Gift and inheritance tax: the family company

Anchoring the family company in the family is supported by the legislator through particularly advantageous tax systems for gift and decease. Preservation of these advantageous schemes is subject to a number of conditions, some of which must still be fulfilled many years later.

Advantageous tax regime

When a family business is donated, no gift tax is due.
In case of inheritance of the company, a rate of 3% applies if the company passes to heirs in the direct line or to the partner, and a rate of 7% in all other cases.

A number of conditions must be met beforehand. For example, it must be family businesses with a real activity; real estate companies are therefore excluded.
But other conditions still have to be met after the gift or inheritance. For example, real economic activity must be continued for at least three years and a capital preservation condition applies.

Preservation of capital

One of the conditions that is sometimes lost out of sight of is the condition of 'capital preservation'. Under the old company legislation, this was a clear fact: the share capital was not allowed to decrease through distributions or repayments after the gift or death. But the new company law, which has been applicable since 1 May 2019, also includes capitalless companies. The condition of capital retention therefore had to be adapted to this new situation.

NVs still have a share capital under the new Companies and Associations Code. Nothing changes for them. As under the old legislation, the capital of an NV may not drop through distributions or repayments during the three years after the death or after the gift.

However, if you have a BV – whether it is a converted BVBA or a new BV –, the capital retention condition no longer refers to the capital of the company, but it is required that the 'equity' of the company does not decrease due to distributions or repayments ‘below the amount of the contributions made at the time of death or the deed of gift, as shown in the annual accounts'.

Therefore, only the annual accounts are considered. This means that shareholders' equity could drop below that limit during the financial year, as long as it is restored by the end of the financial year, when the annual accounts are drafted.

The concept of 'equity' is also broader than the concept of capital, which means that a distribution of tax capital is possible if, on the other hand, there is a corresponding increase in equity.

3 years

The 3-year term is no longer what it used to be. After all, the annual accounts of the company are examined to determine whether there has been a decrease in shareholders' equity with regard to the date of death. This means that the equity must at least remain at the same level in the 3 annual accounts after the death or the gift.

Also note that only a decrease in equity as a result of a distribution or repayment of equity is considered. If the equity of the company decreases due to losses, this has no impact on the exemption or reduction.


If the conditions for the exemption (in the case of a gift) or reduction (in the event of death) are not met or the conditions are no longer met, then the exemption or reduction will in principle not be granted or will be lost completely.

This is not the case with a decrease in equity: there is then 'only' a proportional decline in the favorable regime. As a result, the amount of the distribution or repayment will be taxed at the normal rate, to the extent that the equity falls below the lower limit.

Liquidation reserve

Many entrepreneurs set up a savings account in their company for their retirement. There is also a special tax system for that piggy bank, better known as the liquidation reserve. Keep in mind that the liquidation reserve is not part of the contributions, but is part of the equity. If such a reserve is therefore paid out, it may happen that the shareholders' equity falls below the amount on the date of gift or death. In that case, the exemption or reduction will effectively be lost.