Family-owned firms under threat from death transfer taxes

Date: 17/05/01

FIVE million businesses are under threat from transfer taxes when their owners die or pass on their holdings, a coalition of family-owned firms has warned.

The European Group of Family Enterprises (GEEF) raised the concern as Commissioner Erkki Liikanen prepares to put pressure on EU member states to bring transfer taxes into line with lower rates in countries such as Belgium, Spain and the UK.

"If families have to drain money from their businesses to pay taxes it can kill the firms, as well as the jobs they support," said GEEF President Mariano Puig.

The Commission urged member states to take account of the effects of taxes such as gift and death duties on smaller businesses in a 1998 communication. It predicted that transfer taxes would force the closure of around 1.5 million smaller firms. Now GEEF figures show that one-third of family businesses - around five million - have owners in their 50s and 60s who will soon have to contemplate a transfer of ownership.

Family-owned companies account for around 65% of employment in the EU, according to the organisation, while transfer taxes range from between 34% and 70% across the Union.

An interim report to be published next month by the Commission's expert group on company transfers will identify the countries that continue to charge higher rates.

The report will reveal that while Spain and the UK have increased their rebates on inheritance and gift tax to 100%, there are countries that still impose hefty penalties - including the Netherlands, which offers a reduction of just 25% on the full duty.

Five million businesses are under threat from transfer taxes when their owners die or pass on their holdings, a coalition of family-owned firms has warned. The European Group of Family Enterprises (GEEF) raised the concern as Commissioner Erkki Liikanen prepares to put pressure on EU member states to bring transfer taxes into line with lower rates in countries such as Belgium, Spain and the UK.