Over the years, it has been observed that many family businesses wrestle with regards to control and ownership. The ideal queries are how the family shareholders should control? How to influence the running of the business? How to manage the personal and professional relations between the same set of people? How can the family members have access to business information? Etc.
The above-stated queries have been gradually increasing with the increasing number of family businesses around the globe. One of the appropriate solutions to sort the issues is the incorporation of a family holding company. Many high-net-worth-individuals prefer to establish a family holding company as it holds the complete mechanism allowing the family members to evaluate and control the available assets altogether. Mostly, these companies are situated in the popular offshore jurisdictions that serve to be tax-havens and offer a favorable business climate. In this guide, you will get complete information regarding a family holding company and a suitable way to incorporate the same.
What is a Family Holding Company?
A family holding company is a legal business entity, mostly opted by high-net-worth-families to keep control over the assets held by the company. In general terms, a holding company is meant for holding or owning assets in other companies. Here’s the working mechanism of a holding company that will help you to gain a complete idea of the functioning part.
Now, when it comes to a family holding company, it follows a specific process and structure to ease the transfer and management process. One of the structures that are usually followed by a family holding company is stated below.
Benefits of Starting a Family Holding Company
Proceeding with a family holding company has got multiple benefits, even from the tax perspective.
- Exemption in the case of distribution of dividends of the investee companies
- Complete prevention of double taxation through the corporate income tax (in case of transfer of shares in subsidiaries)
- High possibility to benefit from special tax consolidation regime of the corporate income tax
- High possibility to enter into VAT Groups
- To get a complete exemption from wealth tax
- 95% reduction in the tax base of inheritance and gift tax
- Exemption from capital gains resulting from the gifts in the personal income tax
How to Start a Family Holding Company?
To proceed with the incorporation of a family holding company, one has to go through the following process.
1.Choose a Business Consultant
While dealing with the incorporation of a family holding company, it is recommended to deal with the expert’s advice and not proceed alone. Experts like Business Setup Worldwide can help you to understand the legal proceedings, and to carry out the process at ease.
2.Be Handy with the Company Essentials
The next move is to be ready with the relevant documents that need to be handover to the business consultant to complete the incorporation process. Some of the documents that need to be handover includes:
- Company’s trading name
- Directors Identification Number (DIN)
- Memorandum and Articles of Association
- Complete information regarding the assets held by the subsidiaries
- List of subsidiary companies
- Detailed shareholding structure in each subsidiary
- Detailed information regarding the number of shares held in each subsidiary
3.Submission and Verification of the Documents
Once the listed documents get submitted, it will undergo the scrutiny process, which will be conducted by the concerned authority of the specific nation where the family holding company will be incorporated.
4.Proceed with Offshore Bank Account
After the documentation gets verified, the last part is to deal with the offshore bank account process, where an offshore corporate account needs to be opened. To get better clarity on the benefits that you will derive by holding an offshore bank account, read our latest guide on the Advantages of Offshore Banking.
Thus, you can see that the incorporation process involves multiple steps that need to be carried out in a hassle-free way. To speed up the process, business professionals prefer to join hands with experts. Here’s a guide on the Four Core Reasons to Hire an Offshore Business Consultant.
We at Business Setup Worldwide has been providing one of the best and hassle-free business setup solutions to the business owners. Since inception, we have been helping numerous clients across the globe to incorporate their business dreams and transform them into reality. Our business advisors hold industry experience and are well-versed with the setup process, and provides tailored solutions suiting the business needs. In case if you hold any query or want to take a step further, feel free to have a word with our experts. Contact us today-we’d be glad to assist.