Transferring a family business is a pivotal step for Walloon entrepreneurs. Beyond the emotional aspect, it involves strategic decisions on taxation, governance, and preserving the family vision. While selling the company outright remains an option, intracompany or intrafamily transfers are often more tax-efficient and legacy-friendly.
This guide explores 4 powerful strategies to transfer your family business, minimize taxes, and ensure continuity across generations.
1. Civil Company or Simple Partnership: Structured Family Governance
A civil company or simple partnership is a flexible family governance tool without its own legal personality.
Principle: It gathers family members around the ownership of business shares, allowing for formalized decision-making.
Key Benefits:
- Establishes clear governance rules for the family
- Facilitates collective management and smooth intergenerational transfer
Drawbacks:
- May generate additional management costs
- Potential conflicts in case of family disagreements
Tax Perspective: This structure is usually tax-neutral, but careful management is required to avoid requalification.
Is it suitable for all family businesses?
Not always. This option is ideal for real estate or financial asset management, offering flexibility and tax transparency. However, it is not always suitable for commercial companies or active holding structures. In these cases, a Limited Company (SRL / BV) is often better, allowing commercial activity and flexible governance.
Long-term viability
It can last for decades, with bylaws binding all partners. However, regular updates are recommended to reflect changes in the family or business structure.
2. Business Donation: Immediate Transfer with Tax Advantages
A business donation allows fast transfer of ownership to heirs with favorable tax treatment in Wallonia.
Main Benefit: In Wallonia, share donations via manual or bank transfer can be exempt from donation tax if strict conditions are met.
Advantages:
- Fast and straightforward transfer
- Favorable tax treatment
Drawback:
- Risk of losing control without a shareholders’ agreement or governance mechanisms
What are the specific conditions to benefit from gift tax exemption in Wallonia?
To benefit from the zero rate in Wallonia for a business donation, the transfer must be carried out by notarial deed and comply with specific formal requirements. The transferred business must conduct a genuine economic activity: this can be a sole proprietorship (industry, commerce, liberal profession, agriculture, craft, etc.) or securities—shares, units, certificates, or receivables—of a company active within the European Union.
The business must also employ staff, whether salaried employees or family self-employed workers. The beneficiaries, in turn, commit to maintaining the activity, employment, and capital for at least five years after the donation. Finally, certain ownership conditions must be met, including a minimum participation threshold (see the next question). If any of these obligations are not fulfilled within the required timeframe, the exemption is revoked, and the gift tax becomes payable.
Is there a minimum or maximum participation threshold to benefit from these schemes?
Yes, there is a minimum threshold but no maximum. Specifically, the donation of securities must involve at least 10% of the company’s voting rights. When the transfer involves less than 50% of the voting rights, it is also recommended to conclude a shareholders’ agreement.
In the case of a sole proprietorship, no minimum value threshold is imposed. Lastly, there is no maximum value: the zero rate applies regardless of the amount of the business or securities transferred, provided that the legal conditions are met.
3. Property Dismemberment: Gradual Transfer While Retaining Control
Property dismemberment separates usufruct (voting rights and dividend income) from bare ownership (control over shareholding and sometimes voting rights depending upon statutory limitations).
How it works:
- The business owner keeps usufruct (dividends and voting rights depending on statutory limitations)
- Heirs receive bare ownership, preparing for future full ownership
Advantages:
- Maintains economic and decision-making control
- Donation taxes are calculated only on bare ownership, reducing the taxable base
Drawbacks:
- Complex in case of resale or restructuring
What concrete rights does the usufructuary retain?
The usufructuary retains the right of use (usus), the right to collect income (fructus), and often the right to vote, if provided for in the deed. They may participate in decisions at general meetings and receive dividends, but any transfer of the usufruct or the bare ownership requires the agreement of both parties.
What are the tax advantages of dismemberment in matters of gift or inheritance?
Gift or inheritance taxes are calculated only on the value of the bare ownership, which is significantly lower than the full ownership value. This results in a reduced taxable base, thus optimizing the overall taxation of the transfer.
However, certain conditions must be met to retain these benefits. The dismemberment must be properly formalized from the outset (with the value of the usufruct and the bare ownership clearly separated) and must be lasting. The tax authorities will examine in particular the initial Valuation conditions and the behavior of the parties throughout the entire arrangement.
4. Share Certification via a Private Foundation: Separating Voting and Economic Rights
Share certification involves creating a private foundation to hold company shares.
Family members receive certificates granting economic rights (dividends, sale proceeds), while voting rights remain with the foundation.
Advantages:
- Clear separation between decision-making and income distribution
- Stronger family governance stability
Drawbacks:
- Rigid mechanism in case of family conflicts
- Complex legal and tax framework
Which Strategy Is Best for Your Family Business?
Your choice will depend on:
- Family culture and cohesion
- Successor readiness and experience
- Long-term tax and wealth objectives
In many cases, a tailor-made combination (e.g., partial donation + simple partnership + shareholders’ pact) provides the best balance between control, tax efficiency, and family harmony.
How exactly does the certification of shares via a private foundation work (who decides, who receives the income)?
Share certification consists of transferring the shares of the family company to a private foundation that acts as an “administration office.” In exchange, the foundation issues certificates to the family members: the foundation retains the shareholding rights (and therefore the decision-making/voting power) over the shares, while the certificate holders indirectly receive the economic rights (dividends, proceeds from any sale).
In concrete terms, control (at the level of the foundation and its board of directors) is separated from patrimonial enjoyment (at the level of the certificate holders).
From a legal standpoint, the private foundation is a Belgian legal entity: it is established by notarial deed, and its articles of association are filed with the registry and published, which governs its administration (appointment/removal of directors, scope of powers, etc.). This formalism strengthens the enforceability of governance rules towards third parties and the sustainability of the arrangement.
In practice, many Belgian families have historically used the Stichting (an administrative foundation) to certify shares. However, Belgian law now allows certification through a Belgian private foundation, which avoids relying on a foreign vehicle while pursuing the same goal: stable control and continuity over several generations.
Need Expert Guidance?
Anticipate your family business transfer to avoid tax pitfalls and secure your legacy.
Working with a notary and wealth Structuring advisor is essential for a secure and optimized transition.