If you do not make use of the BOR for inheritance tax purposes (“BOR-SW”), gifting a substantial share interest to a proposed successor will trigger gift tax on the fair market value of those shares. Assuming that the proposed successor is your son or daughter, the parent-child gift allowance for 2021 is EUR 6,604. Gifts with a value in excess of this allowance are taxed at a rate of 10% up to an amount of EUR 128,751 (2021) and at a rate of 20% over and above EUR € 128,751 (2021).
If the BOR-SW applies, the business assets acquired (at fair market value) up to an amount of EUR 1,119,845 (2021) are 100% exempt, and any surplus is 83% exempt. As for the tax due on the taxable part (i.e. 17% of the surplus), an interest-bearing deferral of payment can be applied for for a period of 10 years.
The BOR has been under fire from the tax authorities and politicians for some time now. The Dutch Finance Secretary recently suggested that adjusting the BOR would be a matter for the new coalition government. The results of an evaluation of the BOR are expected to become available at the end of 2021. It is expected that the new government will propose changes on the basis of that evaluation. So there is still some uncertainty about the shape and size of any future BOR.
If you are considering transferring your family business to the next generation in the (near) future, it would be advisable not to wait any longer and initiate the necessary steps. Are your children already on your payroll? This is one of the conditions for the BOR to apply for personal income tax purposes. We have already supported many families with their business succession planning and would be happy to help you too. Please contact us for a free introductory meeting.