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What are the Possible Functions of a Holding Company in Germany?

In our last article we presented the legal and tax advantages of holding structures. All holding companies have one thing in common: the main operational purpose is to hold shares in companies. Apart from this, holding companies perform a variety of functions within a corporate group.

What are the Possible Functions of a Holding Company in Germany?

Holding companies perform a variety of functions.

Management Holding, Financial Holding, Operative Holding

It is a case-by-case decision which tasks the holding company can meaningfully assume for companies. The following functions are common for holding structures:

  • Management holding company
    A management holding assumes responsibility for the uniform management of its subsidiaries. Only the subsidiaries are operationally active. Strategic orientation, coordination of subsidiaries, internal organization and controlling, as well as the definition of corporate goals, however, come from the management holding company.
  • Financial or administrative holding company
    In the case of a financial or administrative holding company, strategic management remains with the subsidiaries. The holding company only manages the shareholdings. It does not conduct any operations itself.
  • Operative holding company or parent company group
    As a so-called parent company group, the operative holding assumes the operative activities itself or at least participates in it.

In addition to this functional classification, holding structures can also be classified on a hierarchical basis. At the top of the holding structure is always the parent or umbrella holding company. An intermediate holding company sits below the umbrella holding company and assumes the functions of a holding company with respect to the “sub-subsidiaries”.

WINHELLER determines the right holding structure for your company

Together with you, we would be happy to find out the right holding structure for your company. Our attorneys and tax consultants will also advise you with regard to the implementation of a holding structure or questions regarding an existing structure.

Continue reading:
Financial benefits for German companies through holding structures
Comprehensive advice on different instruments of asset structuring

Boris Piekarek

Attorney Boris Piekarek specializes in developing legal and fiscal wealth concepts and selecting legal forms for companies, real estate owners, and wealthy individuals. His key competency is optimizing wealth management in view of all aspects of real estate law, corporate law, and tax law.

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