Setting up a holding company is a decision about structure, not a technical transaction. It presupposes a fact rather than creating one, and it has its own timing: it almost always precedes the event that makes it necessary.

It concerns the way in which the entrepreneur intends to govern what has been built, protect its value and prepare for its subsequent phases. This is why it deserves to be examined when nothing urgent is happening: the situations in which a parent company meets a genuine strategic need can be identified with precision, and each brings with it conditions that mature over time.

There are six of them.

When there is more than one operating company

It regularly happens that a business has developed through stratification rather than by design: companies founded at different times, with non-coinciding ownership, that lend each other money, invoice each other for services and exchange guarantees without anyone ever having formalized who decides.

The parent company concentrates strategic decisions, dividend policy and the allocation of resources among subsidiaries in a single center, replacing a plurality of relationships between individuals with a single decision-making hub.

The actual exercise of this function is not, however, without consequences: direction and coordination activity entails, under art. 2497 of the Italian Civil Code, direct liability of the parent company toward the shareholders and creditors of the companies it directs, and requires that the decisions made be justified and documented.

When the risks to be separated are of a different nature

The recurring scenario is that of the property housing the business, registered to the same company that operates it, and the liquidity generated over the years and left in the operating company’s accounts: both are fully exposed to any claim arising from the business, from litigation with a customer to a tax audit.

Placing what generates income and what is meant to endure on separate levels prevents the troubles of one from compromising the other, and channeling profits up to the parent company shields them from the operating company’s business risk and from its creditors’ claims.

It is worth being clear, however, about the scope of this effect, which is also why the decision should not be postponed: it applies to future risks, not to those that have already arisen, since transfers made shortly before claims arise remain exposed to a claw-back action under art. 2901 of the Italian Civil Code.

When profits are meant to be reinvested rather than withdrawn

This covers a widespread yet rarely calculated practice: profit distributed to the shareholder, who pays the twenty-six percent withholding tax on it, and then immediately returns it to the company as a loan or as a capital contribution — with a net loss equal to just under a third of what was meant to be invested.

Where resources are intended to fund new projects rather than personal consumption, the parent company is their natural collection point: art. 89, paragraph 2, of the TUIR excludes ninety-five percent of dividends from the recipient company’s taxable income, so that the funds arrive net of a deduction of close to one point two percent and remain available for reinvestment in another group company or in a new venture.

This is a deferral, not an exemption: the final distribution to the individual will bear the full withholding tax. The advantage is financial in nature, is measured against the reinvestment horizon, and does not arise where profits are meant to be withdrawn.

When an extraordinary transaction is on the horizon

Growth through external acquisitions, the entry of an investor, the sale of the business or of one of its divisions. The parent company makes it possible to conduct the negotiation and provide the guarantees at a level separate from the operating business, without exposing the company that continues to operate or the shareholders personally.

Here, timing is decisive, and it is worth stating this clearly. The sale of the shareholding may qualify for the participation exemption regime, which art. 87 of the TUIR makes subject to four requirements: uninterrupted ownership from the first day of the twelfth month preceding the sale; classification among financial fixed assets in the first financial statements closed during the holding period; residence of the investee in a State that is not subject to a privileged tax regime; its actual conduct of a commercial business, this last requirement to be verified from the beginning of the third tax period preceding the sale.

Offers, as a rule, do not come with three years’ notice. The entrepreneur who receives a proposal and only then starts thinking about the structure will discover that the choice was already made, by omission, a few years earlier.

When generational succession involves children with different roles

This is the scenario — as common as it is overlooked — in which, among the children, some work in the business and others have never taken part in it.

The transfer to descendants and the spouse of shareholdings through which control is acquired or strengthened benefits from the exemption from inheritance and gift tax provided for in art. 3, paragraph 4-ter, of Legislative Decree No. 346/1990, as rewritten by Legislative Decree No. 139/2024, provided that the beneficiaries maintain control for at least five years from the date of transfer and file a specific declaration to that effect. The five-year constraint is itself a planning factor, since it commits the next generation well beyond the moment of the transfer.

Beyond the tax implications, concentrating the operating shareholdings in a single vehicle makes it possible to separate ownership from control: giving all heirs the value and giving those who work in the business the management, rather than splitting the succession among the individual companies and leaving the outcome to whatever balance later emerges.

When the shareholders have different interests

This is the scenario least often considered, and often the most useful.

An equal shareholding between two siblings or between two families, in the absence of clauses governing decision-making deadlock and exit routes, is a condition that works as long as positions coincide and becomes paralyzing the moment they stop coinciding — by which point negotiating the rules is no longer possible.

Placing at the parent company level the articles of association and the agreements governing significant decisions, the transfer of shares and withdrawal makes it possible to keep the operating company free of constraints that would burden its relationships with banks, suppliers and customers, and to regulate potential conflicts while consensus still exists.

How it is set up, and what it costs to maintain

All these scenarios are overlaid by two sets of conditions, which it is right to know beforehand rather than afterward.

The first concerns how the structure is set up. The contribution in kind of the shareholdings into the parent company is not a tax-neutral transaction: art. 177, paragraphs 2 and 2-bis, of the TUIR provides for a controlled realization regime, under which the tax value of the original shareholding carries over to the one received in exchange and the latent capital gain remains deferred until the first actual realization. The regime also requires that the shareholdings contributed exceed certain qualifying thresholds and that the receiving company be wholly owned by the contributor.

The second concerns what it costs to maintain the structure. A company holding shareholdings for more than half of its total assets falls within the definition set out in art. 162-bis of the TUIR, with the resulting reporting and anti-money-laundering obligations. A parent company that merely holds shareholdings without exercising any function must contend with the operating company test under art. 30 of Law No. 724/1994, eased but not overcome by the reduction in coefficients introduced by art. 20 of Legislative Decree No. 192/2024. In addition, there are the second set of financial statements, the related filing obligations and recurring advisory costs.

These are costs proportionate to a group that needs governing, and disproportionate where there is none.

When a holding company does not make strategic sense

By contrast, this yields the opposite situation: a business that consists of a single operating company, with no assets to separate, no transactions to prepare for and no ownership balances to arrange, whose profits are regularly directed to the shareholder’s personal sphere.

There, the structure adds no governance and leaves behind a fixed cost, which as a rule is destined to be dismantled within a few years.

The question that comes before the structure

The question to ask, then, is not whether it is worth setting up a holding company, but which of the circumstances just described applies to one’s own business today, and which can reasonably be expected in the coming years.

It is a check that can be carried out in a few hours by reviewing the financial statements and ownership structure, and there is only one wrong moment to carry it out: the moment after the event has already happened.