Tax rules

For a company to be defined as a holding company for tax purposes, the requirements are that the company is engaged exclusively or almost exclusively in the management of securities, that the company’s stock is spread among a large number of shareholders, and that the portfolio of securities is well distributed.

Intermediaries

Holding companies, along with mutual funds, are usually classified as intermediaries. The principles of legislation in this area are:
■ that neutrality between direct and indirect ownership requires that the intermediary shall not be subject to taxation,
■ that indirect ownership shall not be more advantageous than direct ownership, and
■ that taxation shall enable reinvestment of the intermediary’s shareholding.

Tax rules

The main principles concerning taxation of holding companies are:
■ that interest income is taxable, while interest expenses and management costs are tax deductible,
■ that dividends received are taxable, while dividends rendered are tax deductible, and
■ that capital gains on sales of stocks are tax exempt, but in return, a standard-calculated level of income, which amounts to 1.5% of the market value of the equities portfolio at the start of the fiscal year, is taxed. The basis for calculating the standard level of income does not include business-related shares, by which is meant unlisted shares as well as listed shares in which the holding corresponds to at least 10% of the number of votes. In order for listed business-related shares to be excluded from the standard income calculation, they must have been held for at least one year.

Tax deficits

Tax-loss carryforwards are deductible and can be accumulated in order to be deducted from future taxable surpluses.

Condensed tax computation for the Parent Company