Delaware Holding Companies
Delaware offers tax-exempt treatment of corporations whose activities in Delaware are confined to the maintenance and management of intangible investments. Such Delaware investment holding companies derive their income exclusively from passive sources, which can include interest, dividends, licensing fees and royalties that are derived from the rights to use patents, trademarks, trade names, secret processes, and technical know-how, as well as stocks, bonds, notes, and debt obligations.
Tax Savings Opportunity
This tax exemption affords significant opportunity for corporations to deflect passive income to a Delaware investment holding company and thereby save state taxes that would otherwise apply to such income in the parent corporation’s state of domicile.
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