Holding-GmbH in Germany.
95% tax exemption under § 8b KStG.
Holding structure that accumulates and redeploys profits efficiently. Participation exemption on dividends and capital gains, Organschaft for tax-group offset, restructuring paths.
A Holding-GmbH is a GmbH whose purpose is to hold and manage participations in other companies. § 8b KStG makes 95% of qualifying dividends and capital gains tax-exempt. § 9 Nr. 2a GewStG extends the relief to Gewerbesteuer for participations of 15% or more. §§ 14, 17 KStG allow Organschaft (tax group) consolidation with a 5-year profit-and-loss-transfer agreement.
The 95 / 5 mechanics
A €100 dividend from operating GmbH to Holding-GmbH: 95% exempt, 5% treated as non-deductible expense (§ 8b (5) KStG). The €5 is taxed at ~30% combined, producing ~€1.50 leakage. Net at Holding level: €98.50. Worked example: operating GmbH earns €1,000,000 pre-tax, pays ~30% = €700,000 after tax, distributes up to Holding. Only €35,000 taxable at Holding, ~€10,500 tax. Net at Holding: ~€689,500–31% total effective vs 48% if distributed straight to a natural person.
The 10% threshold (§ 8b (4) KStG)
Dividend exemption requires at least 10% participation at the start of the calendar year. Below 10%, the dividend is fully taxable at corporate level. Capital gains on disposals have no minimum-holding requirement (but watch anti-abuse rules).
Gewerbesteuer Schachtelprivileg
§ 9 Nr. 2a GewStG grants additional GewSt relief on dividends from participations of 15% or more. Below 15%, § 8 Nr. 5 GewStG adds dividends back for GewSt purposes, a trap for thinly-held portfolios.
Organschaft, when the 5-year PLTA pays off
§ 14 KStG allows full consolidation when: (a) Tochter is financially integrated (>50% voting), (b) profit-and-loss-transfer agreement (PLTA) is signed, registered at HR, and performed for at least 5 full fiscal years. Result: Tochter losses offset Holding profits directly. Risk: break the 5-year rule and the tax group is denied retroactively.
Restructure into a Holding over an existing GmbH
§§ 20-24 UmwStG allow tax-neutral contribution of an existing GmbH into a newly-formed Holding. Timing and structure matter: set up the Holding before a dividend event, meet the 10% threshold at the start of the calendar year of distribution, and lock Organschaft before using it for loss offset.
When a Holding is a mistake
If you want immediate personal cash-out, the Holding does not help: the chain back to you still carries Kapitalertragsteuer. If retained profit is under ~€50,000/year, the admin cost of two entities eats the benefit. If you are a solo freelancer, a Holding is theatre.
Often booked alongside this one.
Frequently asked questions
What is a Holding-GmbH and when does it make sense?
A GmbH whose purpose is to hold participations. Makes sense for profit retention, multi-entity ring-fencing, pre-exit structuring, family-office pooling.
How much tax is saved with the § 8b KStG participation exemption?
Effective leakage drops from ~48% (direct to natural person) to ~31% (via Holding) on retained profit. On an M&A exit, effective tax drops from ~15% (Teileinkünfteverfahren) to ~1.5% (§ 8b).
What is the 95/5 rule and where does the 5% come from?
§ 8b (5) KStG treats 5% of the exempt amount as non-deductible expense. So 95% effectively exempt, 5% creates minor tax.
What is the minimum shareholding for the dividend exemption?
10% at the start of the calendar year, per § 8b (4) KStG.
Do capital gains on the sale of a subsidiary also benefit from the 95% exemption?
Yes, under § 8b (2) KStG, with the same 5% non-deductible treatment and subject to anti-abuse rules.
What is Gewerbesteuer and how does § 9 Nr. 2a affect my Holding?
Municipal trade tax. § 9 Nr. 2a GewStG excludes dividends from participations ≥15% from GewSt base. Below 15%, § 8 Nr. 5 GewStG adds dividends back, a trap.
What is a tax group (Organschaft) and when is it worth the 5-year commitment?
§§ 14, 17 KStG consolidation with a 5-year PLTA. Worth it when Tochter has volatile P&L and Holding needs to offset losses/profits directly.
Can I move my existing GmbH under a Holding without triggering tax?
Yes, under §§ 20-24 UmwStG, tax-neutral contribution is available when conditions met. Timing matters.
Can a UG act as a Holding?
Legally yes, but thin-capital signal hurts bank and counterparty perception. Use a GmbH.
What ongoing filings does a Holding structure require?
Annual accounts for both entities, Transparenzregister UBO for both, potential consolidated accounts if size thresholds hit (§ 290 HGB).
Does a Holding help if I want to pay myself dividends immediately?
No. The tax chain back to you is roughly the same. Holding benefits accumulate when profit stays at Holding level.
How is a German Holding-GmbH taxed on foreign subsidiaries (CFC rules)?
§§ 7-14 AStG apply CFC rules to low-taxed foreign subsidiaries (<25% effective tax) with passive income. Review case by case.
How long does it take to set up a Holding-GmbH?
3 to 6 weeks for a fresh Holding GmbH, 2 to 4 more weeks to shift shares of an existing operating GmbH under it.
What is the total cost of a Holding + Tochter structure?
Two GmbH formations (€1,800 to €3,500 each) plus restructuring fees if rebuilding (~€3,000 to €8,000 legal). Ongoing: two sets of accounts, two tax filings.
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