Active holding company or passive holding company: why the difference really matters
Two holding companies can have the same legal form, own several subsidiaries, and yet not be treated the same way for tax purposes. The difference lies mainly in their actual role within the group.
One holds shares and primarily exercises its shareholder rights. The other actively participates in strategic decisions, manages its subsidiaries, and sets the group's policy. In the first case, it is generally referred to as a passive holding company. In the second, as an active holding company.
The tax changes that came into effect in 2026 give even more weight to this distinction, particularly when a business owner is preparing for a transfer of ownership, considering the French wealth tax (IFI), or holds significant assets in their holding company. Furthermore, some of these measures will have their first tangible effects at the end of 2026 and in 2027.
This article presents the main mechanisms in a deliberately simplified manner. The classification of a holding company depends on its actual situation, its organization, the activities of its subsidiaries, and the elements that demonstrate its role within the group.
Passive holding company: owning and managing your investments
A passive holding company primarily acts as a shareholder. It owns the shares of its subsidiaries, may receive their dividends, votes at meetings, and makes decisions that would normally fall under the purview of a shareholder.
It can perfectly meet the objective of a manager who wishes to hold several companies under a common structure, organize their shareholdings or raise dividends.
The administration thus distinguishes between holding companies which essentially exercise the usual prerogatives of a shareholder and those which actively participate in the management of the group.
The term "passive" therefore does not mean that the structure is malfunctioning or that it should necessarily evolve. It simply describes the role it actually plays in the group.
An active holding company participates in the group's decisions
An active holding company goes beyond simply holding shares. It actively participates in guiding the group's policy and controlling its subsidiaries.
It can also provide them with internal services: administrative, legal, accounting, financial, or real estate functions. These services can support the group's activities, but they do not constitute proof of them in themselves.
In practical terms, an active holding company can, for example:
define the group's major strategic directions
validate certain important investments
monitor the budgets of its subsidiaries
arbitrate funding decisions
to coordinate certain financial or administrative functions
to set common goals for different companies
She then truly plays a leading role in the group.
Writing "active holding company" in the articles of association is not enough
The qualification is based primarily on the actual functioning of the group. The holding company's corporate purpose, a management agreement, or the presence of the same manager in several companies can contribute to demonstrating this.
But it is necessary to be able to show that the holding company actually fulfills this role.
This can involve:
minutes of decisions
committee reports
budgets approved by the holding company
guidelines addressed to subsidiaries
regular reports
animation conventions
documents showing that the guidelines decided by the holding company are actually being implemented
For a manager, the challenge is therefore to maintain consistency between the role claimed by the holding company and its day-to-day operations.
And, this documentation becomes particularly important when a tax advantage depends directly on the active nature of the structure.
Management fees: make sure the holding company is billing for actual services
A holding company may charge its subsidiaries for management, finance, administrative, legal, or IT services. Those services can help demonstrate that the holding company plays an active role within the group. But above all, they need to correspond to services that are actually provided by the holding company and can be clearly identified.
A June 4, 2026 ruling by the French Court of Cassation recently reinforced that point from a different angle: social security contributions.
In the case, a French SAS paid management fees to another company for general management, commercial, and financial services. The same executive represented both companies.
URSSAF, the French social security authority, took the position that the amounts invoiced were in fact remuneration for duties performed by the SAS’s own executive. The Court of Cassation upheld the inclusion of those amounts in the social security contribution base.
That does not mean management fees are automatically subject to social charges.
What the ruling does highlight is the need to clearly distinguish between the duties performed by an executive as part of their corporate office and the services genuinely provided by the holding company to its subsidiaries.
A service agreement and properly issued invoices are a starting point. The company must also be able to demonstrate the reality of the services provided, what they covered, and the resources actually used by the holding company.
The same principle applies when assessing whether a holding company qualifies as an active holding company: charging management fees alone is not enough to prove that the holding company is actively managing the group.
The key issue remains whether the holding company genuinely takes part in setting group policy and exercising control over its subsidiaries.
The distinction becomes particularly important during a transmission
The Dutreil scheme allows, under certain conditions, for an exemption of 75% of the value of the securities transferred for the calculation of gift or inheritance tax.
A holding company whose activity is limited to managing its assets does not, in principle, fall directly under this scheme. However, an active holding company can be considered equivalent to a company carrying out operational activities when the other conditions of the Dutreil scheme are met.
This is why his qualification becomes particularly important when a manager prepares the family transfer of a group owned by a holding company.
Since 2026, the Dutreil law also requires a longer-term perspective.
The 2026 Finance Act has modified several rules of the scheme. Since February 21, 2026, the duration of the individual holding commitment has been extended from 4 to 6 years for the transfers concerned. Certain assets deemed "luxury," when not exclusively used for operational purposes, are also excluded from the partial exemption.
For an active holding company benefiting from the Dutreil scheme, the "active" character must be present at the time the scheme is put in place and remain respected for the duration of the commitments.
An insufficiently documented qualification can therefore become problematic several years after its transmission...
As we approach 2027, this point deserves to be integrated into the transfer plans early enough: the structure must be able to maintain over time the operation on which the benefit of the scheme is based.
At the time of publication, in early November 2026, the draft budget for 2027 is still being debated in Parliament. Any final measures will therefore need to be verified after the budget law has been adopted.
The difference can also matter for the IFI (French wealth tax)
The "active" status can also be relevant in matters of real estate wealth tax.
The administration distinguishes between holding companies that limit themselves to managing their assets and those that effectively participate in conducting group policy and controlling subsidiaries. In this second case, the holding company's activity can be considered commercial for the analysis of certain business assets.
This does not mean that all real estate assets held directly or indirectly by an active holding company automatically fall outside the scope of the IFI (French wealth tax).
The other conditions of the scheme must also be verified according to the situation of the manager and the actual use of the assets.
The important thing is therefore to look at the function of each asset in the group's activity, rather than reasoning solely from the general status of the holding company.
New tax on certain asset-holding companies: initial impact from the end of 2026
The finance law for 2026 also created a 20% tax on certain non-professional assets held by predominantly asset-holding companies.
For the managers concerned, the issue becomes very concrete as 2027 approaches, because the tax is due for financial years ending on or after December 31, 2026.
However, be careful not to confuse the concepts:
A passive holding company does not automatically fall within the scope of this new tax.
Several conditions must be met:
the value of all assets held reaches at least 5 million euros
a natural person holds at least 50% of the financial rights or voting rights , directly or indirectly, or effectively exercises decision-making power
Passive income represents more than 50% of the company's operating and financial income
Even when these conditions are met, the tax does not apply to the company's entire assets. The measure targets certain assets not used for operational activities. Specifically, the government clarifies that cash, financial securities, active investments, and works of art are excluded from the tax base.
The reform therefore primarily reinforces the importance of clearly identifying, in the holding company's balance sheet, what actually serves the group's business and what belongs to assets held for other purposes.
Can an active holding company also hold heritage assets?
An active holding company does not necessarily have to hold only the shares of its operating subsidiaries. It may also have cash, investments, or certain assets.
But the more this heritage component becomes important, the more useful it becomes to verify that animation remains the main activity of the structure.
For the application of the Dutreil, the administration looks in particular at the weight of the assets allocated to the animation activity in the total assets of the holding company.
This topic is particularly relevant for holding companies that have been established for several years.
A structure may have started with two operational stakes, then gradually accumulated:
treasury
a financial portfolio
real estate
new investments
or other assets
As the 2026 closing dates approach, this snapshot of the balance sheet becomes all the more useful as it allows us to both look at the reality of the animation role and to identify the assets that may be affected by the new asset rules.
Should a passive holding company be transformed into an active holding company?
Not always. The right choice depends on how the group actually functions and the leader's objectives.
A holding company primarily intended to hold shares and receive dividends can perfectly well retain this role. A holding company positioned above several subsidiaries, defining their strategy and centralizing certain management functions, can be intended to play a genuine leadership role.
Artificially creating services or an entertainment agreement solely to seek a tax regime would, on the contrary, weaken the company's position.
To take stock, a few elements already allow us to look at the situation in a very concrete way:
Who defines the group's strategy?
Who approves budgets and major investments?
Who monitors the performance of the different subsidiaries?
Who decides on the funding?
Does the holding company have the necessary resources to fulfill this role?
Are these decisions documented?
The responses help to bring the tax classification closer to the operational reality of the group.
With 2027 approaching, it's a good time to review the role of your holding company
New subsidiaries, accumulated cash, investments, real estate, new managers, transfer or acquisition project.... A holding company created several years ago may today have little in common with its original configuration.
And the rules themselves have also changed in 2026. The tax on certain non-professional assets will come into effect for fiscal years ending on or after December 31, 2026. The new Dutreil rules will continue to apply to transfers made from this year onwards.
To prepare for 2027, four checks are particularly useful:
What role does my holding company actually play today?
Are the decisions made for the subsidiaries sufficiently documented?
Has the composition of his assets changed?
Is a transfer, acquisition or reorganization planned for 2027?
In addition to this, there will be any measures finally adopted in the 2027 budget law, which are still under discussion at the time of publication.
At Blendy, we support managers in the accounting, tax and financial structuring of their holdings and groups, particularly before a transfer, acquisition or reorganization.
Has your holding company evolved, or are you preparing for a transaction in 2027?
This is a good time to check that its structure, operation and documentation are still consistent with your objectives.
Sources:
With Blendy, English-speaking French CPA based in Paris, Montréal and Miami, take advantage of digital accounting to accelerate your finance process and develop your business.
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