Transferring a company to your family

TRANSFERRING A COMPANY FREE OF CHARGE

Generally speaking, transferring a company free of charge to one’s family makes it possible to organise a family transfer of a company for a lower amount of tax than in the case of a transfer for valuable consideration. The earlier the gift is made, the more attractive it is from a tax point of view.

When it comes to transferring a company free of charge, there are a number of possibilities between which the manager will have to choose. Indeed, the transfer of a company free of charge is not tax-free and various taxes have to be paid, but the tax pressure is more or less important depending on the situation and the country. Each case must be considered on its own merits. In any case, it is advisable to take action in good time.

ll donations are subject to a “general” tax system that applies regardless of the type of donation, but each also benefits from special provisions.

Taxes are due, these are transfer taxes which are reduced according to the age of the donor. In addition, there may be allowances that reduce the tax base in the event of a collective and individual commitment to retain the shares.

An exemption from capital gains tax is possible when the transfer of the family business (or its assets) does not exceed a certain amount.

TRANSFER OF A FAMILY BUSINESS FOR VALUABLE CONSIDERATION

Valuation: The valuation of the company during the transfer phase is difficult to achieve by the manager himself, who will always tend to see only the qualities and strengths of his company. An external agent is often best placed to offer an objective assessment of the company’s current situation and its prospects.

Legal and financial arrangements: Many more or less complex arrangements are possible in a family business transfer. In the context of a family succession, certain arrangements are particularly advantageous, such as the OBO (see the section on the website) and the creation of a holding company. The choice of arrangement should be made in consultation with specialists in this type of operation, such as chartered accountants, lawyers, consultants, etc.

Tax optimisation: If you wish to sell a company for a consideration, the seller must pay particular attention to the tax consequences. It is strongly advised to call on a professional in order to optimise the tax treatment of the transfer of the SME and benefit from an advantageous regime.

It is most often advantageous for the seller and the buyer to make the best use of the two methods of transfer by skilfully combining donation and sale, thus enabling them to benefit from the tax advantages linked to each method of transferring a company.

Actoria Conseil has extensive experience in all the financial, legal and technical areas of business succession and offers a range of services that are tailored to the requirements of family successions. The experts of Actoria Conseil accompany the family transferring the business in all the stages of the family business transfer, from the preparation to the post-succession support.