Investing/Deposit Rates Using a Company/Holding Company, Options?

missmoleman

Hi Guys,

Supposing I have a couple of companies, and I want to move the profits from both into a holding company. The plan would be to build up funds in this holding company (possibly including the sale of the 2 companies) over a number of years and eventually liquidate/close the holding company taking out funds at CGT rates.

What I'm trying to work out is what the investing options are for the funds that are in the holding company during these years, can it invest in the same way an individual can?

On a very basic level it seems as though the deposit interest rates available to individuals seem to be a lot better than those to businesses?

What other options are there to grow funds in a company over time?

Any advice would be much appreciated!

PS I'm aware that non trading income seems to be taxed at 40%, so any interest etc would be subject to this.

Thanks!

Alan Shore

You need to seek professional advise about such a structure. There are capital gains tax issues on the creation of the group structure as you are effectively selling your shares to the holding company. There may be relief available.

There are company law issues on the lending of money between companies that need to be considered.

There is always the potential for double taxation of gains ie the company paying CGT and then the shareholder paying CGT again to extract funds. Again there may be relief here but the structure is very important.

In general the 40% ct rate acts as a deterant to engaging in investing through a company.

TheCostumeShop.ie: Ronan

OP, What age are you?

If you are older than 55, or will be at the time of liquidating the company you can avail of retirement relief at 0% and it doesn't require you to actually "retire" in the traditional sense. So this makes a difference in the target exist amount. There are several other tax implications - self managed pension funds vs investing in a corporate structure.

Next what are your goals?

Do you have a figure in mind. Think about it, most people say as much as possible return, but really what is your risk profile? How much do you need, how much do you want etc.

In my, totally unqualified, opinion, best thing to do is have three buckets. A safety one that gets you the bare minimum you want, keep it in bonds, deposit or very very safe blue chip shares. Second a growth bucket going for medium level risk investments. Thirdly, depending on your goals ofcourse, the dreams bucket. This one is for the hyper growth, high risk - high returns. Depending on your risk profile, you allocate a % of the profits to each bucket.

Definitely worth speaking to a qualified accountant / wealth management expert.

dbran

Hi missmoleman

This is not the place to come for tax advise. You need professional advise from a suitably qualified and experienced adviser.

Kind Regards

Dbran