Tax Implications of Generational Change

A generational change may entail a number of different risks relating to the tax implications of such a step, for example regarding the preconditions for applying the various models, the valuation of the company etc.

Taxation is a very important aspect of the planning of a generational change. If the transfer triggers large taxable profits, the financing of the tax payment could be a barrier to implementing the generational change. This is particularly relevant in cases where the next generation's takeover of the company is financed, in full or in part, through a gift in combination with the issue of an instrument of debt.

At TVC Law Firm, we specialise in generational changes and the applicable rules under tax law, company law and commercial law. This ensures that any tax implications can be taken into account right from the outset.

The process can often be organised more efficiently if all relevant aspects are considered from the outset.

Our handling of the tax implications and other legal aspects provides our clients with a better basis for understanding and identifying all the various risks.

We are up-to-date with and influence developments in legal practice. We know exactly what is going on regarding the many different models, for example:

  • Current status of using A/B models with preferential right to dividend. What agreements can be made, and what is or is not accepted by the tax authorities in connection with transactions involving family and non-family members.
  • Risks and tax-related pitfalls of seller financing as part of the transfer of a company
  • When is the company a cash pile and therefore cannot be transferred by means of succession, and what can be done to change this?