Outline of gift and inheritance tax measures

Outline of gift and inheritance tax measures

Back to outline Tax Plan

Tightening of business succession scheme

As early as last year, CPB Netherlands Bureau for Economic Policy Analysis (CPB) concluded that the business succession scheme for gift and inheritance tax is effective but not efficient in parts. The same conclusion was drawn for the roll-over relief scheme in income tax. The CPB also found that not all parts of these schemes contribute to the desired continuity of businesses. Given these outcomes, the government wants to improve the effectiveness and practicability of the business succession scheme (BOR) and the roll-over relief scheme (DSR) and remove bottlenecks. To this end, the following measures are proposed in the bill on the 2024 Business Succession Tax Facilities (Amendment) Act:

1. Property leased to third parties and debts attributable to such property will qualify by default as investment assets for application of the business succession scheme and the roll over relief scheme for substantial interest shares in income tax (roll-over relief scheme for substantial interest shares) as from 2024. To determine whether it concerns lease, both the actual use of the property and the taxpayer’s intention will be taken into account.
2. From 2025, the exemption in the business succession scheme will be 100% of the going concern value of the business up to EUR 1.5m (2023: around EUR 1.2m), and 75% (2023: 83%) on the excess of business assets.
3. The effectiveness margin of 5% for investment assets will be abolished, as the legislator believes it does not contribute to preventing discussions on the qualification of assets. For the business succession scheme, this legislative change will take effect from 1 January 2025. The effective date for the roll-over relief scheme for substantial interest shares will be determined by Royal Decree.
4. Business assets with a fair market value of at least EUR 100,000 that are used more than 10% for non-business purposes will only qualify for the business succession scheme and the roll-over relief scheme for substantial interest shares from 2025 to the extent that these assets are actually used within the business.
5. The 36-month employment requirement for application of the roll-over relief scheme for substantial interest shares will be abolished from 1 January 2025, as it has not proved effective. On the other hand, from 2025, a minimum age of 21 years will apply to an acquirer if they wish to apply the business succession scheme or the roll-over relief scheme for substantial interest shares.

The government had proposed to limit the exemption of business assets in the business succession scheme (BOR) to 100% of the going-concern value of the business up to EUR 1.5 million and to 70% over the excess. However, the House of Representatives increased the latter percentage by amendment, to 75%. The so-called dilution scheme will also be relaxed, such that the minimum required indirect interest of 0.5% for application of the BOR and the roll-over relief scheme (DSR ab) will be abolished effective from 1 January 2025. The budgetary cover for these measures is provided for through a reduction of the green investment exemption in box 3 to EUR 30,000 per taxpayer (or EUR 60,000 for tax partners).

Furthermore, measures have been announced to limit access to the business succession scheme and the roll-over relief scheme for substantial interest shares to regular shares representing an interest of at least 5% in the paid-up capital, in order to relax the holding and continuation requirement and to combat certain arrangements. Such arrangements involve conversion of investment assets into business assets with the aim of claiming business succession facilities. On top of that, the legislator refers to arrangements to use these facilities more than once. As the development of these measures will take more time, they will be included in the 2025 Tax Plan and enter into force on 1 January 2026.