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Advantage of holding company

  • 14-02-2019 10:13am
    #1
    MidnightHawk
    Registered Users Posts: 40 ✭


    Hi,

    As the co-owner of 2 limited companies, I am currently investigating the advantage of setting up a holding company where it has 100% shareholding in the 2 (new) subsidiaries.

    What are the rules around distributing/transferring profits between the subsidiaries and the holding company?

    I am also curious about filing books - would all 3 entities have to file separately to the CRO, or is this all done from the holding company?

    Lastly, and I guess ultimately, would it make better sense to leave the 2 limited companies as is (in other words separate), or should I establish the holding company?

    Cheers!


Comments

  • #2
    Calahonda52
    Registered Users, Registered Users 2 Posts: 12,593 ✭✭✭✭Calahonda52


    What are you trying to achieve with the HC?

    “I can’t pay my staff or mortgage with instagram likes”.



  • #3
    MidnightHawk
    Registered Users Posts: 40 ✭MidnightHawk


    Calahonda52 wrote: »
    What are you trying to achieve with the HC?

    I understand that from a management point of view, my partner and I would be 100% shareholders in the HC, where the subsidiaries are 100% owned by the HC. Also, if the businesses perform well, it would be easier to sell them off and there are CGT and dividend tax benefits in structuring the entities like this. CT is also done through the HC and (it is my understanding) that the HC and subsidiaries are seen as a single entity, from that perspective. Not 100% clear on this yet, though.

    I am still exploring the benefits and options, hence my question, but this is the gist of it.


  • #4
    thegolfer
    Registered Users, Registered Users 2 Posts: 346 ✭✭thegolfer


    All three entities are required to file separately for the companies office and revenue. However it is the taxation aspect that over takes the management aspesct.

    All three together can avail of tax relief in that, losses can be transferred intra group. Losses in one offset to losses in another.

    Vat grouping also available, reducing the administration.

    If selling a subsidiary company, assuming the HC meets the conditions, it can sell a subsidiary and pay no CGT.

    Also beneficial from a risk viewpoint, if in a risky sector.

    More aspects are there but the key factors are addressed.


  • #5
    MidnightHawk
    Registered Users Posts: 40 ✭MidnightHawk


    thegolfer wrote: »
    All three entities are required to file separately for the companies office and revenue. However it is the taxation aspect that over takes the management aspesct.

    Thank you. I suppose, ultimately, my question is: Is a HC a more advantageous set-up than having multiple LTD companies (where I am a director of every single one)?


  • #6
    CIARAN_BOYLE
    Registered Users, Registered Users 2 Posts: 14,599 ✭✭✭✭CIARAN_BOYLE


    MidnightHawk wrote: »
    Thank you. I suppose, ultimately, my question is: Is a HC a more advantageous set-up than having multiple LTD companies (where I am a director of every single one)?

    While you do not want to think about a business making losses the ability to surrender losses from one company to the others may be worth having.

    https://www.revenue.ie/en/companies-and-charities/reliefs-and-exemptions/group-relief/index.aspx


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  • #7
    thegolfer
    Registered Users, Registered Users 2 Posts: 346 ✭✭thegolfer


    With a holding company in place you'll have three sets of accounts to sign. Without the HC only two. It depends on your circumstances, whether the companies are trading or passive income companies.

    Are you considering this as part of a exit strategy or just heard it at a bar?

    It's not a easy answer, and primarily we'd need more information as to your intentions, retirement, selling, passing to family, expansion, risk management?

    A HC structure is good in some situations and unnecessary in others.


  • #8
    MidnightHawk
    Registered Users Posts: 40 ✭MidnightHawk


    thegolfer wrote: »
    With a holding company in place you'll have three sets of accounts to sign. Without the HC only two. It depends on your circumstances, whether the companies are trading or passive income companies.

    I have 1 LTD company already registered, and either way, the next logical step is to set up the 2nd LTD company. Whether I keep them as separate LTD co's or part of HC is the question - but I want to keep the two business entities separate. I have a few ventures which might require setting up their own additional entities in the near future. My current company is an active trading company, the new one will be passive income (as will the rest). I don't mind having to sign three sets of accounts - at the moment they will classify as micro companies and I do the filing myself.
    thegolfer wrote: »
    It's not an easy answer, and primarily we'd need more information as to your intentions, retirement, selling, passing to family, expansion, risk management?
    My intention, moving forward, is to start up companies for the software startups I am currently working on, and I am hoping that the HC is the correct vessel to create companies and wind-them down if they don't work out, or sell them on if they are profitable.


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