Transmission of company individual business: donation of the child to a family member

Verified 01 January 2024 - Legal and Administrative Information Directorate (Prime Minister)

You have the possibility to pass on your company to one of your heirs (child or family member) without asking for financial consideration. The donation of your company in its entirety is subject to the fulfillment of many formalities. The purpose of these formalities is to ensure the protection of the donor (you), the beneficiary (the buyer) and the creditors company.

The transfer of the fund to an heir can be carried out in several ways:

  • Simple donation : in the presence of a single child, this act allows you to transfer ownership of your business to an heir, without financial consideration.
  • Donation-sharing : if there are several children, this act allows you to distribute your property among the different heirs.
    One receives property from the company, the others receive gifts of property and money.
    If the goodwill constitutes the majority, or even almost all, of your assets, it is up to the beneficiary of this gift to compensate the other heirs by paying a sum of money, called payoff.

Please note

you can make the simple donation and the donation-sharing for your children and grandchildren, your brothers and sisters and your nephews and nieces. It is irrevocable and takes place before a notary.

The donation of your company implies the Universal Transmission of Professional Heritage (UPOH), i.e. the transfer of all the goods, rights, obligations and securities necessary for your business.

In other words, you're ceding the authorityactive the company (the components of the goodwill) and its indebted (debts, collateral).

Specifically, you are transferring the goodwill, which includes:

  • Clientele
  • Sign and trade name
  • Right to lease : right to take over from the holder of a commercial lease, occupy the premises and enjoy a right to renewal of the lease
  • Furniture, material and tooling : vehicles, machinery, computers, offices
  • Inventory and goods
  • Intellectual property rights : patents, software, trademarks, domain name
  • Money : cash fund, any cash held at the place of pursuit of the professional activity and the sums entered in the bank accounts dedicated to that activity
  • Employment and insurance contracts

In addition, a universal transfer of professional assets implies the transfer of these other elements:

  • Immovable property used for the activity (if you own it): including that part of the principal residence used for business purposes
  • Receivables : amounts owed by your customers but not yet paid
  • Debts : repayment of bank loans and operating debts (e.g. to a supplier). The assignment of a debt requires the written agreement of the creditor.
  • Collateral : pledge of the goodwill, pledge on the stock, for example.

Please note

the Universal Transfer of Professional Assets (UETP) is the default regime. Instead, you can make a non-integral transfer and give away items in isolation. For example, a donation from the only business without real estate and company debts.

The deed of assignment must be filed with the tax office of the registration without waiting if it is a privately signed document or, in a 1-month period after the sale is signed, if the authentic instrument.

You must submit to the registration department, on site or by mail, the following items:

  • Assignment of company in 2 copies
  • Trade Transfer Declaration Form in 3 copies
  • Form for declaring the condition of equipment and goods transferred in 3 copies
  • Payment of registration fees (in cash up to €300, by check or by transfer)

Declaration of transfer of goodwill or goodwill

Declaration of transfer of goodwill or goodwill: condition of equipment and new goods transferred

Who shall I contact

Warning  

Universal transfer of professional assets is not valid if you or your buyer have been personal bankruptcy. Such bankruptcy shall entail the prohibition of managing, directing, administering or controlling, directly or indirectly, any company or business.

When you make a donation, the tax authority collects a registration fee, a tax called gift tax.

Donation fees are paid by the purchaser.

However, you can decide to take them at your expense, the amount of duty shall not be considered as a donation supplement.

To calculate this tax, the registration department proceeds as follows:

  1. It takes into account the value of the gift.
  2. He then deducts from this first value the amount of any deductions.
  3. Finally, it applies a tax scale to the value found.

The amount of the rebate and the tax rate vary depending on the relationship between the donor (you) and the donee.

Example :

You give your son a goodwill worth €320,000No, that's the value of the donation. A donation to one of your children has 2 consequences:

  • A reduction of €100,000 applies, i.e. 320 000 - 100 000 = €220,000.
  • The scale of taxation shall be 20%.

Thus, you or your son (at your choice) will have to pay a transfer fee equivalent to 20% of €220,000, or €44,000 of rights.

Additional specific discounts are available in 2 special cases.

Pact Dutreil

The transmission of companies is facilitated by the Dutreil device which gives the right to a partial exemption donation rights, up to 75% the value of the company.

In other words, only a quarter (25%) of the value of the company will be taken into account to calculate the amount of the gift tax.

The Dutreil Pact applies if 4 cumulative conditions are respected:

  • You held the company for at least 2 years. No time limit is required if you created the company you sent or purchased it yourself free of charge.
  • Each recipient of the gift undertakes to keep the company and the assets allocated to it for Four years.
  • One of the beneficiaries must undertake to carry on the company's activities for 3 years from the time of transmission.
  • The main activity of the company is industrial, commercial, craft, agricultural or liberal, excluding any activity of management of its own movable or immovable property (e.g. SCI).

Early transmission

If you have under 70 at the time of transmission, a further reduction of 50% transfer duties apply to the taxable part of the donation.

The mechanism of early transmission is combined with the possible reductions and advantages of the Dutreil Pact.

The publicity formalities are mandatory and allow the transfer to be made enforceable against third parties.

Publication in the Bodacc or in a legal advertising medium

You have the choice between 2 means of publication :

  • Either publication in the Bodac
  • Either publishing legal announcements in a medium
Publication in Bodac

You have a deadline of1 month from the transfer of your company to publish a notice to the Official Bulletin of Civil and Commercial Advertisements (Bodac).

To publish your opinion, please contact (on-site or by mail) at commercial court registry on which the seat of your company depends. He will be responsible for sending the notice directly for publication on the dedicated website bodacc.

Who shall I contact

The notice must include following mentions :

  • Birth name, surname, first names and, where applicable, the business name of the transferor (you) and the transferee (transferee)
  • Professional activity and EPA code
  • Address of the principal establishment or, in the absence of an establishment, the address of the dwelling-place where the transferred company is fixed
  • Siren Number

In addition, the notice must be accompanied by a descriptive statement of your transferred professional assets. It contains the following information:

  • Overall value of the asset
  • List of collateral from which you benefit and the amounts of the claims secured by them
  • Aggregate value of liabilities
  • List of the assets of your professional property subject to a security right and, for each of the assets concerned, the nature of the security right and the amount of the secured claim

The descriptive state shall be established taking into account the last closed accounting year updated on the date of the transfer, or, for individual contractors not subject to accounting obligations, on the date resulting from the agreement of the parties.

Publish Legal Ads in Media

You have a deadline of1 month from the transfer of your company to publish an opinion in a legal listing support.

Once published, a certificate of publication the notice of amendment is issued.

Opposition by creditors

The creditors of the company shall have a1 month as of the advertisement for oppose the transfer professional heritage.

Creditors shall indicate, by registered letter with acknowledgement of receipt or by extrajudicial act transmitted to the purchaser's domicile, the amount and causes of the claim.

The judge shall examine the merits of the application and, where appropriate, order repayment of the debt. In that case, you are committed to all your movable and immovable property present and future (except for your principal residence).

On the other hand, opposition does not prevent the universal transfer of assets which takes place on expiry of the opposition period.

Immediate taxation of profits

The transfer of the company shall entail the immediate imposition of profits since the end of the last completed financial year until the date of transmission.

Profits will be taxed on income (IR) or business tax (IS), depending on your company's situation.

You must send a tax return to the tax department (SIE) in the 60 days from the publication of the assignment in a legal listing support.

2023 Income Statement 2022 - Industrial and Commercial Profits (BIC)

Non-Commercial Profits (NTB) - Controlled Reporting Regime

Who shall I contact

Value added tax (VAT)

The total transfer of the company entails the payment of VAT perceived.

If you are liable for VAT, you must make a VAT return to the company Tax Service (SIE) within a period of 30 days from the publication of the assignment in a legal listing support.

This period is extended to 60 days if you are placed under the simplified tax system.

However, this transaction is exempt from VAT:

  • If the sale is for theentirety of the goodwill elements
  • What if the buyer is itself liable for VAT.
Who shall I contact

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