What is a holding company in France
A holding company in France is a company whose main activity is not selling products or services, but holding shares in other companies. The French parent company controls one or more subsidiaries and receives dividends from them, without carrying out its own operational activity.
This structure is used to consolidate investments, plan succession, centralise the group's treasury and optimise the taxation of profits that flow up from the subsidiaries to the parent company.
The mère-fille regime: 95% exemption on dividends
The mère-fille regime is the main incentive for setting up a holding company in France. It allows dividends distributed by a subsidiary to its parent company to be 95% exempt from corporate tax (IS). In other words, only 5% of the dividend is taxed as a non-deductible expense.
To qualify for the regime, the parent company must hold at least 5% of the subsidiary's capital, keep the shares for a minimum of two years and opt for the regime in its tax return. With corporate tax at 25%, the effective taxation on those dividends is reduced to around 1.25%.
This is a considerable advantage compared with repatriating profits as an individual or through a company without a holding, where the dividend would be taxed in full.
The SAS as a holding vehicle
The SAS (Société par Actions Simplifiée) is the most common legal form for a holding company in France, used as an SAS or SASU when there is a single shareholder.
It offers freedom in the articles of association: you can define dividend distribution, voting rights and rules for shareholders entering and leaving without being constrained by the SARL regime.
It does not require a minimum legal capital, allows a single shareholder (SASU) and its liability is limited to the capital contributed.
Key points
- Minimum share capital: no legal minimum
- Shareholders: one or more (SASU with a single shareholder)
- Liability: limited to the capital contributed
- Governance: free, defined in the articles of association
Taxation of a holding company in France
A holding company is subject to French corporate tax, with the standard rate of 25% on profits. Dividends received under the mère-fille regime are taxed on only 5% of their amount, so the effective tax burden is minimal.
The standard VAT rate in France is 20%. A pure holding company, which does not sell goods or services, usually has limited VAT activity, but it must be properly registered and file its returns.
If the holding company carries out management activities or provides services to its subsidiaries, those services are subject to VAT and must be invoiced at market price.
Advantages compared with a holding company in Spain
Spain also largely exempts inter-company dividends (95% exemption with a minimum 5% shareholding), but France offers a stable regulatory environment and a broad network of double taxation treaties, including the one signed with Spain.
The Spain-France double taxation treaty prevents the same profits from being taxed twice and regulates the applicable rate for dividends and interest between the two countries.
For companies with operations or subsidiaries in the French market, locating the holding company in France simplifies consolidation and reduces administrative friction compared with managing everything from Spain.
Requirements and incorporation of the holding company in France
Incorporating a holding company in France requires defining the legal form, drafting articles of association, opening a bank account, depositing the capital if contributed and registering the company with the French commercial register. A registered office in France is also required and, where applicable, a tax representative.
Incorporation takes an estimated 3 to 6 weeks, covering the articles, registration with the commercial register and tax registration. The cost depends on capital, registry fees and the structure you design.
To keep the mère-fille regime you must hold at least 5% for two years, keep accounting records in France and file returns on time. A mistake in those requirements means losing the 95% exemption.
