Business succession scheme

To make business succession cheaper in the event of gift or death in terms of the tax payable, regulations have been included in the Income Tax Act and the Inheritance Tax Act. These only apply as far as active business assets are concerned. The schemes do not apply to investment assets. Meanwhile, a property portfolio is also regarded as active business assets under circumstances.

For income tax purposes, these regulations ensure that:

• no income tax needs to be paid on hidden reserves and goodwill in the case of a sole proprietorship or vof;
• in the case of a BV or NV, the AB claim can be carried forward. As a result, no tax has to be paid on the difference between the value at that time and the acquisition price of the shares.

For inheritance tax and gift tax, this arrangement ensures that:

• over one million of the value is exempt from tax;
• of the excess 83 per cent is exempt.

Because these are very far-reaching facilities, it is sometimes interesting to return to active business. However, to make use of these tax facilities, several conditions must be met. For this reason, it is important to seek timely advice.

For more information on business succession and the tax facilities, please contact us. We will be happy to help.