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A personal holding company above your operating company separates assets and operational risks, provides tax flexibility, and simplifies the later sale of your business. It is not a mandatory step, but it is a sensible consideration once you grow beyond the basic freelance phase. The additional notary fees often pay for themselves with the first serious transaction or investment round.
Anouk from our BV cluster initially set up a single BV — an operating company, not a holding company. When she secured an investor two years later and her accountant asked her, “Why don’t you have a holding company?”, the familiar response was: “Should I have set one up back then?” Answer: yes. Below is why.
The short answer
Three main reasons to set up a holding structure:
- Separation of risk. The operating BV assumes the business risk; the holding company retains the excess profit.
- Tax flexibility. Dividends between an operating company and a holding company can be paid tax-free via the participation exemption (Article 13 of the Corporate Income Tax Act).
- Exit benefit. Upon the sale of the operating company, the profit for the holding company is tax-free under the same exemption — the director-major shareholder only pays Box 2 tax upon distribution to private account.
What exactly is a holding company?
A holding company is a private limited company (BV) that does not engage in operational activity but holds shares in one or more other BVs (operating companies). The entrepreneur is a shareholder of the holding company; the holding company is a shareholder of the operating company.
The typical structure:
- You personally — owner of 100% of the shares in the personal holding company.
- Personal Holding Company (PH) — owner of 100% of the shares in the operating company. You are often also a director.
- Operating Company (WM) — the operational BV in which the customers, the employees, and the risks reside.
The holding company “holds” the assets; the operating company “supports” the operation. Hence the name.
Advantage 1: separation of assets and risk
The operating company assumes the operational risks: non-paying customers, claims, and bankruptcy risks. A personal holding company holds the vast majority of the assets — the retained earnings, the buildings (if any), and the shares in other private limited companies.
If the operating company goes bankrupt or faces a large claim, the holding company usually remains unaffected. Barring directors' liability or personal guarantees — read also when directors' liability comes into play.
Benefit 2: participation exemption
The participation exemption (Article 13 of the Corporate Income Tax Act) is the fiscal crown jewel of the holding structure. With an interest of ≥ 5% in a subsidiary, benefits from that participation — dividends and capital gains — are exempt from corporate income tax in the holding company.
Practical:
- Dividend WM → PH: no corporate income tax. After the transfer, the amount is held tax-free in the holding company.
- Sale of WM shares: capital gain in the holding company is tax-free. Tax only comes into play upon distribution to you personally (Box 2 dividend).
- WM loss: in principle not deductible at the holding company (the downside of the exemption).
This is the reason why investors and exit-oriented entrepreneurs almost always work through a holding company.
Advantage 3: exit and succession
Do you ever want to sell your operating company? Doing so via a holding company can be more tax-efficient. The buyer purchases the shares of the operating company from the holding company, not from you personally. The capital gain lands in the holding company (tax-free under the participation exemption) and remains there until you decide to distribute it as a dividend — at your own time and potentially spread over several years.
Without a holding company, the capital gain accrues directly in Box 2 (substantial interest) for you personally — 31% income tax (2024 figure) on the entire amount in one year.
When is a holding overkill?
Not for everyone. Two situations where it pays off less:
- Small self-employed BV with limited capital. The extra notary fees, annual accounts, and tax returns (two BVs, not one) add up. With little excess profit and no exit prospects, the holding company offers little tax benefit.
- Short horizon without value accumulation. Are you closing the BV again in two years? Then you are mainly left with start-up costs and little exemption.
The rule of thumb: if you have profit or capital accumulation above ~€50,000 per year and a horizon of a few years, the holding structure pays off. Discuss with an accountant.
Costs
A holding company at incorporation costs extra: a second BV with its own articles of association and Chamber of Commerce registration. Indicative:
- For the incorporation of a holding company and operating company simultaneously: €600 – €1,500 at the notary, compared to €350 – €800 for a single BV.
- Building a holding company retroactively (contribution of an existing BV): typically €1,000 – €2,500 including tax advice.
- Annual maintenance costs: two annual accounts and corporate income tax returns instead of one — budget €800 – €2,000 extra per year.
The payback period upon an exit is typically shorter than entrepreneurs estimate beforehand.
Honest recommendation
For entrepreneurs with growth prospects, capital accumulation, or a potential exit within five years, a holding structure is almost always worth considering. For pure one-person BVs without value accumulation, a single BV may suffice. Discuss this before you go to the notary — building a holding company later is more expensive than doing so beforehand.
For the execution: Setting up a BV with an existing holding company. For the basics: what is a BV.
Frequently Asked Questions
A private limited company (BV) that holds shares in one or more operating companies, without itself having operational activity. The director-major shareholder is a shareholder of the holding company; the holding company is a shareholder of the operating company. Separates capital and operational risk.
A tax exemption (Art. 13 Corporate Income Tax Act) for benefits from an interest of ≥ 5% in a subsidiary. Dividends and capital gains from an operating company accrue in the holding company without corporate income tax. Box 2 only comes into play upon distribution to the private individual.
In the event of growth, capital accumulation exceeding ~€50,000 per year, or a potential exit within five years. Also in the event of increased liability risk in the operating company or if you expect investors.
At incorporation, an additional €250 – €700 (two BVs instead of one). Annually, an additional €800 – €2,000 for two tax returns and annual accounts. The payback period is typically one to three years with growth or within a single transaction upon exit.
With a single BV, the entire assets and all operational risk are contained within the same entity. Upon sale, the profit immediately falls into Box 2 (taxable privately). With a holding company, you separate the two, gain tax flexibility, and can time the distribution to your private account.
Yes, via share merger or contribution. Sometimes tax-neutral (tax-neutral), sometimes with settlement. More expensive and complex than beforehand — hence the advice to make the right choice of structure at incorporation.
No. For small private limited companies (BVs) for self-employed professionals without value accumulation and without an exit prospect, one BV may suffice. In that case, the tax and legal benefits do not outweigh the extra costs. Discuss with an accountant.
