company, even further tax advantages are tangible.

Double Holding for Families – Conclusion

Whether you look at taxation in general or the structuring of companies and holdings, the dual holding for families generates multiple benefits. This includes, in addition to the already mentioned, the protection of accumulated profits that accumulate in subsidiaries and thus could possibly be subject to liability claims of third parties, or the shielding of the family members involved against any additional payments that could arise in the course of company audits. With a double holding company for families, you can also use many tax arrangements for the acquisition and asset management of real estate.

However, a holding structure is only worthwhile from a certain size. Just as the founding of a GmbH from a sole proprietorship can only be justified after a certain net profit for the year, this only makes sense for a holding company – and especially for a dual holding company – if you achieve significant economic success.

For the long-term entrepreneurial perspective, the dual holding company is again the ideal structure for families. Especially with regard to asset and company succession, the dual holding company is worthwhile for families, because it also gives you further freedoms, such as moving abroad without an exit tax.