SME Accounting
Management company (Gesco) for professionals
23/7/2026
You are a specialist physician, dentist, CPA, lawyer, or incorporated engineer, and your surpluses are accumulating in your operating company. Your accountant may advise you to create a holding company —also called a Gesco or holdco —to optimize your tax situation. But is this really justified in your case? How much does it cost? And above all, what are the real advantages beyond the accounting jargon?
This guide explains how a management company works in Quebec in 2026, in what situations it is worthwhile, and how to structure it correctly with an accountant specializing in corporate taxation.
A management company is a private limited company (SPCC) owned by a professional or entrepreneur, whose main function is not to operate an active business but to manage investments, hold passive assets and optimize taxation .
It is also referred to as a holdco (holding company) or holding company . In Quebec, it is extremely common among incorporated professionals whose professional order allows incorporation: doctors, dentists, pharmacists, accountants, lawyers, engineers, architects, etc.
To fully understand the context, it is helpful to distinguish a Gesco from a traditional public limited company (SPA) : the SPA operates a business, while the Gesco manages capital. Both are private limited companies (SPCCs), but their tax roles differ.
The most common arrangement among incorporated professionals combines two related companies: an Opco and a Holdco.
The OPCO is the company that carries out the professional or commercial activity. For a specialist physician, it is the OPCO that bills the CPAM (French National Health Insurance Fund) or private patients. For a dentist, it bills for clinical procedures. For a consultant, it bills for mandates.
Opco benefits from the small business deduction (SBD) on the first $500,000 of active income, which brings the combined federal-Quebec tax rate down to around 12.2% . It is this reduced rate that makes tax deferral possible.
Holdco owns the shares of the Opco. It does not charge any clients. Its role is to receive the Opco's surpluses through inter-company dividends , invest them (investments, rental properties, loans) and subsequently distribute them to the professional or their family.
The central tax mechanism of this structure is based on Article 112 of the Income Tax Act: dividends paid between related companies are generally tax-exempt . The Opco can therefore transfer its surpluses to the Holdco without triggering additional corporate tax.
| Step | Movement | | Tax consequence |
|---|---|---|
| 1. Active income | The Opco collects the professional fees | Imposed at 12.2% (DPE) on the first 500,000? |
| 2. Salary | The Opco pays a salary to the professional | Deductible for the Opco, taxable for the individual (progressive rate) |
| 3. Surplus | The surplus remains in the Opco after salary and taxes. | Available for distribution or reinvestment |
| 4. Intercompany dividend | The Opco pays a dividend to the Holdco | Not taxable (section 112 of the Income Tax Act) |
| 5. Investments | The Holdco invests the funds | Passive income taxed at approximately 50% (with the IMRTD mechanism) |
This is the number one argument. If you earn $400,000 in professional fees and need $150,000 to live on, the $250,000 surplus can remain in the corporate structure at the rate of 12.2% (DPE) rather than being taxed at your personal marginal rate (up to 53.31% in Quebec in 2026).
The difference in available investment capital is immediate and substantial. Over 30 years, the deferral of corporate tax can generate several hundred thousand dollars of additional capital at retirement.
The cumulative capital gains exemption (CCGE) allows each eligible shareholder to realize a tax-free capital gain of up to $1,016,836 in 2026 when selling eligible shares of a CCPC.
Combined with an estate freeze and a family trust, the Gesco structure allows this exemption to be multiplied between spouses and children. For a professional practice or an SME sold for $3 million, the tax savings can exceed $500,000 .
The assets accumulated in the Opco are exposed to the risks of business activity: lawsuits, creditors, bankruptcy of a major client. By regularly transferring surpluses to the Holdco, you insulate your investment assets from operational risk.
This separation is particularly valuable for exposed professionals (doctors, dentists, lawyers, engineers in private practice), even though personal professional responsibility still remains for acts of the profession.
Upon death, your company's shares are deemed to have been sold at fair market value, which can trigger significant capital gains tax. A well-planned Gesco structure—with an estate freeze, family trust, and capital dividend account (CDA)—can significantly reduce inheritance tax and ensure an orderly transfer of value to heirs.
The Gesco structure is not a universal solution. It adds administrative complexity and recurring costs that must be justified by real tax savings.
| Criterion | Gesco relevant | Gesco is irrelevant |
|---|---|---|
| Annual surplus after compensation | $50,000 and over | Less than $25,000 |
| Investment horizon | 5 years and older | Short term, immediate consumption |
| Corporate assets in the long term | $500,000 and more | Less than $200,000 |
| Tolerance for complexity | You want to optimize and plan | You are looking for simplicity |
| Sale plan or succession | Sale, family transfer, retirement | No structured plan |
| Occupational risk | Profession subject to prosecution; | Low exposure |
If you spend all of your income each year and have no investment horizon, the cost of a Gesco will outweigh the tax savings. In this case, it's best to focus on simple integration and review the strategy when your surpluses increase.
Here are the typical costs of a Gesco structure in France in 2026, based on the rates charged by specialized tax and legal firms.
| Job | Estimated cost | Frequency | |
|---|---|---|
| Constitution of the Holdco (Lawyer); | 1,500 to 3,000? | Once |
| Restructuring and rolling (article 85, freeze); | 2,000 to 5,000? | Once |
| REQ fees and registers | $250 to $500; | Once a year |
| Holdco Financial Statements (Compilation Mission); | 800 to 2000? | Yearly |
| T2/CO-17 Holdco Declaration | $500 to $1,200; | Yearly |
| REQ update and corporate resolutions | $200 to $500; | Yearly |
| Full start | 2,000 to 5,000? | Initial investment |
| Annual Full Maintenance | 1,000 to 3,000? | Recurrent |
These costs vary depending on the complexity (family trust, multiple shareholders, estate freeze) and the region. For a personalized assessment, consult our guide to choosing a tax accountant .
A 42-year-old cardiologist bills $480,000 annually to the RAMQ (Quebec Health Insurance Plan). She pays herself $180,000 in salary (for personal needs), keeps $80,000 for fixed practice expenses, and has approximately $220,000 in surplus. With a Gesco (a type of French corporate income tax return), she can transfer this surplus through intercompany dividends and invest it in a long-term investment portfolio.
Over 25 years of practice, the accumulated capital gap between a corporate strategy and a 100% personal strategy often exceeds $1 million , depending on return assumptions.
A dentist who owns two clinics has one Opco (employee savings plan) per clinic and a single Holdco (holding company). The Holdco receives dividends from both Opcos and also owns the building leased to one of the clinics (held in a third company to isolate the real estate risk). This structure allows:
A SaaS founder plans to sell his company in 5 to 7 years for $5 million. In collaboration with his tax advisor, he is putting in place:
At the time of the sale, his wife and two children can each use their ECGC, thus multiplying the total exemption to more than $4 million free of tax on eligible capital gains.
CPAs in private practice in Quebec face specific restrictions: according to the regulations of the CPA Order, they may incorporate, but their structure must comply with the Regulation respecting the practice of the CPA profession in a corporation . Gescos are permitted, but non-CPA shareholders are limited. Confirm compliance with your legal counsel before any restructuring.
A poorly managed Gesco structure can destroy the savings it is supposed to generate. Three major pitfalls are frequently encountered in tax audits:
The refundable dividend tax on hand (RDTOH) taxes passive income (interest, portfolio dividends, rents) at a high rate (approximately 50%), then refunds a portion of this tax when the company pays taxable dividends. If not properly tracked, the RDTOH balance is lost over the years and the tax is never recovered.
Your accountant must produce the T2-3 schedules (investment income) annually and track the determined and non-determined IMRTD accounts.
Since 2019, annual passive income of a Canadian-controlled private corporation (CCPC) exceeding $50,000 progressively reduces the OPCO's (Swiss Corporation for the Development of Professional Organizations) energy performance (EPO) cap at a rate of $5 of cap lost for every $1 of passive income above the threshold. At $150,000 of passive income, the EPO cap is completely eliminated.
A $1 million portfolio yielding 5% already generates $50,000 in passive income. At this stage, the strategy needs to evolve: Canadian preferred shares (with defined dividends), corporate life insurance, or other vehicles to limit the impact.
The TOSI (Tax on Split Income) rules - article to be published Q3 2026 , in force since 2018, impose the highest marginal rate on dividends paid to a family member who does not actively and regularly contribute to the company.
Several exceptions exist to prevent dividends paid to your spouse or adult child from being subject to the TOSI (Tax on the Self-Employed): a retired spouse (aged 65 or over), a child aged 25 or over with a 10% or greater shareholding in a non-professional company, regular active participation (more than 20 hours per week), etc. Strict adherence to these conditions is essential.
Bankeo connects you with a tax accountant specializing in corporate structures and incorporated professionals. Free service for entrepreneurs and professionals in Quebec.
Find my accountant
Setting up a management company is not something that can be done on a whim. The work combines several areas of expertise:
Most incorporated professionals find their accountant through informal referrals—colleagues, professional associations, banks. But this approach limits comparison. Bankeo allows you to choose a tax accountant specializing in corporate structures based on your profession and the level of complexity of your business.
If you are in the start-up phase and are assessing the relevance of incorporating and then creating a Gesco, also read our guide on the legal status of independent professionals .
Mettre en place et entretenir une Gesco demande un accompagnement comptable et fiscal continu. Pour situer ce que représentent des honoraires réguliers, le Baromètre Bankeo place la médiane autour de 3 000 $ par an (de 500 $ à 6 000 $ selon la complexité du dossier), et l'Indice Bankeo vous aide à choisir un professionnel vérifié, à l'aise avec les structures d'incorporation.
A management company (Gesco) is a powerful tax and estate planning tool for professionals incorporated in Quebec. When well-structured, it allows for the deferral of taxes on hundreds of thousands of dollars, the protection of accumulated assets, and the planning of an orderly succession. When poorly managed, it becomes a source of administrative complexity, tax pitfalls (reduced taxable income, passive income, tax on self-employment), and unnecessary recurring costs.
The number one success factor remains choosing an experienced accountant specializing in business structures for professionals. Before any restructuring, take the time to compare several firms, verify their experience with your professional body, and discuss your investment horizon.
To explore related concepts in more detail, see our Gesco entry in the Quebec 2026 accounting glossary , or the definition of the SPCC and the small business deduction (SBD) .
General information provided for guidance purposes only, reflecting current 2026 tax rules. It does not replace the advice of a CPA: always consult a professional for your specific situation.
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