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Old 10-31-2011, 08:49 PM
 
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Do holding companies usually get profits from the companies they hold?? I was researching and I see that holding companies make money if the company they own pays dividends. But if the holding company for example owns 100% of another company, does that company pay the holding company a certain % of its profits??
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Old 11-01-2011, 04:27 AM
 
Location: The Triad
34,091 posts, read 82,482,448 times
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Quote:
Originally Posted by Sirisaac87 View Post
Do holding companies usually get profits from the companies they hold?
The owners of companies will "usually get profits from the companies" they own.

...and I see that holding companies make money if the company they own pays dividends.
The owners of stock shares "make money if the company they own pays dividends"


But if the holding company for example owns 100% of another company,
does that company pay the holding company a certain % of its profits??
The owners of companies will "usually get profits from the companies" they own.
Are you taking a business course in school?
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Old 11-01-2011, 05:08 AM
 
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It all depends how the subsidiaries are structured and how much equity the holding company owns. If the holding owns 100% of the subsidiary then the holding company can do whatever with the profits. They can either make the subsidiary declare the profits or transfer the profits to the holding company. If the holding company owns 49% of less then the company managers get to decide how the company operates. However, the company managers might have some sort of agreement with the holding company (ie. declare 90% of profits as dividends etc.)

Corporations/wealthy people use foreign holding companies and subsidiaries to lower their tax liability but its complicated to do and requires lots of planning in order to not break any laws. That's why you don't see many corporations complaining about high taxes as stifling their growth, rather they complain about lack of sales. Some idiots will say, "see, the corporations aren't complaining about high corporate tax." Meanwhile, they totally disregard the fact that most corporations pay little to no taxes in the first place. It was the same story when the top personal income tax bracket was 90%. No one complained about it because no one actually paid it (due to deductions/credits).

http://www.youtube.com/watch?v=Xm3RTgItj4Y

Last edited by a34dadsf; 11-01-2011 at 05:18 AM..
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