Business succession facilities

Business succession scheme

The transfer of business assets by donation or succession, may result in the levying of gift or inheritance tax. To avoid that the continuity of a company is jeopardized by this, the business succession scheme (bedrijfsopvolgingsregeling, BOR) can be used. As a result, no or less inheritance tax or gift tax is due.

Transfer facilities

The transfer of business assets often leads to the levying of income tax. There are various transfer facilities (doorschuifregelingen, DSR) which ensure that this levy is deferred in certain situations, so as not to jeopardize the continuity of the company. One of those transfer facilities is specifically aimed at granting a substantial interest (doorschuifregeling aanmerkelijk belang, DSR ab). A substantial interest is, simply put, an interest that represents at least 5% of the (class of) shares in a company.

Restriction on qualifying substantial interests

From 1 January 2026, the BOR and DSR ab are being restricted to direct and indirect equity interests of at least 5% of the total issued share capital. Only ordinary shares still qualify, for which it is not of importance whether those shares give voting rights. Smaller interests, options, profit-sharing certificates and tracking stocks are excluded from the schemes. A usufruct or bare ownership of ordinary shares may still qualify. The purpose of the amendments is to limit the schemes to shares with sufficient entrepreneurial risk.

Tip

The BOR and DSR ab schemes will continue to apply to preference shares issued in the context of a phased business succession scheme.

Corrections to previous amendments in the law

As from 1 January 2024, amendments were made in the BOR and DSR ab schemes that have undesirable effects. For example, the existence of foreign capital may lead to an incorrect calculation of the exemption in the BOR scheme or to negative qualifying business assets. In order to correct this, the law is being amended slightly in some sections.

Holding and continuation requirement of business succession scheme (BOR)

The BOR scheme can only be applied if an acquirer continues operating the business for five years. This time limit is being changed to three years. Bottlenecks in the holding and continuation requirement relating to amendments in the legal shell of a company, such as the transfer from a sole proprietorship to a private limited company (besloten vennootschap, bv), are being resolved. If the institutional entitlement to the company does not increase (holding requirement) or decrease (continuation requirement), this may not be an obstacle for application of the BOR scheme. The requirements for mergers etc. will also be eased, so that no new holding term commences if the economic entitlement to the company remains the same.

Tip

Contrary to previous reports, the shorter continuation term will already apply to acquisitions occurring from 1 January 2025 (and therefore not 2026).

Take note!

Proposals to solve the various bottlenecks will take effect as of 1 January 2026.

Heavier holding requirement for old-age pensioners

The holding term in the BOR scheme will be extended with effect from 1 January 2026 for elderly testators and grantors. This does not apply to companies started by a testator or grantor at the latest within two years of reaching the statutory retirement age. In the case of a testator, the holding term is extended by six months per year that the testator is two years older than the statutory retirement age at the time of death. For a grantor, the holding term is extended by six months per year that the grantor is more than six years older than the statutory retirement age at the time of the donation.

Repeated use of business succession scheme (BOR)

Companies are sometimes transferred several times within a family (and sometimes also through third parties) in order to achieve a non-taxable transfer of assets. For example, parents apply the BOR scheme when granting a company to a child. The company is bought back at a later stage and granted once more under the BOR scheme. A measure is being introduced with effect from 1 January 2026 which excludes the BOR scheme in situations where the company has already been held by the acquirer at any previous time. The exclusion may not exceed the amount of the purchase price for the business assets.

Take note!

The antiabuse measure will be wide-ranging and will also apply, for example, if the company's activities have changed or the legal form has been amended.

Diluted income and small family interests

It was previously announced that with effect from 1 January 2025, the dilution scheme for the BOR and DSR ab schemes, as well as access for small family interests to the BOR scheme, would be extended. These amendments required approval from the European Commission. The effective date has therefore been postponed to a time still to be determined.

Preference shares

Preference shares are often issued in the context of a business succession, but the definition of preference shares often leads to uncertainty. It is proposed that preference shares be designated as priority shares in respect of profit appropriation or liquidation proceeds. This means that the risk of a preference share is lower than the risk of an ordinary share. The priority must, however, be essential. This is not the case, for example, if the paid-up premium has priority and the nominal paid-up capital does not.

Tip

The proposed definition is broadly in line with the Tax Administration’s current practice. The impact of this change is therefore limited.

Take note!

The definition will be codified in Dutch tax law with effect from 1 January 2026 and will still be developed further.

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