A holding company that simply waits optimises nothing
A holding company that holds shares and waits for dividends does nothing on its own. It is the tax, legal and organisational decisions that give it real value — and some of those decisions must be made before 31 December. Miss the deadline and you lose an entire year.
Did you set up your holding company in 2026? Here are the 3 points to review before year-end.
Important: this article applies exclusively to companies subject to French tax law (droit fiscal français). If your structure involves entities based outside France, specific rules may apply.
1. Tax consolidation (intégration fiscale)
The principle. The tax consolidation regime (Articles 223 A to 223 U of the French General Tax Code, Code Général des Impôts — CGI) allows your holding company to be the sole taxpayer for corporate income tax (IS) across the entire group. In practice: one subsidiary's profits can offset another's losses. You only pay IS on the consolidated net result.
What to check before 31 December.
- The holding company must hold at least 95% of the share capital and voting rights of each subsidiary to be included, on a continuous basis throughout the financial year.
- All group entities must have aligned financial years — same opening date, same closing date. A subsidiary with a 30 June year-end cannot join a group with a 31 December year-end without prior adjustment.
- The option must be formally notified to the tax authorities no later than the deadline for filing the tax return for the financial year preceding the first year of application. In other words: for consolidation effective from 1 January 2027, the option must be filed before the 2026 return deadline. Case law is unequivocal: a late option cannot be regularised. Miss the date and you lose a full year.
- The option file must be complete: option letter from the parent company, formal written agreement from each subsidiary, evidence of 95% minimum ownership.
2026 point of vigilance. The exceptional corporate income tax surcharge, extended by Article 12 of the 2026 Finance Act, now applies to the first two financial years closing from 31 December 2025 onwards. It affects consolidated groups with turnover exceeding €1 billion. Worth checking depending on your situation.
Good to know. The option is binding for a minimum period of 5 financial years, tacitly renewed. Not a decision to take lightly.
2. The parent-subsidiary regime (régime mère-fille)
The principle. The parent-subsidiary regime (Articles 145 and 216 of the CGI) allows dividends to flow from a subsidiary to the holding company with a near-total exemption: only a 5% add-back for costs and charges is included in taxable income, resulting in an effective tax rate on dividends of just 1.25% (5% × 25%).
Conditions to meet.
- Hold at least 5% of the share capital (and 5% of voting rights) of the subsidiary.
- Comply with a 2-year holding period for the shares — or make a formal commitment to hold them for that duration.
- Exercise the tax option under the required conditions.
A commonly misunderstood point. You do not need to wait two years before receiving the first dividends under this regime. The holding company can receive dividends from year one, provided the 2-year holding commitment is subsequently honoured. If shares are sold before the minimum period has elapsed, the previously exempt dividends will be subject to a clawback.
The difference from tax consolidation. Under the parent-subsidiary regime, the add-back is 5%. Under tax consolidation, intra-group dividends are neutralised at 99% — the effective add-back falls to just 1%. The two regimes are not mutually exclusive: they can coexist within the same group, depending on the ownership structure.
3. Management fees
The principle. Your holding company can invoice management, advisory or support services to its subsidiaries. This is entirely lawful. It is also one of the most closely scrutinised arrangements by the French tax authorities — and the legal landscape shifted significantly in 2026.
What 2026 case law requires.
On the tax front, the Conseil d'État clarified in the Sté Kérac ruling of 12 February 2026 (n° 500842) the conditions under which management fees are tax-deductible for the subsidiary (Article 39, 1, 1° of the CGI). Three cumulative conditions must be met:
- The services must be genuinely provided for the benefit of the entity bearing the cost.
- They must be proportionate to the value delivered.
- A traceable decision by the competent corporate bodies must express the intention to remunerate those services.
A standard agreement is not enough. Invoicing that overlaps with functions already performed by the executive as part of their corporate mandate constitutes an abnormal act of management (acte anormal de gestion) — the deduction is disallowed and the amount may be reclassified as a hidden distribution.
On the social security front, the Court of Cassation ruling of 4 June 2026 (n° 23-20.189, published in the Official Bulletin) significantly hardened the URSSAF risk. The Court upheld the reintegration into the social security contribution base of management fees billed by a holding company to an SAS, where the agreement merely made the subsidiary's own executive available. URSSAF does not need to prove that the executive personally received the fees: the mere provision of their services is sufficient. Over a three-year audit period, the reintegration may cover all invoices in full, without deducting the holding company's own costs.
On the civil front, agreements that duplicate the corporate mandate may be annulled by a court for lack of genuine consideration (Article L. 225-38 of the French Commercial Code for SA structures).
What to do before 31 December.
- Ensure the services agreement is formally documented and signed before any invoicing takes place.
- Confirm that all required corporate resolutions have been passed (regulated agreements where applicable).
- Document the reality of services rendered: meeting minutes, deliverables, timesheets or any other substantive evidence.
- Avoid any invoicing that overlaps with functions already remunerated under the corporate mandate.
What this means for you
Setting up a holding company is the first step. Making it genuinely effective means activating the right levers at the right time — and documenting them properly.
These three topics (tax consolidation, parent-subsidiary regime, management fees) are not boxes to be ticked once and forgotten. They deserve an annual review, ideally at year-end, with your accountant and legal adviser.
Need to review your situation before 31 December? Book a meeting with our team — we support business owners and executives on holding company structuring and day-to-day management.
This article applies exclusively to companies subject to French tax law (droit fiscal français).