Holding companies and startups: why and how to structure your group

Holding companies and startups: the essentials in 2 minutes

A holding company is not a legal form, but a company (often SAS, sometimes SARL or SA) whose main purpose is to own and actively manage subsidiaries. Well designed, it facilitates group governance, intragroup tax optimisation (parent-subsidiary regime, tax consolidation), cash distribution and acquisition-led growth. But it requires genuine economic substance (invoiced services, strategic oversight) and strict compliance with legal formalities.

In France, forming and operating a holding company is governed by general company law (Commercial Code) and specific tax regimes (General Tax Code). Useful references: Legifrance (CGI art. 145, 216; 223 A et seq.; 219 I-a quinquies), Service Public Pro (formalities), INPI (single window). For regulated financial holding companies, see the chapter on financial holding companies (distinct from “ordinary” startup holding companies).

Why create a holding company above a startup?

• Structure governance: centralise strategic decisions (budgets, M&A, IP, treasury) at group level.
• Optimise intragroup tax: distribute dividends under the parent-subsidiary regime (95% exempt, 5% add-back; CGI art. 145 and 216) and, if conditions are met, tax consolidation (offset results at group level; CGI art. 223 A et seq.).
• Facilitate fundraising and capital allocation: investor securities at operating-company/subsidiary level, founders at holding-company level, clearer cap table and ways to limit dilution.
• Prepare acquisitions: hold targets through sub-holdings, secure and finance a build-up.
• Organise IP and shared services: invoice genuine services (management, finance, HR, legal, IT), pool costs.

Warning: without substance (real activity, resources, intragroup agreements), there is a risk of tax reclassification (abuse of law, fictitious services, profit shifting). Active-management criteria are assessed in practice (oversight, synergies, proven services).

Passive, active or “animatrice” holding company: choose correctly

• Passive holding company: holds securities and receives dividends. High risk of challenge if management fees are charged without genuine services.
• Active/“animatrice” holding company: strategic and operational management of subsidiaries (committees, group budget, pooling, brands/IT, support functions), with service agreements and documented transfer prices.

Subject to conditions, “animatrice” status opens access to group regimes and lends credibility to intragroup flows. Document active management (activity reports, organisation charts, agreements, deliverables, shared tools).

When should the holding company be established?

• From formation: holding company at the top, operating company/companies below. Simple and clean for future fundraising.
• Before a significant funding round: capital reorganisation, investor entry at the right level. See our guidance on negotiating a robust shareholders' agreement and choosing between SAS and SARL.
• Before a build-up: prepare debt and the acquisition perimeter (sub-holdings by business line or geography).

Creating a holding company after the operating company is formed remains possible (founders contribute their shares to the holding company), but requires specific legal and tax structuring: obtain professional assistance.

Legal form: SAS, SARL or SA?

• SAS (often recommended): considerable flexibility in articles and governance, no statutory minimum capital, directors with employee-equivalent social-security status. See our SAS articles for startups.
• SARL: more regulated, possible self-employed manager status (optimised social-security cost, but less flexibility for investors).
• SA: complex governance, suited to large groups/IPOs.

In practice, the holding company is subject to corporate income tax (IS). Group regimes (parent-subsidiary, consolidation) also require IS. Choose a form consistent with your funding rounds and control objectives.

Key tax regimes for a group with a holding company

Parent-subsidiary regime (CGI art. 145 and 216)

• Conditions: holding company subject to IS, holding at least 5% of capital, and retaining securities for ≥ 2 years.
• Effect: 95% of dividends paid up to the holding company are exempt; only a 5% add-back is included in taxable income.

Example: the subsidiary distributes €100,000 in dividends. At holding-company level, €95,000 is exempt; €5,000 is subject to IS (standard rate). At 25%, tax is approximately €1,250.

Tax consolidation (CGI art. 223 A et seq.)

• Conditions: holding ≥ 95% of capital and voting rights, aligned year ends, election for 5 financial years, all companies subject to IS.
• Effects: aggregate results at the group parent holding-company level (offsetting profits/losses), neutralisation of certain intragroup dividends under the regime's rules.

Simplified example: subsidiary A (+€300k), subsidiary B (−€250k). Without consolidation: A pays ~€75k (25%). With consolidation: group base €50k ⇒ tax ~€12.5k.

Capital gains on disposal of participating interests (CGI art. 219 I-a quinquies)

When disposing of participating interests held for ≥ 2 years, the regime provides near-total exemption of the gain, subject to a 12% add-back taxed at the standard rate (check conditions and exclusions). Example: €900k gain ⇒ €108k taxable ⇒ IS ~€27k (effective rate ~3%).

Tax legislation is available on Legifrance. For the European framework (Parent-Subsidiary Directive), see EUR-Lex.

How to create a holding company: step by step

1) Define the project

• Define the corporate purpose (holding interests, active management, support services).
• Choose the form (SAS/SARL/SA) and governance.
• Decide where to hold IP and cash, and how to coordinate incentive mechanisms (BSPCE, BSA, AGA) with the operating company/companies.

2) Draft and form

• Articles of association (name, registered office, capital, purpose, governance) and beneficial ownership register.
• Capital deposit (bank/notary) and, for contributions in kind, a contribution auditor if necessary (Commercial Code; Legifrance).
• Publication of an incorporation notice in a legal notices publication.

3) Register through the single window

File with the INPI single window: signed articles, capital deposit certificate, publication certificate, director/registered-office documents, beneficial owners. After processing, registration with the RCS (Kbis). References and step-by-step guidance: Service Public Pro.

4) Organise intragroup agreements

• Service agreements (management, finance, HR, IT, legal), specifying scope, deliverables, arm's-length pricing and VAT.
• Process for approval of regulated related-party agreements (SAS/SA; Commercial Code L. 227-10, L. 225-38 et seq.; see Legifrance).
• A transfer pricing policy and documentation.

5) Records and recurring obligations

• Accounting, tax return package, accounts filing. Consolidation if you control one or more subsidiaries and exceed certain thresholds (Commercial Code; Legifrance).
• Monitor tax elections (parent-subsidiary, consolidation), align financial years and renew the consolidation election if necessary.

Practical guides: L-Expert-Comptable: creating a holding company (2026) and LegalPlace: how to create a holding company.

Capital structure: governance good practices

• Provide a shareholders' agreement at holding-company level (lock-up, pre-emption, liquidity, tag-along, non-compete, governance): see our essential shareholders' agreement clauses.
• At operating-company level, carefully draft the articles for investor entry (financial rights, anti-dilution, liquidation preference).
• Anticipate the impact of subsequent rounds and control dilution.

Special cases and international issues

• European group: a European Company (SE) may suit a cross-border parent company (see Your Europe: European Company (SE)).
• Financial markets: for public offerings or financial-instrument transactions, refer to AMF rules and recommendations.
• Funding and support: resources and programmes on BPI France.

Points to watch (and how to avoid problems)

• Substance and active management: no management fees without genuine services. Evidence: agreements, invoices, deliverables, organisation charts, minutes.
• Transfer pricing: market practice, documented method, correct VAT treatment.
• Tax regimes: strictly meet conditions (ownership thresholds, duration, aligned financial years) or risk challenge.
• Formalities: omissions in the single window, legal notice or RBE delay registration (see Service Public Pro and INPI).

Quick numerical examples

1) Intragroup dividends (parent-subsidiary)

A subsidiary distributes €200,000 to the holding company. At holding-company level, €190,000 is exempt; €10,000 is taxable (5%). At 25%, IS ~€2,500. Net cash available to the holding company ~€197,500.

2) Tax consolidation

Group with two subsidiaries: F1 (+€500k), F2 (−€450k). Without consolidation, F1 pays ~€125k IS. With consolidation, group base = €50k ⇒ IS ~€12.5k.

3) Subsidiary exit (> 2 years)

Capital gain: €1.2m. 12% add-back = €144k taxable ⇒ IS ~€36k (subject to eligibility for the participating-interest regime and no exclusion).

“0 to 90 days” checklist

1. Choose form (SAS/SARL/SA) and governance.
2. Draft precise articles (purpose: holding/active management/services) and a shareholders' agreement if necessary.
3. Open a deposit account, pay capital (certificate), appoint a contribution auditor if necessary.
4. Publish the incorporation notice in a legal notices publication (certificate).
5. File with the INPI single window: articles, supporting documents, RBE, certificates.
6. Establish intragroup agreements (management, IP, services) and related-party agreement procedures.
7. Set up group accounting, the annual legal calendar and tax elections (parent-subsidiary, consolidation).

For choosing the company form and preparation, also see: our SAS vs SARL comparison and how to draft suitable SAS articles.