Family holding company

A family holding company is a legal entity — typically a SA, SAS or SARL in France, or an SA or Sàrl in Switzerland — that holds the shares of one or more operating companies on behalf of a family group. It is the cornerstone of family business structuring in the Franco-Swiss market: it provides a single governance vehicle, facilitates the gradual transfer of ownership to the next generation, separates patrimonial and operational assets, and optimizes tax efficiency through the parent-subsidiary regime (in France) and participation exemption (in Switzerland).

A French family holding benefits from the parent-subsidiary regime (Article 216 CGI) which exempts 95% of dividends received from subsidiaries from French corporate tax — only 5% of the dividend is taxable as a management expense. In Switzerland, the participation exemption (Beteiligungsabzug) similarly exempts dividends and capital gains from substantial participations (≥10% or ≥CHF 1 million), making Swiss holdings highly tax-efficient for Franco-Swiss group structures.

The family holding company also facilitates the Pacte Dutreil: as long as the holding is an "animating" holding company (actively managing its subsidiaries), it qualifies for the 75% inheritance tax reduction on the transfer of its shares. The "animating" qualification is regularly challenged by the French tax authority and requires solid documentation of the holding's management activity — board governance, service agreements, treasury centralization.

At the valuation level, a family holding is typically appraised using the sum-of-the-parts method (SOTP): each subsidiary is valued independently, and a holding discount (typically 10–30%) is applied to reflect the lack of direct control over the underlying assets, tax leakage on future distributions, and administrative costs.

At Hectelion, we value family holding companies for Pacte Dutreil, succession and M&A purposes in our valuation and structuring mandates.