Advantages of Selling Company Shares Through a Holding Company vs. as an Individual

The sale of company shares can generate a significant capital gain, and how the transaction is structured has a major tax impact.
In Spain, there are substantial differences between selling as an individual and selling through a holding company.

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1. Sale as an Individual

When an individual sells company shares, the resulting gain is taxed under the Personal Income Tax (IRPF) as part of the savings base:

• 19% on gains up to €6,000.
• 21% on gains between €6,000 and €50,000.
• 23% on gains between €50,000 and €200,000.
• 28% on gains exceeding €200,000.

👉 This means that, for large transactions, up to 28% of the gain may go directly to the Tax Agency.

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2. Sale Through a Holding Company

If the sale is made through a holding company that meets the requirements of Article 21 of the Spanish Corporate Income Tax Law (LIS) — i.e., holding at least 5% ownership (or an investment exceeding €20 million) for at least one year:

• The capital gain is 95% tax-exempt.
• Only 5% of the gain is taxed at 25% under the Corporate Income Tax.
• The effective tax burden is just 1.25% on the total gain.

👉 This allows you to reinvest nearly the entire profit into new projects or assets without immediate tax erosion.

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3. Practical Example

Let’s imagine an entrepreneur sells their stake in a company for €5,000,000, with an acquisition cost of €1,000,000.
The total gain is €4,000,000.

If sold as an individual:

• The gain is taxed under IRPF between 19% and 28%.
• Approximate tax: €1,000,000.
• The entrepreneur keeps €3,000,000 net.

If sold through a holding company:

• 95% of the gain is exempt.
• Only 5% (€200,000) is taxed at 25%, resulting in €50,000 in taxes.
• The company retains €3,950,000 net for reinvestment.

📊 Tax Comparison:

💡 Tax savings: €950,000.

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4. Conclusion

Selling company shares through a holding company offers a tremendous tax advantage compared to selling as an individual:

• The difference can exceed 20% of the total transaction value.
• It enables you to reinvest nearly all the proceeds into new ventures or assets.
• It also provides benefits in wealth planning, succession, and asset protection.

💼 For all these reasons, structuring the ownership of company shares through a holding company is one of the most effective strategies for entrepreneurs seeking to maximize the net return from a future exit or divestment.