Legal and tax approach
In our tax advice firm, we understand that the continuity of a family business depends on a well-structured succession plan. Within this process, usufruct plays a key role, as it allows the distribution of rights over business assets among heirs without compromising the stability of the company.
Usufruct can be an effective tool to ensure that the management and profits of the business are administered in an orderly way, especially when seeking to protect the interests of the surviving spouse without affecting the ownership of the descendants.
What is usufruct, and how does it apply in business?
From a legal perspective, usufruct is a real right that grants a person (the usufructuary) the use and enjoyment of another’s property, while the bare ownership belongs to someone else. In the context of business succession, this means that heirs may receive ownership of the shares or stakes, while another person – generally the spouse – retains the right to receive the profits of the business.
This mechanism helps maintain harmony between the generation that leaves the business and the one that inherits it, avoiding conflicts in management and protecting the stability of the company.
Types of usufruct in the family business
Usufruct is not a single concept; different types can be applied depending on the objectives of business succession:
Legal usufruct
Legal usufruct is that imposed by law in certain inheritance situations. In the business sphere, this may affect the distribution of shares among heirs. In the absence of specific provisions in the will, the regulations may grant the spouse usufruct over part of the business assets.
Voluntary usufruct
Voluntary usufruct is established through an agreement or will, which allows greater flexibility. In the case of family businesses, it can be used to ensure that the surviving spouse continues to receive dividends from the business without interfering in strategic decision-making.
Lifetime usufruct
Lifetime usufruct extends throughout the life of the usufructuary. In family businesses, it is a tool used so that the founder or the deceased’s spouse continues to benefit from the company’s profits without altering its ownership structure.
Temporary usufruct
Temporary usufruct has a limited duration. It can be useful when wishing to gradually transfer business management, for example, granting temporary rights to an heir until another reaches the age or readiness to take control.
Universal usufruct
It covers the entire hereditary estate, meaning that the usufructuary may enjoy all the assets of the inheritance. In a family business, this could mean that the surviving spouse receives all business profits while ownership is transferred to the children.
Key aspects of usufruct in businesses
When applying usufruct in business succession planning, it is essential to take the following points into account:
- Rights of the usufructuary: May receive dividends generated by the company’s shares or stakes.
- Rights of the bare owner: Retains the status of shareholder, with voting rights at the shareholders’ meeting, unless the articles of association state otherwise.
- Management and decision-making: It must be clearly defined how the business will be managed to avoid conflicts between usufructuaries and bare owners.
- Strategic planning: Proper structuring of usufruct facilitates generational transition without affecting the performance and stability of the business.
Tax implications of usufruct in family businesses
From a tax perspective, usufruct has direct effects on the taxation of heirs and the business:
- Inheritance and Gift Tax: The valuation of usufruct for this tax depends on the age of the usufructuary and the value of the business assets. Proper planning helps optimise the tax burden.
- Taxation of dividends: Usufructuaries are taxed under Personal Income Tax (IRPF) on the dividends received, which must be taken into account in the tax structure of the succession.
- Capital gains in case of sale: If the shares or stakes subject to usufruct are sold, it must be determined how the gains will be distributed between the usufructuary and the bare owner to avoid unexpected tax burdens.
Usufruct can be a key tool for family business succession, but its implementation requires a detailed analysis of its legal and tax implications. In our firm, we specialise in designing personalised strategies to ensure the stability and continuity of businesses across generations.
Every succession situation is unique and, therefore, it is essential to have expert advice to structure the best solution in each case. If you are planning your business succession, we invite you to contact us to evaluate the best options and ensure an orderly and efficient transfer of the company.
Contact us for a personalised consultation and secure the future of your business with a well-designed succession strategy.