Family transmission is failing in Europe

With only 10% of companies opting for family transmission, some countries are far behind their neighbors. Figures and analysis.

According to a report broadcast on March 5, 2018, 65% of business transfers in Germany take the form of family transmission. 76% of businesses are passed on within the family in Italy and even 88% in Sweden. However in France, only 10% of companies remain in the family fold after transmission.

Family transmission: a very heavy tax burden

Justine Weyl, journalist, points out the taxes that weigh on the family transmission may be the cause of this phenomena. Heavier than in other countries, the mechanisms that allow for tax relief are also very complex. Difficult to implement and discouraging. Reforms are therefore expected rapidly to cope with the retirement of many managers within the decade. Especially since there is a real demand from companies for measures to promote family succession.
According to a survey conducted by OpinionWay (2016):

• the company’s durability and long-term projects are the primary motivations of 50% of company managers
• for 70% of them, family transmission is an effective way to ensure this continuity
• and for 76% of them, a family member is even the ideal buyer to maintain the family character of the company

How to modernize family transmission ?

On March 14, 2018, Senators Claude Nougein and Michel Vaspart filed a bill to simplify the transmission of business. Their starting point is the following: the transmission of business is more perennial than the creation. However, the state tends to encourage the latter and to make the former more complicated. A paradox that the authorities in place would like to reverse. Because according to Claude Nougein, quoted by Le Monde du chiffre: “the bad transmissions cause terrible damage.

Their bill aims, in particular, to make the Dutreil Pact more flexible, a measure that provides for a 75% exemption from the transfer tax base following a donation or the transfer of company shares. Michel Vaspart said: “We want to modify the Dutreil Pact because companies and company councils do not use it much. There is a problem of information, of making the system more flexible. It should also be made more attractive.” Their text indeed plans to raise this tax exemption to 90%.

Contact our consultants at Actoria, experts in business transfers for over 25 years.
Source : France Info and Le Monde du chiffre