How to Set Up a Holding Company for Personal Assets in the Philippines

Disclaimer: This article provides general information only and does not constitute legal, tax, or investment advice. Engage Philippine counsel, a licensed tax adviser, and, where relevant, a trust or estate specialist before acting.

1) What a Holding Company Is (and Why Use One)

A holding company is a corporation (often a stock corporation or a One Person Corporation) formed primarily to own and control assets or other companies, rather than to sell goods or services. For Filipino families and entrepreneurs, typical goals include:

Consolidation: Real estate, shares, family business interests, vehicles, artwork, and intellectual property are centralized in one legal owner.
Governance & Succession: Voting rules, classes of shares, and board procedures simplify inter-generational control transfers.
Liability Ring-fencing: Personal liabilities are separated from operating business risks.
Tax administration: Streamlined dividend flows, bookkeeping, and estate planning; potential access to inter-corporate dividend exemptions and organized documentation for capital gains/transfer taxes.
Privacy (to a point): Ownership can be better structured, while still complying with beneficial ownership disclosures.

2) Common Legal Vehicles

A. Domestic Stock Corporation (Family Holding Company)

Owners: ≥2 incorporators (can be all Filipino), or a mix consistent with nationality restrictions applicable to underlying assets or industries.
Capital: No general minimum, except for regulated industries or where required by special law.
Directors/Officers: At least 2–15 directors for ordinary corporations; President, Treasurer, Corporate Secretary (Secretary must be a resident; additional officers per by-laws).
Best for: Family or multi-member asset pools, layered share classes (voting/non-voting, preferred), and formal board governance.

B. One Person Corporation (OPC)

Owner: A single stockholder (natural person, trust, or estate).
Governance: The sole stockholder is also the director; must designate a Nominee and Alternate Nominee to take over in case of death or incapacity.
Officers: Corporate Secretary (resident), and a Treasurer (the single stockholder may act as Treasurer subject to bonding/SEC rules).
Best for: Solo asset consolidation with clean succession hand-off via nominee mechanics.

C. Non-Stock Corporations & Foundations

Typically unsuitable for purely private/family wealth holding due to charitable or non-profit purposes, stricter use-of-funds rules, and tax issues. Consider only when a genuine public-benefit mission exists.

Foreign nationals: Land ownership is restricted; the Anti-Dummy Law prohibits using Filipino “dummies.” Where foreign beneficial ownership exists, observe constitutional and statutory foreign equity limits in asset-owning or regulated sectors.

3) Core Planning Questions Before You Incorporate

Objectives: Preservation, control, asset protection, or pre-sale structuring?
Asset Inventory: Real property (titles & tax declarations), company shares, cash/securities, vehicles, IP, artwork/collectibles.
Nationality & Industry Limits: Are any assets in partially nationalized industries or land?
Succession: Heirs, family council, buy-sell arrangements, and estate equalization.
Governance: Board composition, reserved matters, share classes, deadlock resolution.
Funding: Paid-in capital vs. shareholder loans; banking relationships.
Tax map: Dividend flows, passive income classification, VAT exposure (if any), donor’s/estate tax planning, and documentary stamp taxes (DST).

4) Step-by-Step Incorporation & Registration

Step 1: Name Clearance & Drafting

Reserve corporate name and prepare the Articles of Incorporation (AOI) and By-Laws.
Include a primary purpose narrowly tailored to “investing in, owning, and holding assets and securities,” plus incidental powers.
Define authorized capital, par or no-par shares, and classes (e.g., Class A voting common; Class B non-voting; preferred with fixed dividends and liquidation preference).
For OPC: prepare Nominee and Alternate Nominee designations.

Step 2: SEC Incorporation

File AOI, By-Laws (corporations file by-laws within statutory timelines if not submitted on day one), Treasurer’s affidavit, and other SEC forms.
The Treasurer-in-Trust (TIT) acknowledges receipt of paid-in capital. Bank certificates may be required by internal policies even if not per se mandated.

Step 3: Post-SEC Registrations

BIR (Bureau of Internal Revenue):
- Secure TIN, register books of accounts (manual/loose-leaf/CAS), and (if issuing invoices/receipts) register for ATP/e-invoicing per applicability.
- Pay annual registration fee (if required by current rules), then file periodic returns (income tax, withholding, VAT or percentage tax as applicable).
LGU Permits:
- Barangay Clearance and Mayor’s/Business Permit where the head office is located, even if operations are passive.
Social Agencies (if hiring staff):
- SSS, PhilHealth, Pag-IBIG registrations.

Financial accounts: Open corporate bank/brokerage accounts. Banks apply KYC/beneficial ownership checks; keep corporate records and notarized documents ready.

5) Moving Assets Into the Holding Company

Different asset classes require distinct transfer mechanics and taxes.

A. Real Property

Documents: Deed of Sale or Deed of Donation (inter vivos), or capital infusion via property-for-shares (contribution to capital).
Taxes & Fees (typical):
- Capital Gains Tax (CGT): Generally 6% on the higher of gross selling price or fair market value when the seller treats real property as a capital asset (corporate sellers may have ordinary-income treatment instead—seek advice).
- DST: On the deed of sale; local transfer taxes; registration fees.
- Donations: Donor’s tax (generally a flat rate under current law) if gratuitous.
Process: Secure tax clearance/Certificate Authorizing Registration (CAR), then transfer title at the Registry of Deeds; update Real Property Tax records.

B. Company Shares & Securities

Unlisted shares: Transfer by Deed of Assignment; stock CGT (commonly a flat rate on net capital gains for individuals) or corporate income tax rules; DST on original issue of shares (capital contributions) and on certain transfers.
Listed shares: Stock Transaction Tax applies when traded on the PSE.
Inter-corporate dividends: Often exempt from income tax when a domestic corporation receives dividends from another domestic corporation; confirm current rules and any anti-tax-avoidance provisions.

C. Cash, Time Deposits, Bonds, UITFs/Mutual Funds

Mechanics: Subscription to shares, loans to the holding company, or direct portfolio accounts under the company’s name.
Taxes: Final withholding taxes on interest and certain passive income; mark-to-market or trading gains taxation per instrument type.

D. Vehicles & Chattel

LTO/Registry transfers, chattel mortgage releases (if any), and payment of transfer/registration fees. Insurance policies must be endorsed to the new owner.

E. Intellectual Property (IP)

Assignment of trademarks/patents/copyright; record at the IPOPHL. Royalty arrangements between holding company and operating companies require arm’s-length pricing and withholding taxes.

6) Capitalization: Shares vs. Shareholder Loans

Paid-in Capital: Straightforward but may trigger DST on original share issuance. Useful to set stable ownership percentages and strengthen the balance sheet.
Shareholder Loans: Flexible and repayable; interest must be arm’s-length and withholding tax compliant. Consider thin-capitalization, transfer pricing documentation, and related-party disclosures.

7) Governance Architecture That Actually Works

Board & Officers: Specify quorum, meeting frequency, and reserved matters (e.g., asset sales, new debt, guarantees).
Share Classes: Combine voting common for control and non-voting/ preferred for economic participation and estate equalization.
Shareholders’ Agreement: Lock-ups, right of first refusal, tag/drag, buy-sell triggers (death, disability, divorce, bankruptcy), and valuation formulas.
Family Constitution: Vision, conflict-resolution processes, and role of a Family Council to reduce boardroom friction.
Nominee Mechanics (OPC): Keep nominee consents current and accessible.

8) Ongoing Compliance Checklist

SEC filings: General Information Sheet (GIS) after the annual stockholders’/members’ meeting; Audited Financial Statements (AFS) subject to thresholds; beneficial ownership disclosures.
BIR filings: Quarterly and annual income tax returns; withholding tax returns for compensation and expanded withholding; VAT/percentage tax as applicable; books of accounts maintenance; inventory of fixed assets (if any).
LGU: Business permit renewal (typically every January), and local tax payments.
Related-Party Disclosures: Keep Transfer Pricing Documentation for intra-group loans, royalties, and services.
Substance & Minutes: Hold and minute board/shareholder meetings, maintain stock & transfer book, and issue stock certificates properly.

9) Tax Themes for Holding Companies

Corporate Income Tax: Rates depend on size and current law; Minimum Corporate Income Tax (MCIT) may apply in low-profit years. Confirm current rates and any incentives.
Inter-corporate Dividends: Often tax-exempt domestically—an important advantage for dividend “stacking” into the holdco before personal extraction.
Personal Extraction: Dividends from the holding company to individuals are typically subject to final withholding tax at a statutory rate; timing distributions can coordinate with estate plans.
Donor’s & Estate Taxes: Post-TRAIN reforms generally impose flat 6% donor’s and estate tax, with standard deductions and exempt transfers; documentation and timing matter.
VAT/Percentage Tax: Pure passive holding with no regular sale of goods/services may be non-VAT; however, leasing or service income can create VAT or percentage tax exposure. Track the VAT threshold for mandatory registration.
DST: Applies to original share issuances, certain debt instruments, and property transfers; model DST in advance to avoid surprises.

10) Asset Protection & Regulatory Compliance

Separation: Keep personal and corporate funds distinct; use board approvals for related-party transactions.
Insurance: D&O insurance, property insurance, and key-person coverage for founders.
AML & Beneficial Ownership: Expect banks and SEC disclosures identifying ultimate beneficial owners (UBOs).
Anti-Dummy Law: Never use nominee arrangements to circumvent nationality limits.
Data Room Discipline: Maintain a digital vault for titles, CARs, deeds, board minutes, and tax clearances.

11) Succession & Estate Planning Add-Ons

Share Classing & Gifting: Issue non-voting or preferred shares to heirs for economic participation while founders retain voting control.
Buy-Sell Agreements: Fund with life insurance so the company or surviving heirs can buy out a deceased owner’s stake at a pre-agreed valuation.
Testamentary Planning: Wills that dovetail with corporate documents; consider trusts (testamentary or inter vivos) for minors or special situations. Remember, private trusts are legal relationships—not separate corporations—and must be drafted carefully.

12) Timelines, Costs & Practical Tips

Incorporation: Typically measured in weeks from document readiness to SEC approval, subject to name review, document quality, and workload.
Professional Fees: Budget for legal, tax, notarial, and audit fees; plus DST, transfer taxes, and registration charges.
Banking: Start early with KYC and source-of-funds documentation; pre-clear large in-kind capitalizations or cross-border inflows.
Recordkeeping: Use a capable accountant familiar with holding entities and related-party rules.

13) Sample Purpose & Share Structure (Illustrative)

Primary Purpose: “To invest in, purchase, own, hold, assign, transfer, mortgage, pledge, or otherwise dispose of real and personal properties of every kind and description; to subscribe to, purchase, own, hold, assign, or dispose of shares of stock, bonds, debentures, notes, securities or other evidences of indebtedness of any person, firm, corporation or association; and to exercise all rights, powers and privileges of ownership, including voting powers, without acting as a dealer or broker in securities.”

Authorized Capital: ₱100,000,000 divided into:

80,000,000 voting common shares at ₱1 par;
20,000,000 non-voting preferred shares at ₱1 par with a non-cumulative 3% annual dividend, redeemable at par at the Board’s option, non-participating, with priority on liquidation over common.

(Adjust numbers, rights, and preferences to your needs.)

14) Common Pitfalls to Avoid

Titling assets to the holdco without mapping all taxes (CGT/DST/local taxes) and bank compliance.
Using undocumented shareholder loans or non-arm’s-length interest.
Missing beneficial ownership and related-party disclosures.
Treating the holdco as a personal wallet (commingling).
Ignoring succession triggers (death/incapacity) and lacking a funded buy-sell.

15) Quick Launch Checklist

Finalize objectives, asset list, and nationality checks.
Choose entity (Stock Corp vs OPC); define share classes and governance.
Draft AOI/By-Laws; reserve name; prepare Treasurer-in-Trust documents.
File with SEC; obtain Certificate of Incorporation.
Register with BIR; books of accounts; invoicing (if needed).
Obtain barangay and mayor’s permits; enroll with SSS/PhilHealth/Pag-IBIG if employing.
Open bank/brokerage accounts; complete KYC.
Transfer assets with tax modeling and proper deeds; secure CARs and title/name changes.
Set up board calendar, compliance diary, and document vault.
Align will/trusts, buy-sell agreements, and insurance with the new structure.

Final Word

A Philippine holding company is a powerful, flexible container for family wealth—if formed with careful attention to governance, taxes, compliance, and succession. With a precise purpose clause, thoughtful share architecture, and disciplined recordkeeping, it can deliver control, clarity, and continuity across generations.