Sources checked 10 November 2026. This page is education for owners and directors who are thinking about where in a group of companies any bitcoin should sit. It is not tax, legal or accounting advice, and it is not a recommendation to buy, sell or hold bitcoin or to set up any structure. Group rules turn on exact ownership percentages and facts. Confirm the position with your accountant and lawyer before anything is moved or set up. If anything here conflicts with a linked source, the source wins.
Short answer
Putting bitcoin in a holding company or a separate subsidiary is not a neutral filing choice. In the UK, a company that exists mainly to hold investments can lose the small profits rate and marginal relief, and every extra company under common control shares the profit limits. Moving bitcoin between UK group companies can be tax neutral, but leaving the group later can bring the gain back. In the US, corporations that are at least 80% owned can file one consolidated return, dividends between them can be fully deductible, and a corporation that mostly holds investments faces its own accumulated earnings and personal holding company rules. S corporations cannot sit under another corporation at all. Decide the purpose first, then check the tax and company law with an adviser.
Three common shapes
Small companies that hold bitcoin tend to use one of three layouts. The labels below are descriptions, not legal terms.
| Shape | Where the bitcoin sits | What to check first |
|---|---|---|
| One trading company | On the balance sheet of the company that trades. | Whether the holding becomes large enough to change how the company is seen for tax and reliefs. See the UK limited company and US C corporation pages. |
| A holding company above the trading company | In the parent, which also owns the shares of the trading company. | Whether the parent still exists mainly to hold shares in a trading group, how profits reach it, and what group accounts it must prepare. |
| A separate bitcoin company | In a subsidiary or a sister company that does nothing else. | Whether that company is an investment company for tax, how it is counted alongside the others, and how money and bitcoin move between them. |
Our judgement, not a rule: people often give two reasons for a separate company, keeping the bitcoin away from the trading risks, or keeping trading creditors away from the bitcoin. Whether a structure actually does that depends on company law, guarantees, security given to lenders and how the companies are run, not on the chart. Ask a lawyer, and do not assume separation that the paperwork and the bank accounts do not show.
Choose your country for the rules that apply.
The short version: UK
- A close company that does not exist wholly or mainly for a permitted purpose, such as trading or holding shares in trading companies it controls, is a close investment-holding company. It cannot use the 19% small profits rate or marginal relief.
- Companies under common control are associated companies. The £50,000 and £250,000 limits are divided between them, so adding a company can raise the rate paid by the others.
- Most dividends a UK company receives from another company are exempt from Corporation Tax, subject to conditions.
- Bitcoin can usually move between members of a 75% group at no gain and no loss. If the company that received it leaves the group within six years while still holding it, a gain can be charged then.
- Selling the shares of a subsidiary that only holds bitcoin is unlikely to qualify for the substantial shareholdings exemption, which needs a trading company or the holding company of a trading group.
UK: is the company an investment company?
Under section 18N of the Corporation Tax Act 2010, a close company is a close investment-holding company in an accounting period unless, throughout the period, it exists wholly or mainly for one or more permitted purposes. The permitted purposes include carrying on a trade on a commercial basis, making investments in land let commercially, holding shares in and making loans to companies it controls that themselves trade or let land commercially, and co-ordinating the administration of two or more such companies. Holding bitcoin is not on that list.
That matters because section 18A charges the small profits rate only on a company that is not a close investment-holding company, and GOV.UK says a close investment-holding company cannot claim marginal relief. In practice such a company pays the main rate, currently 25%, on all its taxable profits, including its chargeable gains.
Source: legislation.gov.uk: Corporation Tax Act 2010, section 18A: the small profits rate is not available to a close investment-holding company, GOV.UK: Marginal Relief for Corporation Tax: limits divided by associated companies, and who cannot claim, GOV.UK: Corporation Tax rates, expenses and reliefs: main rate 25%, small profits rate 19%.
Applied to the three shapes:
- A separate bitcoin company that does nothing but hold bitcoin does not appear to fit any permitted purpose. Expect it to be treated as a close investment-holding company unless an adviser finds otherwise on the facts.
- A holding company that exists to hold the shares of a trading subsidiary fits the permitted purposes. If it also holds bitcoin, the question becomes whether it still exists wholly or mainly for those purposes. Section 18N does not give a percentage. This is a judgement on the facts, so document why the parent exists.
- A trading company that also holds bitcoin is normally still trading. A company whose main activity has become holding bitcoin may not be, as the UK limited company page explains.
UK: associated companies share the limits
Section 18E says a company is another company's associated company if one controls the other, or both are under the control of the same person or persons. Under section 18D, a company with no associated companies has a lower limit of £50,000 and an upper limit of £250,000. With associated companies the limits are reduced. GOV.UK gives the example that a company with three other associated companies divides the limits by four, to £12,500 and £62,500.
Source: legislation.gov.uk: Corporation Tax Act 2010, section 18E: associated companies, including control and companies with no trade or business, legislation.gov.uk: Corporation Tax Act 2010, section 18D: the lower and upper limits, reduced where there are associated companies, GOV.UK: Marginal Relief for Corporation Tax: limits divided by associated companies, and who cannot claim.
A separate bitcoin company is likely to carry on a business of making investments, so it would usually count. Section 18E ignores an associated company only if it has carried on no trade or business in the period, and section 18F extends that only to a passive holding company: broadly, one whose only assets are shares in its 51% subsidiaries, whose only income is dividends that it pays straight on, and to which no chargeable gains accrue. A parent that holds bitcoin has other assets, so it is not passive in that sense.
Source: legislation.gov.uk: Corporation Tax Act 2010, section 18E: associated companies, including control and companies with no trade or business, legislation.gov.uk: Corporation Tax Act 2010, section 18F: passive holding companies treated as not carrying on a business.
UK: moving profits up the group
Part 9A of the Corporation Tax Act 2009 exempts many distributions received by UK companies. For a small company, section 931B sets the conditions, including that the payer is resident in the UK or a qualifying territory and that the distribution is not part of a tax advantage scheme. For other companies, section 931D requires the distribution to fall into one of the exempt classes, such as dividends from a company the recipient controls. A trading subsidiary paying a dividend to its parent, so that the parent can buy bitcoin, will often fall within these rules, but check the conditions each time.
Source: legislation.gov.uk: Corporation Tax Act 2009, section 931B: exemption for distributions received by small companies, legislation.gov.uk: Corporation Tax Act 2009, section 931D: exemption for distributions received by other companies, if in an exempt class.
Company law still applies first. The paying company needs distributable profits, and a dividend paid in bitcoin itself is a distribution in kind with its own valuation rule. See bitcoin for a UK limited company and funding a company bitcoin purchase for loans and share capital instead.
UK: moving bitcoin between group companies
For chargeable gains, section 170 of the Taxation of Chargeable Gains Act 1992 builds a group from a principal company and its 75% subsidiaries. Section 171 then says that when one group company disposes of an asset to another while both are members of the same group, the transfer is treated as made for whatever amount gives neither a gain nor a loss. The receiving company takes over the original cost. Bitcoin held by a company is normally a chargeable asset, so moving it from the trading company to the parent is usually tax neutral at that point.
Source: legislation.gov.uk: Taxation of Chargeable Gains Act 1992, section 170: meaning of a group, built on 75% subsidiaries, legislation.gov.uk: Taxation of Chargeable Gains Act 1992, section 171: transfers within a group at no gain and no loss.
Two follow-on rules matter:
- Leaving the group. Under section 179, if the company that acquired the asset leaves the group within six years of the acquisition while it still holds the asset, a degrouping charge can arise. A plan to sell the trading company, with the bitcoin moved up just before, needs advice early.
- Matching gains and losses. Section 171A lets two group members jointly elect to move a chargeable gain or allowable loss from one to the other, as if the asset had been transferred first. Bitcoin does not have to be moved physically just to match a loss in one company with a gain in another.
Source: legislation.gov.uk: Taxation of Chargeable Gains Act 1992, section 179: company leaving a group within six years of an intra-group acquisition, legislation.gov.uk: Taxation of Chargeable Gains Act 1992, section 171A: election to reallocate a gain or loss to another group member.
The transfer is still a real movement between two legal persons. Record it with a minute in each company, an intercompany agreement or loan account entry if value is owed back, and the transaction IDs. Each company's pool is separate. See bookkeeping examples.
UK: selling a subsidiary
The substantial shareholdings exemption in Schedule 7AC can take a gain on selling shares outside Corporation Tax. It needs, among other things, a holding of at least 10% for a twelve-month period beginning not more than six years before the sale, and the company sold must be a trading company or the holding company of a trading group or subgroup. A subsidiary that only holds bitcoin is unlikely to meet that second test. Business Asset Disposal Relief and Business Property Relief for the owners have their own trading tests. See selling a company that holds bitcoin and the owner's estate.
UK: accounts and audit
Every company in the group still prepares and files its own accounts. Under section 399 of the Companies Act 2006, a parent company must also prepare group accounts unless it is exempt. A parent subject to the small companies regime is exempt, unless the group includes certain listed, banking or insurance undertakings, and it may still choose to prepare them. Section 479A lets some subsidiaries skip an audit, but only if every member agrees, the parent gives a guarantee under section 479C of all the subsidiary's outstanding liabilities at the end of that financial year, and the subsidiary is included in the parent's consolidated accounts. That guarantee cuts across the reason many owners give for a separate bitcoin company in the first place.
Source: legislation.gov.uk: Companies Act 2006, section 399: duty to prepare group accounts, and the small group exemption, legislation.gov.uk: Companies Act 2006, section 479A: subsidiary audit exemption, conditional on a parent guarantee, legislation.gov.uk: Companies Act 2006, section 479C: the parent guarantee covers all outstanding liabilities at the end of the financial year.
The short version: US
- A single-member LLC is disregarded for federal income tax by default, so a bitcoin LLC owned by one corporation is usually part of that corporation's return.
- Corporations linked by at least 80% of vote and value form an affiliated group and may file one consolidated return. Intercompany transactions, such as moving bitcoin between members, then follow special timing rules.
- A corporation that receives dividends from another domestic corporation can deduct 50% or, for qualifying dividends within an affiliated group, 100%.
- A mere holding or investment company gets only the minimum accumulated earnings credit, and a controlled group shares one $250,000 amount.
- Gains on selling bitcoin are not personal holding company income, but interest, for example from lending bitcoin, is.
- An S corporation cannot have a corporation as a shareholder. It can own a 100% subsidiary and elect to treat it as a qualified subchapter S subsidiary.
US: an LLC as the bitcoin company
Treasury Regulation 301.7701-3 says that, unless it elects otherwise, a domestic eligible entity with a single owner is disregarded as an entity separate from its owner, and one with two or more members is a partnership. A corporation that forms a single-member LLC to hold its bitcoin is, for federal income tax, usually still holding the bitcoin itself: same return, same basis, same lots. State law treatment, liability and state taxes are separate questions. See bitcoin for a US LLC.
US: consolidated returns
Section 1501 gives an affiliated group of corporations the privilege of filing a consolidated return instead of separate returns, on condition that every member consents to the consolidated return regulations. Section 1504 defines the group: one or more chains of includible corporations connected to a common parent, where stock with at least 80% of the total voting power and at least 80% of the total value of each member is owned within the group. The IRS uses Form 851, the affiliations schedule, with the parent's consolidated return.
Source: US Government Publishing Office (United States Code, 2024 edition): 26 U.S.C. 1501: privilege to file consolidated returns, US Government Publishing Office (United States Code, 2024 edition): 26 U.S.C. 1504: affiliated group, including the 80% voting and value test, IRS: About Form 851, Affiliations Schedule.
Inside a consolidated group, Treasury Regulation 1.1502-13 governs intercompany transactions. Its stated purpose is to clearly reflect the taxable income of the group as a whole by preventing intercompany transactions from creating, accelerating, avoiding or deferring consolidated taxable income. Each member still works out its own gain or loss on a sale to another member, but the timing follows the group rules. Selling bitcoin from one member to another is therefore not the same as selling it to an outsider. Ask the preparer how the regulation applies before moving coins.
Source: eCFR: 26 CFR 1.1502-13: intercompany transactions between members of a consolidated group.
US: dividends between corporations
Section 243 allows a corporation a deduction for dividends received from a domestic corporation: generally 50%, and 100% for qualifying dividends, which are dividends received from a member of the same affiliated group out of earnings and profits of years in which both were members. That is the usual route for a trading subsidiary to pay up cash for a parent to hold, if the group files separate returns.
US: accumulated earnings in a holding company
The accumulated earnings tax applies to a corporation that lets earnings build up beyond the reasonable needs of the business to avoid tax for its shareholders. The C corporation page covers the basic rule. Two points matter more in a group. First, section 535(c)(3) says a mere holding or investment company does not get the credit for earnings retained for the reasonable needs of the business; it gets only the minimum credit of $250,000 less its accumulated earnings and profits. A company set up only to hold bitcoin may be in that category. Second, section 1561 gives the component members of a controlled group one $250,000 amount between them, divided equally unless regulations allow otherwise. Section 1563 defines controlled groups, including parent-subsidiary groups at 80% and brother-sister groups owned by five or fewer individuals, estates or trusts.
Source: US Government Publishing Office (United States Code, 2024 edition): 26 U.S.C. 535: accumulated taxable income and the accumulated earnings credit, including mere holding or investment companies, US Government Publishing Office (United States Code, 2024 edition): 26 U.S.C. 1561: one $250,000 accumulated earnings credit amount shared by a controlled group, US Government Publishing Office (United States Code, 2024 edition): 26 U.S.C. 1563: controlled group of corporations, parent-subsidiary and brother-sister groups.
US: the personal holding company tax
Section 541 imposes a 20% tax on the undistributed personal holding company income of a personal holding company. Under section 542, a corporation is one if at least 60% of its adjusted ordinary gross income is personal holding company income and, at any time in the last half of the year, more than 50% of its stock by value is owned, directly or indirectly, by five or fewer individuals. Most small companies meet the ownership test, so the income test decides it.
Source: US Government Publishing Office (United States Code, 2024 edition): 26 U.S.C. 541: personal holding company tax of 20% on undistributed personal holding company income, US Government Publishing Office (United States Code, 2024 edition): 26 U.S.C. 542: definition of a personal holding company, the 60% income test and the five-individual ownership test.
Section 543 defines ordinary gross income as gross income excluding all gains from the sale or other disposition of capital assets, and lists dividends, interest, royalties and annuities as personal holding company income. So gains on selling bitcoin held as a capital asset do not count either way. Interest does. A bitcoin company with no trade whose only regular income is interest, for example from lending bitcoin or holding cash on deposit, may meet the 60% test. That is a reason to ask before adding a yield product inside a holding company. See borrowing against bitcoin for lending risks.
US: S corporations in a group
Section 1361 says an S corporation may not have as a shareholder a person who is not an individual, apart from certain estates, trusts and exempt organisations. A corporation cannot own shares in an S corporation without ending the election. The same section lets an S corporation own 100% of a domestic corporation and elect to treat it as a qualified subchapter S subsidiary, which is then not treated as a separate corporation for federal tax: its assets and income are the parent's. A bitcoin subsidiary under an S corporation can sit there, but for federal tax it is still the S corporation's bitcoin. See bitcoin for a US S corporation.
Moving bitcoin into a new corporation in exchange for its stock raises section 351, including the exception for transfers to an investment company. That is covered on the C corporation page.
Running a group that holds bitcoin
Our judgement, not a rule: whichever shape is chosen, treat each company as its own treasury.
- One written policy per company that holds bitcoin, approved by that company's board, or one group policy adopted by each board.
- Separate wallets for each company, with their own keys, configuration files and backups, and a separate provider account in each company's name. Do not hold one company's bitcoin in another company's multisig. See multisig for a company.
- A minute in both companies for every transfer between them, saying whether it is a dividend, a loan, a sale or a capital contribution, with the value used and the transaction ID.
- Separate books, separate cost pools or lots, and separate year-end evidence for each company. See the year-end checklist.
- A short note on the group chart explaining why the bitcoin sits where it does. If the reason changes, review the structure.
Common questions
Does a separate bitcoin company save tax?
Not by itself, on the sources checked for this page. In the UK it may be a close investment-holding company paying the main rate, and it shares the profit limits with the other companies. In the US it may be a mere holding or investment company for the accumulated earnings tax. Any saving depends on the facts, so model it with an adviser before setting anything up.
Can we move the bitcoin into a new holding company later?
Often, but the route matters. In the UK, transfers inside a 75% group are usually at no gain and no loss, with a six-year degrouping rule. In the US, transfers into a corporation and within a consolidated group have their own rules. Reorganisations that insert a new holding company above an existing company also have separate rules not covered here.
Do we need group accounts?
In the UK, a parent must prepare them unless an exemption in the Companies Act applies, and small groups are commonly exempt. In the US there is no federal company law equivalent; lenders, investors or a consolidated tax return may still need consolidated figures.
Is a holding company that also trades an investment company?
Not if it exists wholly or mainly for a permitted purpose such as trading. The test is about the company's purpose across the period, not a single figure.
Common mistakes
- Setting up a bitcoin company without checking whether it will be a close investment-holding company, or forgetting that it becomes an associated company of every other company the owner controls.
- Moving bitcoin between companies without a minute or an agreed value, so neither company's books show whether it was a dividend, a loan or a sale.
- Moving bitcoin up to a parent just before selling the trading company, without considering the degrouping rule.
- Giving a parent guarantee for an audit exemption and still assuming the bitcoin company is ring-fenced.
- Putting a yield product in a US holding company without checking the personal holding company income test.
- Having a corporation buy shares in an S corporation.
- Keeping several companies' bitcoin in one wallet.
Read next
- UK limited companies, tax, accounts and distributions for one company.
- US C corporations, section 351 and the accumulated earnings tax.
- US S corporations, shareholder basis and passive income.
- US LLCs, classification and operating agreements.
- Funding a company bitcoin purchase, loans and share capital from the owners.
- Related-party bitcoin transactions, when a director, owner or group company is on the other side.
- Selling a company that holds bitcoin, reliefs and buyer checks.
- Company tax on bitcoin, UK Corporation Tax and US federal tax.
Sources
Primary sources only. Each link was checked on 10 November 2026. Rules change, so confirm the current version with your adviser.
- legislation.gov.ukCorporation Tax Act 2010, section 18N: close investment-holding companies and the permitted purposes
- legislation.gov.ukCorporation Tax Act 2010, section 18A: the small profits rate is not available to a close investment-holding company
- GOV.UKMarginal Relief for Corporation Tax: limits divided by associated companies, and who cannot claim
- GOV.UKCorporation Tax rates, expenses and reliefs: main rate 25%, small profits rate 19%
- legislation.gov.ukCorporation Tax Act 2010, section 18E: associated companies, including control and companies with no trade or business
- legislation.gov.ukCorporation Tax Act 2010, section 18D: the lower and upper limits, reduced where there are associated companies
- legislation.gov.ukCorporation Tax Act 2010, section 18F: passive holding companies treated as not carrying on a business
- legislation.gov.ukCorporation Tax Act 2009, section 931B: exemption for distributions received by small companies
- legislation.gov.ukCorporation Tax Act 2009, section 931D: exemption for distributions received by other companies, if in an exempt class
- legislation.gov.ukTaxation of Chargeable Gains Act 1992, section 170: meaning of a group, built on 75% subsidiaries
- legislation.gov.ukTaxation of Chargeable Gains Act 1992, section 171: transfers within a group at no gain and no loss
- legislation.gov.ukTaxation of Chargeable Gains Act 1992, section 179: company leaving a group within six years of an intra-group acquisition
- legislation.gov.ukTaxation of Chargeable Gains Act 1992, section 171A: election to reallocate a gain or loss to another group member
- legislation.gov.ukTaxation of Chargeable Gains Act 1992, Schedule 7AC: substantial shareholdings exemption, including the trading company requirement
- legislation.gov.ukCompanies Act 2006, section 399: duty to prepare group accounts, and the small group exemption
- legislation.gov.ukCompanies Act 2006, section 479A: subsidiary audit exemption, conditional on a parent guarantee
- legislation.gov.ukCompanies Act 2006, section 479C: the parent guarantee covers all outstanding liabilities at the end of the financial year
- eCFR26 CFR 301.7701-3: classification of eligible entities, including a single-owner LLC disregarded by default
- US Government Publishing Office (United States Code, 2024 edition)26 U.S.C. 1501: privilege to file consolidated returns
- US Government Publishing Office (United States Code, 2024 edition)26 U.S.C. 1504: affiliated group, including the 80% voting and value test
- IRSAbout Form 851, Affiliations Schedule
- eCFR26 CFR 1.1502-13: intercompany transactions between members of a consolidated group
- US Government Publishing Office (United States Code, 2024 edition)26 U.S.C. 243: dividends received by corporations, including 100% for qualifying dividends in an affiliated group
- US Government Publishing Office (United States Code, 2024 edition)26 U.S.C. 535: accumulated taxable income and the accumulated earnings credit, including mere holding or investment companies
- US Government Publishing Office (United States Code, 2024 edition)26 U.S.C. 1561: one $250,000 accumulated earnings credit amount shared by a controlled group
- US Government Publishing Office (United States Code, 2024 edition)26 U.S.C. 1563: controlled group of corporations, parent-subsidiary and brother-sister groups
- US Government Publishing Office (United States Code, 2024 edition)26 U.S.C. 541: personal holding company tax of 20% on undistributed personal holding company income
- US Government Publishing Office (United States Code, 2024 edition)26 U.S.C. 542: definition of a personal holding company, the 60% income test and the five-individual ownership test
- US Government Publishing Office (United States Code, 2024 edition)26 U.S.C. 543: personal holding company income, and ordinary gross income excluding gains from capital assets
- US Government Publishing Office (United States Code, 2024 edition)26 U.S.C. 1361: S corporation shareholder limits and qualified subchapter S subsidiaries
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This is general information and education only. It is not financial, investment, tax, accounting, legal or regulatory advice, and it is not a recommendation to buy, sell or hold bitcoin or any other asset. It does not take account of your circumstances or those of your company. You must obtain your own official professional advice to confirm this information is correct before acting on it.
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