Transfer of family businesses to the next generation

In this episode of Z Fiscaal, Hilde Marcou, Legal Specialist at VGD, discusses the new law of succession and the consequences it has for the transfer of family businesses to the next generation. We will go deeper into what has changed with the new inheritance law, whether the new inheritance law is fairer than the previous one, and how entrepreneurs can best transfer their businesses to the next generation.

Hilde Marcou

Overdracht van familiale ondernemingen naar de volgende generatie

From 1 September onwards, the law of succession will change. What are the consequences for entrepreneurs who want to leave their business to the next generation.

There is a change concerning the valuation of the shares. Under the current scheme, the value of the family company is clicked into place at the time of the donation. In the new regulation, when a donation is made in full ownership, the value is also taken at the time of the gift, but an index is applied to it.

In any case?

This index is applied from 1 September to all donations, both movable and immovable, as long as they are made in full ownership. If there is a reservation of usufruct, the settlement is made at the time of death, for example a donee, a child who works in a family business, works well in it and the value increases, then he or she will have to settle this value with his or her brother or sister at the time of death if the parents still have the usufruct.

Do you think the new law of succession is fairer when it comes to the transfer?

In the event that usufruct is reserved and the company has gained added value through the work of the recipient, it is not so fair. However, there may be a solution: one can make a declaration of retention before the notary, so that one continues to be covered by the current regime.

And then that index will not be applied?

And then the index is not applied and then everyone declares to agree with the value at the time of the gift. Even after 1 September, it is possible to conclude a specific notary's agreement on succession, in which parents and children agree to fix the value of the shares at the time of the donation.

So there are still ways to deviate from that regulation.

You often assist entrepreneurs in transferring their businesses to the next generation. How do you start? Is it with a photograph of the property as it is?

In order to make a good arrangement, it is necessary to map out everything. It starts with the parents. We check, whether they are married or unmarried, what their marriage regime is in order to know who owns what type property.

Do you sometimes have to rearrange or reorganise in order to achieve a good regulation?

This is often the case, as the operating company also often owns the property in which the activity is carried out. In that case, it may be advisable to split off the property into a property company or to transfer the business property. So that the child that continues the business gets the shares of the operating company and the non-active children the shares of the property company.

I suppose donating is the best choice?

Indeed, because a donation of family shares can be made at a zero rate. This arrangement was also introduced specifically to force the company manager to pass on the matter to the next generation during his lifetime.

Are there any conditions attached to this donation?

There are two main conditions: a participation condition and an activity condition.

And do they also apply to inheritance?

These are precisely the same conditions.

You are often in the middle of a family in which such a transfer takes place, is it sometimes easy or do you also have to solve conflicts?

Sometimes we do have to mediate, both between parents and children and between children themselves, because the child who gets the family business gets risk capital. We assume that things will continue to grow and flourish, but they can also change in the other direction. While someone who gets real estate or a sum of money or a portfolio of shares is more certain of that value.


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