Acquiring of other companies would be easier if you set up holding company. If the holding company totally acquires another company it is called fully owned and managed subsidiary of that holding company.
However, starting a holding company comes with many challenges. Below is a step by step guide to make the process more streamlined:
1. Determine the sector and domains you wish to target, access the market thoroughly, estimate the profitability of your investment before you delve in the matter completely.
2. Devise a rock-solid business acquisition strategy and also set 5 year goals for your company. Determine the number of staffs you may keep and the amount of capital investment you need.
3. Select a legal, accounting firm (like Atrium Associates) who can give sound advice on acquisition process, taxation and other regulatory laws.
4. Acquire confidence of your shareholders and equity partners by displaying your plans and goals.
5. Create a business website for your holding company for showcasing the dynamic nature of your business.
FORM HOLDING COMPANY
Know about tax liabilities before you form holding company:
One of the most lucrative incentives to establish a holding company lies in its tax benefits. A holding company benefits from the Substantial Shareholder Exemption scheme if it holds 10% of subsidiary shares for a 12 month time period.
Holding companies that have share acquisition in subsidiaries receive dividends and prevent it and subsidiaries from takeover can also enjoy the VAT exemptions according to the guidelines by HMRC.
VAT registration for a holding company is mandatory only if annual income exceeds beyond 85,000 euros per year. In such cases, voluntary registration for VAT is necessary to avoid penalties.
