Business succession rules have become more favorable over the past few years. The legislator believes that the tax treatment of business transfers should not be an obstacle to desired business transfers. With regard to tax aspects of a business transfer, you should mainly think of Income Tax, Gift and Inheritance Tax, Turnover Tax (VAT) and Transfer Tax.
Profit from the business includes all benefits that accrue to you as an entrepreneur from the business. As soon as the link between you and your company is broken, the company is on strike. In that case, you will owe income tax on the discontinuation profit, consisting of the hidden reserves, tax reserves and any goodwill. While filing taxes for small business with no income the right tax calculator is also there.
Two matters are important from a tax point of view in a business transfer
After your death, two things are important from a tax point of view: the death benefit and the retirement reserve.
The death benefit
For income tax purposes, the so-called death profit must be settled: the equity of your company at the time of death. The death profit can be compared to the strike profit. The discontinuation deduction may still apply in whole or in part. If your heirs continue the business, it may be that there is no need to settle for tax purposes. This is the case if they (also) continue the company directly. In that case, the person who continues the business will be deemed to have taken your place for the purpose of determining the profit. This is called roll over. It is not required that all heirs continue the business, it is sufficient for one or more heirs to do so.
The old-age reserve
Your retirement reserve will be canceled upon your death. This must then be settled for tax purposes. But if your partner continues your business and takes over the retirement reserve, this is not necessary.
At the moment of discontinuation, a peak in the levy may arise due to the past untaxed increases in the value of company assets. Tax facilities have been created to prevent liquidity problems. When a substantial interest is transferred, there is a profit from a substantial interest on which income tax is payable.
Gift tax is levied at the acquirer if he obtains at a price that is lower than the fair market value. This is not very common as it is usually transferred at a business price. Inheritance tax is calculated on the value of what your heirs receive from your estate (assets minus debts).
Tax aspects of business transfers: Who inherits what?
If you run your business in the form of a sole proprietorship, partnership, general partnership or limited partnership, your heirs inherit (part of) the business assets. If your company is a BV, your heirs inherit the shares in the BV. The value of the business assets or shares is part of the estate.