Why lend from holding to operating company?
The holding accumulates after-tax profits (after 19% Vpb). Rather than extracting these as dividend (triggering box 2 tax), the holding can lend to the operating company to finance investments, working capital or acquisitions. This defers personal tax and keeps the capital within the corporate group.
Market interest requirement
Intercompany loans must be at arm's length — the interest rate must reflect what an independent lender would charge. The Tax Authority can reclassify below-market interest as a hidden dividend distribution, triggering corporate tax corrections. Typical intercompany rates: 3–6% depending on term, amount and creditworthiness.
Formal requirements
- Written loan agreement between holding and operating company
- Market-rate interest
- Realistic repayment schedule
- Proper bookkeeping entries in both companies
- Documented credit assessment (why is the operating company creditworthy?)
Earningsstripping: interest deduction limits
Since 2019, the earningsstripping rule limits interest deductions. Net interest costs above 20% of EBITDA (with a minimum threshold of €1,000,000) stay outside the deduction. This affects highly leveraged group structures more than standard holding-operating company setups.
The follow-up question
Three pages sit directly alongside this one: The Pass-Through Salary Scheme, What is a Holding Company? Simply Explained and Inter-Company Loans.