The creation of an asset-holding company can be on account of diverse reasons, no incompatible, but in a lot of cases supplementary between them: the decision to separate certain assets of the derivative risk of the exercise of an economic activity, the wish to enjoy the taxation on Corporate Tax (IS) instead of doing it for the Personal Income Tax (IRPF) and to be able to apply reductions and exemptions on the Wealth Tax and the Inheritance Tax (death tax), to guarantee the transmission of family properties through an established structure easy to manage, or the reduction of the size of the company with the objective to reduce their formal obligations when not all of its assets are related to the same activity, among others.
However, the fact of having the properties through a commercial company does not presuppose the fact to be considered as an Asset-holding Company on tax terms. Nevertheless, if the company is considered for tax purposes an Asset-holding Company, it is important to have in mind the tax consequences of having this consideration, since it implies the exclusion of applying certain tax benefits as:
- The application of the small-sized company tax regime.
- The application of the exemption for double taxation of capital gains on the transfer of shares, even if it entails a double taxation.
- Compensation of negative tax bases.
- Taxation by the reduced tax rate of 15% for newly created companies.
Besides, it entails other consequences as a severe application of the international tax transparency rules or the fact of not being allowed to apply the regime of entities holding foreign securities (ETVE).
When will a company be considered as an asset holding company?
For this reason, it is really important to know when a company will have the consideration of Asset-holding Company, and it will be when, instead of carrying out an economic activity, it devotes its activity to the management of goods. Thus, in accordance to the Corporate Tax, an entity is defined as an Asset-holding Company, and that it does not carry on an economic activity, if more than half of its assets are composed of securities, or are not affected to an economic activity.
It is understood as economic activity the order of the means of production and human resources, or one of the two, for the purpose of intervening in the production or distribution of goods or services. In addition, the conditions to be met with the objective of assessing the existence of an economic activity in the event of leasing of buildings are expressly defined: when at least one person with a full-time contract is employed for its management.
In addition, in order to determine the stocks to be taken in account in order to know whether the half of its assets are composed by these, it is necessary to know that they are not subject to computation as stock for the purpose of qualifying as an Asset-holding Company:
- Those possessed for complying with legal or regulatory obligations.
- Those that incorporate credit rights arising from contractual relations established as a result of the development of economic activities.
- Those held by securities companies as a consequence of the exercise of the activity constituting their object.
- Those that grant at least 5% of the capital of an entity and are held for a minimum term of one year, in order to manage the participation, provided that the corresponding organization of material and personal means, and that the investee is no considered an Asset-holding Company.
And so, to set up a company that can be considered an Asset-holding Company requires an in-depth study of the tax effects that may be derived from such consideration. It is necessary to know exactly what the current situation of the company is and to have specialized tax advice in order to know the consequences of it. This daily follow-up by professionals will help you make the most of the advantages and avoid wrong decisions.