Knowledge base item

The tax requirements for business transfers within the family

There is a lot involved in a business transfer

In the family business there comes a time when you want to transfer the shares to the next generation. A very important moment and process. When youtransfer your business to a family member, there are several things to consider. It is not just a question of passing on the baton. There are various requirements for a business transfer within the family. One of the requirements is an independent valuation. But why is it importantto prepare an independent valuation?

On the one hand, the tax authorities facilitate a transfer within the family, for which the so-called BOR, business succession arrangement, has been set up. The tax authorities facilitate a partial exemption for the inheritance of business assets. On the other hand, the tax authorities are also critical. For them, it is important that the shares are not transferred too cheaply, because that way they lose tax money.

3 situations for business transfers within the family

The requirements of the tax authorities and thus the approach of the independent business valuation are different for each situation.

Company transfer within the family, but not to your children

In this case, the business transfer is similar to a regular sale to an external party. It is very important to orient on the business value. This can be done by making a business valuation. However, it is not necessary for the tax authorities.

Company transfer to 1 of your children and you have more than one child

First of all, it is important to make sure that an evaluation takes place so that no child is short-changed. You do not want to create discord within the family. There must be equal weighting. Secondly, the tax authorities take an extra strict view of business transfers to children.

Business transfer to the only child

The taxman then demands that an independent valuation is made, and that this is also well-founded. The tax authorities will check carefully whether you have kept the value low in order not to have to pay too much inheritance tax in the context of the transfer and would therefore be short-changing the tax authorities.

In all situations, it is important that you have an independent valuation carried out.

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Hans MinnaarFounder and director

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