Taxing family business transfers — a world of differences
For business families and governments around the world, KPMG Private Enterprise’s Global family business tax monitor has regularly delivered insightful information on the implications of transferring the family business to the next generation, both through gifting during the owners’ lifetime, including on retirement, and through inheritance. Since the first edition in 2014, which covered 23 European countries, the report now spans 57 countries, territories and jurisdictions worldwide.
In this latest edition, advisers from KPMG Private Enterprise in each covered country, territory and jurisdiction offer a snapshot of the domestic tax rules governing family business transfers — see the summary notes at the end of the report for details. These advisers also provided a detailed analysis of the outcomes of two case studies: one in which the shares in a family business are transferred on the owner’s death (inheritance) and a second in which the transfer happens during the owner’s lifetime (gifting).
As the case studies in this report show, there are significant disparities between tax regimes on:
• whether a specific tax relief is available and what conditions must be met to gain that tax relief; and
• whether taxes are applied on inheritances and family gifts directly or through other taxes and charges, such as capital gains taxes and stamp duties.
Domestic tax rules are only one factor helping to drive succession, investment and business planning. For broader context, this year’s report surveys the lay of the land for today’s business families, with insights on some of their biggest risks and priorities distilled from interviews with KPMG Private Enterprise leaders and advisers in selected countries, territories and jurisdictions.
Top global trends influencing business family planning
Three emerging trends that business families should consider as they develop their long-term plans for their businesses and their wealth:
Branching out — More business families are globalizing, and family members are more globally mobile, assets being diversified geographically, and businesses transitioning to greener models.
Building up — KPMG Private Enterprise advisers are seeing increased rigor in the management of family wealth in many countries, territories and jurisdictions, with more reliance on family offices and more focus on governance.
Giving back — Business families have long played a philanthropic role, but the sharpening focus on transparency and environmental, social and governance (ESG) reporting (for the family business) is compelling many of them to be more public about their contributions.
If you have any questions or would like to discuss this topic further, please reach out to
Olaf Leurs or Maarten Merkus.