The business succession scheme
Continuity of your family business
The Business Succession scheme ensures that Dutch family businesses can remain in the family. Without this tax facility, inheritance tax and gift tax plus personal income tax will first have to be remitted to the Dutch tax authorities before the next generation can start running the business.
Job retention
Family businesses don’t only strive for growth, but are also good to their employees. Often, they provide significant value to the local community. If the family business is sold to a foreign investment company, this can risk the value it provides to the local community.
Maximize tax benefits
Under the Business Succession scheme, a large part of the value of the business assets are exempt from inheritance tax and gift tax and a direct personal income tax claim is avoided. This means your family may save hundreds of thousands to millions of euros.
How does the business succession scheme work?
The Business Succession scheme is a tax facility found both in personal income tax and inheritance tax and gift tax. The entire process can take several years and therefore requires a well-considered approach and good preparation.
A successful process already starts before you actually want to transfer the business. In this preparatory stage you optimize the business structure and ensure you comply with all the conditions. By using the Business Succession scheme, at the time of transfer – whether that’s by way of a gift or an inheritance – a large part of the value will be exempt from inheritance tax or gift tax. After the business has been transferred, it must also be continued for several years and the shares must be held for several years if the business is acquired by means of a gift.
Business Succession scheme: the latest news
The Business Succession scheme is regularly amended, making the tax facility increasingly complex. Families who wait too long with arranging a business succession or haven’t adequately prepared for it, will find it costly to rectify this or may have to wait years before they can again restructure. Keen to learn about the latest developments and new challenges?
The six most important conditions for the Business Succession scheme
1. Minimum age 21 years
Shares in the family business can only be gifted to someone who is at least 21 years old. This has made the employment requirement redundant.
2. Operating assets
The assets that you transfer must qualify as business assets according to the tax definition for this. In practice, there is a fine line between running a business and investment, and this may lead to questions being raised by the tax authorities.
3. Holding requirement
The gifter must have held the business assets for at least five years before the transfer. Seemingly small or simple changes to the day-to-day business operations may have unexpected major consequences for this requirement. Upon the death of the gifter or testator, this period is at least one year.
4. Prenuptial agreements and wills
Prenuptial agreements and wills that are intended to protect your family assets may unintentionally preclude the application of the BOR. The legal agreements that you and your partner make regarding your assets therefore require additional attention if a business succession is to be successful.
5. Continuation requirement
In the case of a gift, the recipient must continue the business for at least three years after the transfer – since 2025 shortened from five to three years – under the conditions stipulated for this. This strict requirement will influence the strategic decisions of both the current and next generation.
6. Strategic points to consider
This entails designing your share structure and governance in the best way possible to get the most out of the scheme, including all the tax requirements and practical preparatory aspects.
Why Meijburg for your business succession?
The Business Succession scheme is complex and subject to change. That’s why Meijburg has employed specialists who spend a large part of their time on business succession. The BOR is not just something they do in addition to their other work, but they follow all the relevant developments closely and know every pitfall.
Everything under one roof
At Meijburg we combine tax advice and legal expertise. From strategic analyses to notarial documents – everything stays within one trusted team. That’s why you don’t have to go looking for external civil-law notaries or lawyers for the legal settlement of your business transfer.
International network
Families are increasingly running their businesses at the international level, creating complex tax situations. For example, foreign investments or children who emigrate. Thanks to the KPMG network spread across more than 80 countries, we can engage colleagues with local expertise.
More than tax advice
Business succession involves more than just tax aspects. For example, we also advise on governance, and family values that can be laid down in a family constitution. In doing so, we actively involve the next generation, because they receive shares governed by certain conditions and a specific family legacy.
Need customized BOR advice?
Each family situation is unique. Whether you’re considering passing control onto the next generation or already have specific plans, we’d be happy to discuss the best strategy for your specific situation with you.
Links
Frequently asked questions
What is the Business Succession scheme?
The Business Succession scheme is a tax facility under which a large part of the business assets are exempt from inheritance tax and gift tax when transferring the business within the family. The aim is to safeguard the continuity of family businesses.
What happens if you wait too long with business succession?
Waiting too long preparing for a business succession may lead to a sub-optimal application of the BOR, which means you may end up paying hundreds of thousands of euros more in tax. In a worst-case scenario, you may not be able to apply the BOR at all and will have to pay the full tax rate. Rectifying this is costly and sometimes you may have to wait a few years before you can restructure again.
