Issues relating to the transfer of a family business in Spain
The transfer of a family business is a key process in guaranteeing the continuity and stability of the company. In Spain, this process involves legal, fiscal and strategic aspects that must be well managed to avoid conflicts and ensure a successful transition.
Many family businesses fail in the generational handover due to a lack of planning or internal conflicts between heirs. To avoid these kinds of problems, it is essential to have a detailed knowledge of all the implications of the handover and to prepare a solid plan that allows the business to continue operating without interruption.
What is the transfer of a family business?
The transfer of a family business refers to the transfer of ownership and management of the company to the next generation or to an interested third party. It can be done through different mechanisms, such as sale, donation or inheritance. Some family businesses choose to keep the property within the family, while others may decide to sell it to a third party due to the lack of successors interested in continuing the business.
Family businesses represent a significant percentage of the business fabric in Spain, and their continuity depends to a large extent on adequate planning for the generational handover. Without a clear strategy, the business may lose value or face operational problems that hinder its viability.
Transfer methods
There are various ways of transferring a family business in Spain, depending on the relationship between the parties and the objective of the transfer:
- Sale of the business: ownership is transferred in exchange for an agreed price, either to family members or to third parties. This option allows the owners to make a financial profit and facilitates the continuity of the business under new management.
- Donation: the business is transferred without financial compensation, generally to a child or other family member. In this case, the new owner must assume responsibility for the management and guarantee the viability of the business.
- Hereditary succession: The business is transferred after the death of the owner, as stipulated in the will or inheritance law. It is essential to have a clear will detailing how the business will be distributed among the heirs to avoid disputes.
- Partial transfer: The entrepreneur retains part of the ownership while transferring operational control to another person. This option is recommended for a gradual transition in which the former owner can continue to advise the new manager.
Legal aspects of the transfer
The transfer of a family business is regulated by various laws in Spain. Firstly, it is essential to have a transfer contract specifying the terms of the transfer, the assets included in the operation and the obligations of both parties. In addition, in the case of leased businesses, the owner of the premises may have a right of first refusal, which means that they must be informed of the operation and can choose to acquire the business before a third party.
If the business has several partners, it is advisable to establish a partnership agreement that defines the conditions of the transfer, the responsibilities of each partner and the exit clauses. It is also necessary to update the information in the Companies Register, where changes in the ownership and structure of the company must be registered.
Tax implications of the transfer
The transfer of a family business has important tax implications that can affect both the seller and the buyer. Different taxes may apply depending on the type of transfer chosen.
In the case of a sale, the owner of the business must declare the capital gain in their Personal Income Tax (IRPF), although there are reductions and exemptions in certain circumstances.
If the transfer is made by inheritance or donation, it is compulsory to pay Inheritance and Gift Tax, the amount of which varies according to the autonomous region. In some regions, there are tax credits that can reduce the tax burden by up to 95%, which facilitates the transfer of family businesses to direct descendants.
Another aspect to consider is Value Added Tax (VAT), which is generally not applied when the business is transferred as a functioning economic unit. Furthermore, if the company is incorporated as a corporation, the transfer of shares may generate capital gains subject to corporation tax. Finally, if the transfer includes real estate, it is possible that municipal capital gains tax may have to be paid, the amount of which is calculated based on the value of the land and the length of time it has been owned.
Strategies for a successful transfer
To guarantee a smooth transition, it is advisable to follow certain key strategies. Advance planning is essential to avoid unforeseen events and to ensure that the process is carried out in a structured manner. It is also important to identify a successor with the necessary skills to take over the management of the business and to provide them with adequate training.
Another fundamental aspect is the valuation of the business, which allows its real price to be determined and facilitates negotiation with potential buyers. In addition, having financing options can be key for the new owner to be able to take over the operation without financial difficulties.
The support of specialised advisors can help resolve legal, tax and operational issues during the transfer process.
Asesoría Orihuela Costa, your business advisor
At Asesoría Orihuela Costa, we have a team of experts in commercial law, taxation and business management to help you transfer your family business. Our aim is to ensure a smooth transition, optimising the fiscal and legal aspects so that you can make the best decision.
If you are thinking of selling, inheriting or donating your company, we will advise you every step of the way. Contact us and find out how we can help you manage the transfer of your business safely and efficiently.
