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When is the best time to start transferring your family business?
The simple answer: earlier than you probably think.
A family business transfer involves much more than signing a gift or sale agreement. Among other things, you need to consider the future management of the business, the ownership structure, your own financial needs and the position of your other children.
The timing can also have a significant tax impact.
That is why ideally, you should start several years before you actually want to transfer the business. This gives you enough time to compare different scenarios and, where necessary, adjust your company or asset structure.
Preparing for a transfer doesn’t mean that you have to stop working straight away. Ownership, management and day-to-day involvement don’t necessarily have to be transferred at the same time.
1. First determine who is capable and willing to take over the family business.
In family businesses, it can sometimes seem obvious that the next generation will continue the business but that is not necessarily the case. Perhaps one of your children would like to join the business, while another is pursuing a completely different career. Perhaps several children are interested. Or maybe no one wants to take over the business.
So start by engaging in an open discussion about what everyone really wants.
Interest is not the only factor to consider. Competence is also important. A future business leader needs to develop sufficient knowledge, leadership skills and entrepreneurial skills to be able to run the business independently.
This takes time. It is therefore preferable to let a potential successor gradually build up experience. This can be done in different roles within the business but they can also start outside the family business.
2. Gradually make yourself less indispensable
Many family businesses are largely built around their founder or current business leader.
Customers call you directly. You know every supplier. Important decisions go through you and a large part of the commercial or technical knowledge exists only in your head.
This is a risk for both the continuity and the value of the business.
So start in good time to:
· delegate responsibilities;
· document processes;
· transfer customer relationships;
· strengthen management;
· give employees more decision-making authority;
· embed important knowledge within the organisation.
A business that can operate independently without its current owner is not only easier to transfer. It is usually also more attractive to an external buyer if family succession ultimately proves not to be an option.
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3. Have your family business valued
A proper valuation is an important starting point for almost any business transfer.
This also applies if you want to gift your business to your children and are therefore not asking a conventional sale price.
An objective valuation can help you, for example, to:
· determine the economic value you are transferring;
· treat different children fairly;
· establish a potential sale price;
· assess financing options;
· identify the tax implications;
· avoid family disputes.
Moreover, the value of a business is not necessarily the same as the final price someone is willing to pay for it. Factors including profitability, future cash flows, debt, property, market position and dependence on the current business leader can all affect its value.
4. Consider gifting or selling
A family business can be transferred to the next generation in various ways.
You can, for example:
· gift shares;
· sell shares;
· partly gift and partly sell shares;
· transfer the business in stages.
Which solution is most suitable depends on your personal situation.
Do you still need income from the business? Do you want to realise part of its value to fund your retirement? Do you want to avoid placing too great a financial burden on the next generation? Or do you want to transfer ownership while retaining certain control for the time being?
When making a gift, for example, techniques can be used that allow you to retain certain rights or income subject to certain conditions. However, the precise legal arrangements must be carefully tailored to your situation.
5. Look into the favourable tax regime for family businesses
Specific tax regimes apply in Belgium to the transfer of family businesses and companies. As gift and inheritance tax are regional matters, the exact rules depend on the relevant region.
In Flanders, family businesses and shares in family companies can, subject to certain conditions, be gifted with an exemption from gift tax.
Among other things, conditions relating to family shareholding and the company's economic activity must be met.
For a family company, for example, the donor must in principle own shares in full ownership representing at least 50% of the voting rights. Under certain conditions, a holding of at least 30% may also be sufficient if the donor exercises the required control together with one or two other shareholders.
In addition, the company must carry out a genuine economic activity.
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6. New rules since 2026: be aware of residential property
Since 1 January 2026, the Flemish favourable tax regime has been amended.
Residential property is now excluded from the favourable tax regime. In the case of a family business, the exemption therefore cannot be applied to immovable property that is primarily intended or used for residential purposes. Building plots are also considered residential property for the purposes of this regime.
In the case of a family company, the corresponding value of the residential property is taken into account when determining the value of the shares.
For example, does your company own an apartment, house or building plot alongside its operating activities? If so, this may affect the proportion of the gift to which you can apply the tax exemption.
This makes it even more important to review the structure of your business well before the transfer.
7. What if the family business is inherited rather than gifted?
Even if the owner dies before the business has been gifted, a favourable tax regime may apply in Flanders, subject to certain conditions.
Since 1 January 2026, the reduced rate of Flemish inheritance tax for qualifying family businesses and companies is:
· 3% for an acquisition in the direct line or between partners;
· 7% for an acquisition by other persons.
Here, too, residential property is now excluded from the favourable tax regime.
This means that from a tax perspective, gifting the business during your lifetime may be more advantageous than waiting until it is inherited, but the decision should not be based solely on the tax rate.
Control, income, family relationships and your own financial security should also be taken into account.
8. Also consider what happens after the gift
A tax-efficient gift is not necessarily permanently tax-safe once the deed has been signed.
The Flemish favourable tax regime also comes with conditions that must be met for a certain period after the transfer. For instance, the economic activity must be continued, and for companies, conditions also apply regarding the continuation of the activity and the annual accounts.
A transfer should therefore not be considered solely in terms of the situation on the day of the gift. You should also consider whether the planned structure and strategy will remain compatible with the conditions of the favourable tax regime in the years that follow.
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How do you treat children who do not join the business?
One of the most difficult questions in family succession is often not a tax issue but a family matter.
Suppose you have three children and only one of them wants to continue the family business. Does a fair division then mean that each child should receive one third of the shares? Not necessarily.
An equal distribution of shares can even result in children who are not actively involved in the business having significant influence over decisions they have little connection with. At the same time, the child who bears the day-to-day entrepreneurial risk has to take into account shareholders with different interests.
Treating everyone fairly doesn’t necessarily mean treating everyone identically.
Children who are not actively involved in the business can, for example, be compensated with other assets, property or cash. In other situations, different types of shares, a sale or other arrangements may be used.
A proper valuation of both the business and the family's other assets helps to compare different scenarios objectively.
Put family agreements in writing
During family discussions, everyone can sometimes seem to be in complete agreement. But circumstances change. Children have partners. The business grows. Someone unexpectedly leaves the business. Grandchildren are born or a shareholder wants to sell their shares.
It is therefore advisable to put important agreements in writing in good time and in accordance with the law.
Which documents are required depends on the arrangements you want to make and on your family and property situation. This often involves a combination of different documents, such as:
· amended articles of association;
· a shareholders' agreement;
· a family charter;
· a will;
· a gift agreement;
· a global inheritance agreement.
Each of these documents has its own purpose. Together, they can, for example, formalise arrangements concerning control, dividend policy, the transfer of shares, the role of family members within the business and the distribution of family assets.
A well-structured family arrangement therefore usually consists not of a single document, but of a set of arrangements that are legally coordinated with each other.
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What if no one in the family wants to take over the business?
A family business doesn’t necessarily have to remain within the family. If no suitable family successor is available, options include:
· a sale to the current management;
· a sale to an employee;
· a sale to a company in the same sector;
· a sale to an external investor.
Again, the same principle applies here: start in good time.
A business with transparent financial statements, clear processes, independent management and limited dependence on the owner is generally easier to sell. This keeps several options open, even if family succession is currently still the preferred scenario.
Also think about your own future after the transfer
With all the attention given to the business, one person is sometimes forgotten: the entrepreneur transferring it.
What do you need financially after your shares have been transferred? Do you have sufficient private assets? Do you want to continue receiving income from the business? Will you remain active for a few more years? Do you want to invest in other projects or stop working altogether?
A business transfer should therefore ideally form part of broader wealth planning. This involves looking not only at how to transfer the business but also at how to remain financially independent yourself.
A successful business transfer starts years in advance
The most successful family business transfer is rarely the one with the lowest tax bill alone.
The aim is to find a structure that allows the business to continue growing, gives the next generation sufficient scope, protects family relationships and ensures that you, as the person transferring the business, remain financially comfortable.
This takes time so don’t wait until retirement is just around the corner to start thinking about it. By considering succession several years in advance, you retain far more options for preparing the business, your assets and the next generation for the transfer.
Are you considering transferring your family business? Discuss your plans with your PIA adviser in good time. Together, we can map out the financial, tax and family considerations and work towards a transfer that suits both your business and your family.
