International holding company
An international holding company is a company whose main purpose is to hold equity interests in other companies located in several jurisdictions, used to structure a cross-border group, optimize financial flows and prepare for a sale.
Definition
A holding company is a company whose business is to hold equity interests in one or more subsidiaries. In France, it can take the form of a SAS or a SARL and benefit from the parent-subsidiary regime (article 145 of the French Tax Code (CGI)), which exempts 95 percent of dividends received if the holding company owns at least 5 percent of the share capital for at least 2 years. In the United States, the holding company can be a Delaware C-Corp (governed by the Delaware General Corporation Law) or an LLC. A holding company becomes international when it holds equity interests in entities located in several jurisdictions, which requires coordinating multiple domestic tax regimes and tax treaties.
In plain English
If you operate in France and the United States, the structural question is: who owns what, and from where. Three structures dominate. First: the French SAS directly owns the U.S. LLC or C-Corp (top-down France to U.S.), simple but heavy on tax once the U.S. entity pays dividends to France without optimization. Second: the Delaware C-Corp owns the French SAS as a subsidiary (a flip U.S. over France), the preferred structure of U.S. VCs, which makes French tax-resident founders shareholders of a U.S. entity. Third: a third-country holding company (Luxembourg, the Netherlands, Switzerland) sits between the two, an approach increasingly scrutinized by tax authorities since BEPS and the EU ATAD directive. The right structure depends on the project: a U.S. VC raise calls for a flip, a short-term exit with family control points to a top-down France structure.
RWM transatlantic case study
For a French executive preparing a U.S. fundraise and a 5-year exit, we typically structure a Delaware C-Corp at the top, owned by the founders as individual French tax residents, or by a dedicated French patrimonial holding company. This French holding company allows the benefit of the parent-subsidiary regime (article 145 CGI) on future dividends from the Delaware C-Corp, and the benefit of article 150-0 B ter CGI on the tax deferral of an apport-cession in case of reinvestment. On the Delaware side, the C-Corp holds the operating French SAS as a wholly-owned subsidiary. The France-U.S. tax treaty of 31 August 1994 caps the withholding tax on dividends at 5 percent between related companies (article 10), versus the 30 percent U.S. domestic rate. We systematically check eligibility under the limitation on benefits clause (article 30 of the treaty), an anti-abuse test that may strip a holding company of treaty benefits if it lacks substance.
Points to watch
- French parent-subsidiary regime: 5 percent ownership threshold and 2-year holding period, otherwise full taxation.
- France-U.S. limitation on benefits: real economic substance required.
- Luxembourg or Netherlands routing under heightened scrutiny since BEPS and ATAD.
- Apport-cession under article 150-0 B ter: tax deferral conditioned on 60 percent reinvestment.
- A holding with no substance (no employees, no premises) is treated as a shell and loses treaty benefits.