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Lodging your tax return

Tax on the inheritance of a company

So, if I inherit a company in the Netherlands, do I have to pay inheritance tax or gift tax?
Yes, if you inherit or receive a business as a gift, you pay tax. How much? That depends on the value of the company. And sometimes you get an exemption.

If you continue the business, you can get an exemption from inheritance tax or gift tax
For example, if you take over the family business from your parents. This scheme is called the business succession scheme(1). You then pay less or no tax.

When can you make use of the business succession scheme?

  • The business must be an active, ongoing business. If it only concerns investments, this is not covered by this scheme.
  • Furthermore, the previous owner must have owned the company for at least 5 years, although if the owner has deceased, this period is only one year.
  • Finally, the company must not stop shortly after the takeover. You must continue with the company’s activities for at least 5 years. Have you acquired shares in a company? Then you must remain the owner of those shares for at least 5 years.

How do you make use of this business succession scheme?
You have to file a gift tax or inheritance tax return and state that you want the exemption. We strongly advise you to engage an advisor if you are taking over a company. They can also help you determine the value of the company for inheritance or gift tax.

Are you the heir of an entrepreneur? After the death of the entrepreneur, you will have to deal with various tax issues, such as inheritance tax and substantial interest. An executor can provide you with good services in settling the inheritance.

Substantial interest in Dutch law
Owning at least 5 percent of the shares of a BV company or NV is called a substantial interest. In the event of death, the substantial interest passes on to you as heir. You do not have to file a tax return for the profit from a substantial interest. This only applies if the shares become part of your private assets, and you are liable for tax in the Netherlands.

If after you acquire the shares you decide to emigrate or place the shares in another (holding) company, the tax authorities will consider this a taxable event.

Inheritance tax
As soon as the estate has been settled, you as heir must settle on the inheritance tax (a tax on the value of the shares or depository receipts thereof). With a high business value, this often means a large amount per heir. This can endanger the survival of the business if the inheritance tax is paid from it. The law provides for deferment of payment under certain conditions. Then this tax must be paid in 10 equal annual installments.

Continuing the business
Do you want to continue the inherited business? If you take advantage of the business succession facility, you do not have to pay tax on much of the value of the business assets. View more information about the business succession facility.

Sources:
https://ondernemersplein.kvk.nl/belastingzaken-bij-erven-van-een-onderneming/

https://www.bedrijfsopvolging.nl/kennisbank/bedrijfsopvolgingsregeling-borbof/

https://www.erfwijzer.nl/onderneming.html

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