Business Succession

Anyone who prepares the succession in a structured way keeps the substance for the next generation. Anyone who addresses it only shortly before the handover often loses a considerable part to tax. We support family businesses, GmbH owners and founders over several years.

In brief

• Timing decides: ideally 10–15 years ahead — the gift allowance renews every ten years
• Allowances every ten years: €500,000 spouse, €400,000 per child; rates 7–30 % in tax class I
• Relief: standard relief (85 %) needs 5 years' holding + 400 % payroll; option relief (100 %) needs 7 years + 700 %
• Administrative assets (securities, let property, financial means above 15 %) can quickly jeopardise the relief
• Share deal vs asset deal: a share deal from the holding costs ~1.5 % (§ 8b KStG), from private assets 25–28 %, an asset deal with distribution ~47 %

Why the timing decides

Ideally ten to fifteen years in advance. The gift allowance is granted anew every ten years, so several transfers move far more tax-free than a single one. The relief (§§ 13a/13b ErbStG) requires a five- to seven-year holding period after the handover, and structural adjustments take years before they reliably take effect.

Inheritance and gift tax

Three factors determine the burden: the allowances every ten years (€500,000 spouse, €400,000 per child), the rates by tax class (7–30 % in class I) and the valuation. For a family business of five million euros passing to one child, the tax without relief is roughly €0.9 million; with option relief (100 %) it can fall to zero, with standard relief (85 %) to the residual tax.

Relief and administrative assets

Standard relief (85 %) requires five years' holding and 400 % payroll, option relief (100 %) seven years and 700 %. Administrative assets — securities, let property, financial means above 15 % of the company value (the financial-means test) — can quickly jeopardise the relief. The balance sheet structure one to two years before the handover is therefore decisive.

Structuring routes

Anticipated succession uses allowances repeatedly; a gift with a reserved usufruct reduces the gift value. On a sale, share deal and asset deal are worlds apart: a share deal from the holding costs around 1.5 % (§ 8b KStG), from private assets 25–28 %, an asset deal with distribution around 47 %. For an MBO or external sale we sit at the table on the tax side — relevant, too, for a founder exit.

Typical engagements

• Family businesses before a generational change
• GmbH owners and founders with an exit perspective
• Handovers to internal management (MBO)
• Structuring via a holding or family foundation