Save taxes through corporate structures

Creating a company involves making many decisions with the aim of saving expenses and taxes. Getting these decisions right can mean paying less and having more liquidity. We tell you how to save taxes with corporate structures.

It is not about being a tax expert when making decisions. It is simply about having the appropriate advice and considering the circumstances of each case.

What structure to choose for a business?

The structure you choose will depend on what you want to do. These are the most common options:

• Register as self-employed. If you start the business alone, without a staff and without initially generating a large income, this is the most recommended option. You will have to register with Social Security and the Treasury and carry out the corresponding personal income tax withholding on the invoices you issue, in addition to charging VAT.
• Create a commercial company. If you are going to have higher costs, such as renting an office, paying salaries for hiring staff or if you are going to request financing, you should create a limited liability company so that the liability derived from the business is limited to the assets of the company.
• Create a holding company. These are structures in which a company owns all or most of the shares of another or other companies. This type of structure is usually used when you want to diversify the activity; for example, you can have a company dedicated to selling food and another dedicated to transporting goods.

In addition to the above, we cannot forget that companies are entities in continuous transformation, so a company started by an individual entrepreneur can eventually become a holding company.

How to save taxes with holding company structures

Creating corporate structures can provide benefits such as greater ease in developing other activities and greater flexibility and speed in decision-making. Still, one of the main advantages is the possibility of saving taxes for the following reasons:

• If a company that belongs to the holding company registers losses, those losses can be offset against the profits of another company that belongs to the same holding company.
• The holding companies are subject to the tax consolidation regime. This regime means that the various companies that apply it are considered single taxable persons for corporate tax purposes. Therefore, the group of companies is taxed on the sum of the tax bases of all the companies.
• Depending on each autonomous community, reductions may be applied when transferring the shares of the companies that make up the holding company, both in the Wealth Tax and the Inheritance and Donation Tax.
• The parent company may invoice and charge VAT for the services it provides to the rest of the companies, which may, in turn, deduct that VAT.