Common types of holding structures
What is a holding structure?
A holding structure is a company created primarily to own and manage stakes in other companies. Rather than producing goods or delivering services directly, the holding acts as a parent entity that controls one or several subsidiaries through its shareholdings. In France, this arrangement is common among family businesses, groups seeking to organise their activities, and entrepreneurs planning succession or reinvestment.
The holding sits at the top of a group, while operating companies (often called filiales, or subsidiaries) sit beneath it. The holding may own a majority of shares, giving it control, or a minority stake that still grants influence. This layered organisation separates ownership from day-to-day operations, which can make governance clearer and financing easier to arrange.
Holdings are usually set up as an SAS, SARL, or SA in France, depending on the level of flexibility and the number of associates involved. The legal form chosen affects governance rules, taxation options, and how new investors can enter. Before creating one, it helps to understand the two main categories: pure holdings and mixed holdings, along with several variations that serve specific goals.
Pure holding: definition and characteristics
A pure holding, sometimes called a passive or financial holding, has a single purpose: to own and manage shareholdings in other companies. It carries out no commercial or industrial activity of its own. Its income comes almost entirely from dividends paid by its subsidiaries and, occasionally, from capital gains when it sells shares.
Because its role is purely financial, a pure holding usually has a light operating footprint. It may have no employees, or only a small team handling accounting and shareholder decisions. Its balance sheet is dominated by participations in other companies rather than by inventory, equipment, or trading receivables.
Consider an entrepreneur who owns three separate operating companies. They might create a pure holding to gather all three shareholdings under one roof. The holding does nothing but hold those stakes, receive dividends, and decide how to reinvest or distribute the funds. This concentration can simplify group governance and make it easier to bring in outside investors at the holding level without disturbing each subsidiary.
Pure holdings can access specific tax regimes in France, such as the parent-subsidiary regime, which reduces double taxation on dividends flowing up from subsidiaries, provided conditions on shareholding levels and holding periods are met. However, because it has no commercial activity, a pure holding may face limits on recovering certain VAT and must be structured carefully to remain compliant.
Mixed holding: definition and characteristics
A mixed holding, also called an active holding, combines two roles. Like a pure holding, it owns shares in subsidiaries. But it also carries out its own commercial, industrial, or service activity. This dual nature is what distinguishes it from a purely financial parent company.
In practice, a mixed holding often provides services to its subsidiaries. It may handle administration, accounting, human resources, IT, marketing, or strategic management, invoicing each subsidiary for these services. These are frequently organised through management fee agreements (conventions de prestations de services). This centralisation can reduce duplication across a group and give the parent company its own revenue stream.
For example, a group of restaurants might use a mixed holding that both owns the individual outlets and runs a central kitchen, a purchasing department, and shared back-office functions. The holding earns income from its own operations as well as from dividends paid by each restaurant.
Because it conducts a genuine economic activity, a mixed holding is generally in a stronger position to recover VAT on its expenses and to justify the services it charges to subsidiaries. That said, management fee agreements must reflect real, documented services at fair prices; French tax authorities scrutinise arrangements that appear artificial or designed mainly to shift profits.
Key differences between pure and mixed holdings
The core difference is activity. A pure holding only owns shares and manages them, while a mixed holding also runs its own business or provides services to its group. This single distinction ripples through taxation, VAT treatment, administrative complexity, and the level of scrutiny each structure attracts.
On taxation, both can benefit from favourable regimes on dividends and, where applicable, group tax consolidation (intégration fiscale) if ownership thresholds are met. But VAT differs: a mixed holding with genuine taxable services can usually recover more input VAT than a pure holding, whose passive nature restricts recovery.
Complexity is another factor. A pure holding is lighter to run, with fewer contracts and less operational risk. A mixed holding demands more rigour: it must document its service agreements, price them correctly, and manage the practical delivery of those services. The table below summarises the main contrasts to keep the comparison clear.
Other holding structures to know
Beyond the pure and mixed distinction, several other holding arrangements appear in French practice, often layered on top of the basic categories.
An animation holding (holding animatrice) is a mixed holding that actively drives the strategy and policy of its group, going beyond simply invoicing services. This status matters because it can unlock specific tax advantages, including certain exemptions on business assets, but it requires genuine, provable involvement in steering subsidiaries.
A family holding groups the shareholdings of relatives to organise ownership, prepare succession, and keep control within the family. It is frequently paired with tools such as the Dutreil pact to ease the transfer of a business across generations.
A cascade or multi-tier holding stacks holdings on top of one another. One holding owns another, which in turn owns the operating companies. This structure can help separate different branches of activity or manage financing and control at distinct levels, though it adds administrative and accounting layers.
Finally, an acquisition holding is created specifically to buy a target company, often using debt. The subsidiary's future profits then help repay the loan, a technique commonly seen in leveraged buy-outs. Each of these variations serves a particular objective, so the right choice depends on your goals rather than on any single structure being universally better.
How to choose the right holding structure
Choosing a holding structure starts with your objective. Are you seeking to organise several existing companies, prepare a succession, raise finance, acquire a business, or centralise shared services? Each aim points toward a different arrangement, and there is no one-size-fits-all answer.
If your goal is purely to consolidate ownership and manage dividends, a pure holding may be simple and sufficient. If you want the parent company to provide real services and recover VAT, a mixed holding is often more appropriate, provided you can genuinely deliver and document those services. For family transmission, a family holding combined with appropriate legal tools deserves consideration, while an acquisition project may call for a dedicated acquisition holding.
Practical factors matter too. Consider the number of associates, the legal form (an SAS offers flexibility, an SARL more framework), the financing you need, and the administrative capacity you can sustain. A more complex structure brings more compliance obligations, so weigh the benefits against the ongoing cost of accounting, reporting, and governance.
Because taxation, VAT, and legal rules interact in ways that depend on your specific situation, it is wise to consult a qualified accountant (expert-comptable) or a lawyer before deciding. They can model the consequences of each option and confirm that your chosen structure will hold up to scrutiny. Treat this article as a map of the options, not as personalised advice.
Example
Pure holding vs mixed holding: main differences
| Criterion | Pure holding | Mixed holding |
|---|---|---|
| Activity | Owns and manages shares only | Owns shares and runs its own business or services |
| Income sources | Mainly dividends and capital gains | Dividends plus operating or service revenue |
| VAT recovery | Restricted due to passive nature | Broader, if services are genuinely taxable |
| Administrative complexity | Lighter | Higher, with service agreements to document |
| Typical use | Consolidating ownership, managing dividends | Centralising group services, active management |
FAQ
Can a pure holding become a mixed holding later? Yes. A pure holding can evolve into a mixed holding if it begins carrying out its own commercial activity or providing genuine services to its subsidiaries. This change affects its tax and VAT treatment, so you should update your governance, put proper service agreements in place, and check the consequences with an accountant before making the switch.
Which legal form is best for a holding in France? There is no single best form. The SAS is popular for its flexibility in governance and shareholder arrangements, the SARL offers a more defined legal framework, and the SA suits larger structures. The right choice depends on the number of associates, financing needs, and how you plan to bring in investors, so professional advice is recommended.
Do all holdings benefit from the parent-subsidiary tax regime? Not automatically. The parent-subsidiary regime, which limits double taxation on dividends, applies only when specific conditions are met, notably a minimum shareholding level and a minimum holding period. Both pure and mixed holdings can qualify if they satisfy these requirements, but you must confirm eligibility for your particular case.
Is a mixed holding riskier than a pure holding? A mixed holding carries more operational and compliance responsibilities because it conducts its own activity and must document the services it charges to subsidiaries. It is not inherently riskier, but it demands more rigour. A pure holding is simpler to run but offers fewer opportunities, such as broader VAT recovery. The right balance depends on your objectives.
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