Holding company in Portugal: when it makes sense to protect your assets

A holding company is a company whose main purpose is to own shares in other companies or to concentrate assets such as property and investments. In Portugal it can take different legal forms, and the choice depends on the type of assets, the number of shareholders and the founders' goals. It is not an off-the-shelf product but a structure that has to be designed case by case.

In this guide, we explain how a holding company works in Portugal, its real benefits, who it suits and what to watch when assets are split between Brazil and Portugal.

What types of holding company are there?

• Shareholding holding: owns shares in operating companies and centralises the group's management.
• Asset holding: concentrates the family's property, financial investments and other assets.
• Family holding: combines both and organises each family member's stake, often with a focus on succession.

In Portugal, the former special SGPS regime was repealed, and there is now no specific company type for holdings: a private limited or public limited company is generally used, with articles of association suited to the purpose.

What are the benefits of a holding company?

• Organisation: assets are brought together in a single vehicle, with centralised management and accounting.
• Risk separation: family assets are kept apart from the risks of operating companies.
• Succession: the transfer of shares can be planned during your lifetime, with clear rules on management and exit.
• Tax efficiency between companies: under certain conditions, profits distributed by subsidiaries to the holding receive more favourable treatment.

How is a holding company taxed in Portugal?

The key point is the participation exemption regime in the Corporate Income Tax Code. As a rule, when the holding owns at least 10% of the capital of the subsidiary for one year, and the subsidiary meets the required taxation conditions, dividends received and capital gains on the sale of those shares may be excluded from taxable profit.

This benefit is not automatic: it depends on legal and tax requirements that must be checked shareholding by shareholding. When profits leave the holding for individual shareholders, they are taxed again, depending on each shareholder's tax residence.

How does a holding company help with succession planning?

Portugal has no inheritance tax along the lines of Brazil's ITCMD: gratuitous transfers are subject to stamp duty, with an exemption for spouses, descendants and ascendants, except for a reduced rate on property. Even so, a holding can simplify succession, because what is transferred is shares rather than each individual asset, and the articles can set rules on management, the entry of heirs and the exit of shareholders.

Who does a holding company suit, and who does it not?

Running costs such as certified accounting, filings, minutes and governance recur every year. Transferring property into the company may also trigger property transfer tax and stamp duty. For simpler estates, a lighter structure may be enough.

What if there are assets in Brazil and in Portugal?

When there are interests in both countries, it is essential to analyse the rules of each and the Brazil–Portugal double taxation treaty. For Brazilian tax residents, Brazilian law now taxes, under certain conditions, the profits of controlled foreign entities every year, which can completely change the outcome of a Portuguese holding company. Each shareholder's tax residence and the risk of the structure being recharacterised by either country's authorities must also be considered.

How to set up a holding company, step by step

1. Map the assets, shareholders and goals: protection, management, succession or investment.
2. Model the taxation in Portugal and Brazil, before and after the holding.
3. Choose the legal form and draft the articles of association and shareholders' agreement.
4. Incorporate the company and transfer the shares or assets, assessing the taxes on each transfer.
5. Keep governance and obligations up to date, so the structure does the job it was created for.

Planning ahead makes it possible to decide whether a holding is the right tool and how to structure it. This article is for information only and does not replace a legal consultation.