Question reg. Holding

caribmike

caribmike

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OK, here is what I am thinking to do:

I want to found a SRL as a holding.

2 questions:

1. Does a property already have to exist to be brought in or can a holding be found with the goal to acquire property?

2. If a property is owned and brought into the holding and the holding is in my name what happens to the property if I die? Will there be any complications for my son inheriting it?

Sorry, but I am total beginner regarding that.

Any input welcome

Thanks!
 
Castellamonte

Castellamonte

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1. The property does not have to "exist" prior to the forming of the SRL. Capitalize the SRL with a very small amount (to avoid unnecessary taxes) and only increase it when you have increased the material value of the company through the holdings.

2. Companies cannot die. You can. If an SRL owns the property then the partners in the SRL are going to have control of the property once you die. However, your personal ownership in the SRL is something that will fall under DR estate law. If your ownership in the SRL it through a US LLC, for example, then DR estate law has no basis in the resolution of this part of your estate.

Enjoy!
 
caribmike

caribmike

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Another question:

Is it possible to do 2 different things with a holding? Say holding property and doing some (web based) business or would that require 2 separate SRL?
 
Castellamonte

Castellamonte

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A holding company, by definition, has no operations and thus no income to report and be taxed upon. Should you start a web-based business it would no longer be a non-operational company so it would be taxed accordingly.

Why create a company for a web-based business? What are you trying to protect within a corporate shield? Why not just do it individually?
 
caribmike

caribmike

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Guessed that much. Just wanted to verify it. I am planning no other activity atm. It was just to be clear if something comes up could it be done with the same company or not. Thanks so much!
 
caribmike

caribmike

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OK.

Say, I found it with 100,000 DOP i.e. I would be taxed on these even if the holding produces a loss? Do I understand that right?

And how much would be the tax %?
 
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rubio_higuey

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You are charged 1% of assets. If you do operations, you pay income tax plus 1/12 of 1.5% every month of your previous year's turnover as an ANTICIPO. If at the end of the period your actual tax is lower than the anticipo paid, your "tax credit" is applied towards payment of assets.
 
caribmike

caribmike

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Thanks for chiming in. I was shy to send you more questions via PM, wanted to avoid your mail box exploding ;)
 
Castellamonte

Castellamonte

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caribmike said:
OK.

Say, I found it with 100,000 DOP i.e. I would be taxed on these even if the holding produces a loss? Do I understand that right?

And how much would be the tax %?
Click to expand...

By definition, a holding company cannot "produce a loss" since it is non-operational. If the company does any operations it is no longer characterized as a holding company but is now an operational company with a completely different set of tax consequences.
 
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rubio_higuey

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Your company does not fill that. That form is meant for "simplified contributors" such as colmado owners, peluquerias, etc. where it is difficult to asses tax obligations. The for is meant to calculate "simplified tax" based either on buying volume or selling volume. This is meant for mainly unincorporated businesses or those in informal retail mass trade business.
 
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rubio_higuey

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Castellamonte said:
By definition, a holding company cannot "produce a loss" since it is non-operational. If the company does any operations it is no longer characterized as a holding company but is now an operational company with a completely different set of tax consequences.
Click to expand...

Well, technically, a holding company can produce a loss without operating. For example, you go register your Asamblea. Registro mercantil charges you, let's say 200 pesos. You get NCF invoice in the company's name for those 200 pesos. You submit the invoice (you should) in form 606. At the end of the year, your non-operating company has a physical operating loss of 200 pesos. That is a simplified example. there are many expenses the holding, non-operating company, can incur, and they obviously produce a loss.
 
caribmike

caribmike

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I will meet my lawyer Friday in SDQ and frankly I have no idea how to explain her what I need. The terms Mauricio suggested don't ring a bell. She asks for "razon social"?

Basically I want to tell her I want a Holding with part time secretary to administer the property, but there is nothing what I can find helping me in Spanish business terms what I need to tell her and I am concerned something gets messed up and I am getting the "wrong" company founded... :(

Well, that happens when a "business amateur" like me tries to grow, lol...
 
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rubio_higuey

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Razon social is the legal business name.
Nombre Comercial is the business name (dba) registered with ONAPI and used as "Doing Business As".

A single company (Razon Social SRL. can have different Nombre Comercial-es e.f. RASOC, INVESTRASOC, etc.).

When only one Nombre Comercial is present, tehn Nombre Comercial = Razon Social.

E.g.
Nombre Comercial= Inversiones del Caribe, INVERCA
Razon Social = Inversiones del Caribe SRL, or Inversiones del Caribe EIRL, etc.
 
Castellamonte

Castellamonte

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rubio_higuey said:
Well, technically, a holding company can produce a loss without operating. For example, you go register your Asamblea. Registro mercantil charges you, let's say 200 pesos. You get NCF invoice in the company's name for those 200 pesos. You submit the invoice (you should) in form 606. At the end of the year, your non-operating company has a physical operating loss of 200 pesos. That is a simplified example. there are many expenses the holding, non-operating company, can incur, and they obviously produce a loss.
Click to expand...

Okay, I can see your point but I wouldn't call that "producing a loss" so much as "incurring an expense." The nuance may be lost on the DGII, of course, but when I think of producing a loss I think of generating revenue which is insufficient to cover the costs associated with that revenue. I don't think of the existence expenses in this manner, which is probably just a point of view as opposed to what the law may read.
 
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rubio_higuey

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CM :) I get your point. But it's called Profit and Loss statement, where you list revenue (0) and expenses in various categories. At the end you have BENEFICIO DEL PERIODO (profit) or PERDIDAD DEL PERIODO (loss). From accounting point of view, having expenses and no revenue is a "loss". From business point of view, a "loss" may be considered as you mention, when expenses run over the revenue. And to complicate matters even further, you can have an accounting loss even when you have positive cash flow and more money in the bank than ever before.
 
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