Inheritance and gift tax optimization with an Irish holding structure

Inheritance and gift taxes

For entrepreneurs and company owners, the transfer of business assets to the next generation represents a significant challenge. High inheritance and gift taxes can make the transfer considerably more difficult. However, the tax burden can be significantly reduced by setting up a holding structure with an Irish limited company.

Advantages of the Irish holding structure

The key advantage of an Irish holding structure is thatthat no inheritance or gift tax is levied in Ireland on the transfer of company shares between a holding company and its subsidiaries. Only the subsequent sale of shares in the Irish holding company by the heirs is subject to normal capital gains tax.

Functionality of the optimized structure

The optimized structure works as follows: The operating business activities are carried out in one or more subsidiaries whose shares are fully controlled by the Irish holding ltd. be transferred. The testator transfers or donates the shares in the holding company to the future heirs. The stamp duty results in a one-off fee of 1% of the share value, but no further inheritance tax.

Tax advantages for the heirs

The heirs then hold the shares in the tax resident in Ireland Holding company. Dividends from the operating subsidiaries can flow to Ireland within the structure and be taxed there at only 12.5% corporation tax. Regular income tax is then payable on payment to the heirs as natural persons.

Capital gains tax on exit

The biggest advantage, however, is the subsequent exit, i.e. the sale of the company shares by the heirs. As only the shares in the holding company are sold, the lower capital gains tax of 33% applies to the capital gain instead of a higher inheritance tax, which can amount to over 50% in many countries.

Double taxation agreements and legal aspects

Another important point is the avoidance of Double taxation. Germany has concluded double taxation agreements with several countries, including the USA, which ensure that inheritances and gifts are not taxed twice. However, these agreements are often complex and require precise knowledge of the respective provisions.

It is essential to take comprehensive tax advice to ensure that the structure is set up in a legally secure and optimal manner. Taxation depends heavily on the individual situation and the applicable double taxation agreements.

Summary

The establishment of an Irish holding company offers entrepreneurs and company owners an effective way to significantly reduce the inheritance and gift tax burden. Through legal structuring and professional advice, significant tax savings can be achieved and financial security for the next generation can be guaranteed. This makes the Irish holding company an attractive option for long-term wealth planning and succession planning.