Proposition to raise ownership threshold BOR

April 25, 2024

The cabinet intends to limit fiscal benefits for business succession to larger ownership stakes only. At the same time, requirements for the continuation of the business by successors are set to be relaxed. This is outlined in a draft bill for which the cabinet has initiated an online consultation.

The focus of this draft bill is primarily on the Business Succession Scheme (BOR) within inheritance and gift taxation. The BOR provides substantial fiscal advantages to successors inheriting or receiving shares in a business: in 2024, acquisition up to approximately €1.3 million is completely exempt, with an 83% exemption beyond that amount. Earlier, the cabinet introduced changes to business succession schemes, effective from 2025. These changes include raising the exempted amount under the BOR to €1.5 million, with a reduction to 75% beyond that threshold, which are already enshrined in law.

Common shares

Additionally, the cabinet aims to introduce further adjustments with a focus on facilitating genuine business transfers. An online consultation has been initiated on these proposals, running until May 19. One of the measures involves limiting which shares qualify for fiscal benefits. In essence, successors will only be eligible for the business succession facilities for common shares in a business. Moreover, the benefits will only apply to ownership stakes representing 5% or more of the total issued capital.

This intervention implies that, for example, share options, profit shares, and significant interests based on the 'carry-along' provision will be excluded starting from 2026, as outlined in the draft bill. Preference shares—those granting additional rights, such as in profit distributions—will only be counted if issued as part of a phased business transfer. This tightening applies not only to the BOR but also to the Deferral of Capital Gains Tax (DCGT) in income tax. The DCGT allows those transferring a business to defer the tax claim to successors.


In addition to these limitations, the cabinet proposes several relaxations in the BOR. Conditions apply for utilizing the scheme: the ownership requirement and the continuation requirement. In the case of inheritance, the deceased must have owned the shares for a minimum of 1 year, and for gifts, it's 5 years. Moreover, successors must continue the business for at least 5 years, otherwise, the right to the BOR is forfeited. In practice, these requirements can be quite cumbersome. If successors find it prudent to partially sell the business within 5 years or enter into a joint venture, it could jeopardize their BOR exemption. Addressing complaints from practice, the cabinet proposes shortening the continuation requirement from 5 years to 3 years, effective from January 1, 2025. The minimum ownership requirements remain unchanged. The ownership requirement for inheritance is already short, according to the cabinet, and shortening the ownership requirement for gifts is expected to lead to more improper use. However, the plans also include proposals to make restructuring easier for successors, without immediately jeopardizing their fiscal benefits.

Higher ownership requirement

Furthermore, the bill includes several measures to counter improper use of the BOR. The cabinet is taking action against a practice known less than favorably as 'walker investments'. In brief, wealthy individuals at advanced ages convert their assets into business assets. As a result, the transfer of that wealth falls under the BOR, though there is essentially no business transfer occurring. The cabinet deems this 'obviously highly undesirable'. To complicate this practice, the cabinet proposes extending the minimum ownership period for the BOR for those who have surpassed the retirement age by a few years. In the draft proposal, this leads to the table below, where the standard periods of 1 year for inheritance and 5 years for gifts apply for up to two years after the retirement age.