Great, Mahmoud! Let’s build you a step-by-step implementation plan + structure diagram tailored to Egypt, so you can legally and efficiently execute this strategy of profit centralization, asset acquisition, and tax-free reinjection.
✅ Objective:
Create a Holding Company that:
- Owns real estate purchased using profits from your business.
- Takes loans against this real estate.
- Uses the loan funds to finance operations and give cash to you, tax-free.
🧱 Step-by-Step Implementation Plan (Egypt)
🥇 Step 1: Set Up the Holding Company
- Form Type: Preferably a S.A.E (شركة مساهمة مصرية) or LLC (شركة ذات مسئولية محدودة).
- Ownership: You (100% or with silent partners if needed).
- Activity: Include investment activities, asset management, and real estate.
- Bank Account: Open a separate bank account.
🥈 Step 2: Route Profits from Your Existing Company
- Your current business pays management fees, dividends, or profit-sharing to the holding company.
✔️ Legally valid channels:
- Management or Consultancy Contract between the two companies.
- Brand licensing or IP rights held by the holding company (if applicable).
- Profit distribution if the holding company owns shares in the business.
💡 Use audited contracts and invoices to keep this clean in front of the tax authority (مصلحة الضرائب).
🥉 Step 3: Use the Holding Company to Buy Real Estate
- Holding company uses the accumulated profits to buy real estate (residential, commercial, land).
- You can purchase property outright or through installment plans (many developers in Egypt offer this).
🏗️ This real estate now becomes an appreciating asset and collateral for your next step.
🏦 Step 4: Leverage the Real Estate to Get a Loan
- Use the holding company’s real estate assets as collateral to secure a bank loan.
- Make sure the loan agreement is structured in the company’s name (not personal).
🚨 Notes:
- Most Egyptian banks will lend you up to 70% of real estate value for commercial use.
- You’ll need:
- Updated valuation report.
- Tax clearance.
- Financials for the holding company.
💸 Step 5: Inject Loan Money into Your Business or Yourself
You now have cash from the loan. Two main uses:
Option A – To Your Business:
- Structure it as a shareholder loan, working capital injection, or invoice payment.
- Make sure it’s a loan, not revenue—so it’s not taxed again.
Option B – To You Personally:
- You take money from the holding company as:
- Director's loan
- Dividend (taxable)
- Salary (taxable)
💡 Best case? Use director’s loan: money you take but not taxed unless it becomes a salary or dividend.
🔄 Step 6: Manage the Loan Repayment
- The operating business pays money back to the holding company (or directly to the bank) from its cash flow.
- Make sure interest and capital repayments are recorded cleanly in accounting books.
🧠 Optional Pro Tips:
| Tactic | Benefit |
|---|---|
| Put Real Estate in a Subsidiary under Holding | Asset protection – isolate every property risk. |
| Use Installment-based Real Estate | Less upfront cost, easier to accumulate assets fast. |
| Use Interest Payments as Expenses | Interest on loans is often deductible for the company. |
| Hire Family as Employees in Holding | Pay them salaries legally, keep the wealth in the family. |
🗺️ Structure Diagram
plaintext
+----------------------+ | Holding Company | | (Asset Owner) | +----------------------+ | | +----------+ +------------------+ | | [Buys Real Estate] [Takes Bank Loan] | | +-------------------------------+ | +-----------------+ | Loan Cash | +-----------------+ | +---------------+--------------+ | | +--------v---------+ +--------v----------+ | Operating Company| | Owner (You) | | (Business Entity)| | Director’s Loan | +------------------+ +-------------------+
💰 Tax Notes for Egypt
| Income Type | Tax Rate | Notes |
|---|---|---|
| Corporate Profits | 22.5% | Deduct expenses first |
| Dividends | 10-14% | From one Egyptian company to another is often exempt if owned ≥25% |
| Loan Proceeds | 0% | Not taxed unless considered disguised income |
| Director’s Loan | 0% (initially) | Taxable if not repaid or converted into salary |
| VAT | 14% | Applies on services, not on real estate purchases |
⚙️ Required Professionals:
- Lawyer – To draft clean intercompany agreements and set up the structure.
- Accountant – For legal tax routing and compliance.
- Banker – To secure loan terms and ensure approval.
- Real Estate Appraiser – To maximize valuation for loan collateral.
If you'd like, I can help you:
- Write a legal brief to give your lawyer.
- Draft a real estate buying strategy for the holding company.
- Create a cash flow simulation based on your business revenue and property plan. Would you like me to do any of those?