Holding company: pros, cons — and when it makes sense

The three big advantages

• Tax-free dividends: if the holding owns at least 10% of the operating company, dividends can move up to the holding untaxed
• Tax-free sale: sell the operating company and the gain is tax-free in the holding — tax is only triggered when you take money out privately
• Risk shielding: retained profits can be moved up to the holding, away from the operating risk

The drawbacks

A holding company is a separate company with everything that entails: its own CVR number, its own bookkeeping and its own annual report every year. That typically costs a few thousand kroner a year in administration — and a bit more complexity whenever money moves around.

With a modest profit and no exit plans, the value is limited.

When does a holding make sense?

• You expect to sell your business at some point
• You earn more than you spend privately and want to retain the surplus in the company
• There are several owners — each holds through their own holding and can take dividends differently
• You run several companies and want their finances kept separate

Practicalities: setting up and running it

If you found the holding and the operating company at the same time, it can be done with the same capital via a rolling contribution. If you already have an operating company, a holding can typically be added through a tax-free share exchange — it requires advice, but it's a routine restructuring.

At Numina we have a fixed holding package: bookkeeping and the annual report for the holding at a fixed yearly price, so the structure doesn't drown in admin.

The terms behind it, briefly explained

Finally a quick glossary of the terms from this article — brief and concrete, the way we explain them to our customers.

What is a holdingselskab (holding company)?

A holding company is a company whose main purpose is owning shares in other companies. With at least 10% ownership, dividends from the operating company can move up tax-free.

The structure is used to shelter retained profits from operating risk and to sell the operating company tax-free. The price is a bit of extra admin: its own books and annual report.

What is a datterselskab (subsidiary)?

A datterselskab is a company controlled by another company — the parent — typically because the parent owns more than half the shares or votes.

Parent and subsidiaries form a group and are jointly taxed automatically. If the parent owns at least 10% of the subsidiary, dividends between the companies are tax-free — the core of the holding structure.

What is sambeskatning (joint taxation)?

Sambeskatning means Danish group companies are taxed as one: profits and losses across the companies are pooled before corporate tax is calculated.

Joint taxation is mandatory for Danish companies in the same group — a holding company and its operating company, for example. A loss in one company automatically offsets profit in another, and the administration company (typically the parent) settles the tax for the group.