<\/span><\/h2>\n<\/p>\n
The succession pact<\/strong> is a legal agreement that allows planning the succession of the business<\/strong> during life, establishing how the assets will be distributed after the death of the owner. This instrument is particularly useful to ensure the continuity of the family business and to avoid conflicts between heirs.<\/p>\n<\/p>\n
<\/span>Advantages of the succession pact<\/strong><\/span><\/h3>\n<\/p>\n
\n- Tax efficiency:<\/strong> Assets passed on through an inheritance pact are taxed as an inheritance (in most cases), which can result in a lower tax burden compared to a gift. Of particular interest can be a cumulative inheritance pact, where you pass on most of your assets during your lifetime (reserving a few) and divide the inheritance into two parts (first, through the inheritance pact, during your lifetime; then, upon death, for the remaining assets). This allows separate tax benefits to be applied in two separate tax returns, which, if filed jointly, would be incompatible. As an exception, inheritance agreements of particular attribution with the delivery of a present are considered a donation.<\/li>\n
- Legal certainty:<\/strong> As a binding agreement, it provides certainty about the future distribution of assets.<\/li>\n
- Flexibility in management:<\/strong> The owner can continue to manage the company until his or her death, ensuring an orderly transition.<\/li>\n<\/ul>\n
<\/p>\n
<\/span>Considerations<\/strong><\/span><\/h3>\n<\/p>\n
\n- Geographical limitations:<\/strong> The succession pact is recognised in autonomous communities with their own civil law, such as Catalonia, Galicia, Navarre, Aragon, the Basque Country and the Balearic Islands.<\/li>\n
- Irrevocability:<\/strong> Once granted, the succession pact cannot be changed unilaterally, which requires careful planning.<\/li>\n
- There are different types of succession agreements, and it is therefore necessary to pay attention to the specificities of each typology, depending on the case.<\/li>\n<\/ul>\n
<\/p>\n
<\/span>Donation: immediate transfer with tax implications<\/strong><\/span><\/h2>\n<\/p>\n
Donation<\/strong> involves the transfer of assets during the owner’s lifetime, allowing the heirs to assume ownership and, in some cases, management of the business immediately.<\/p>\n<\/p>\n
<\/span>Benefits of donation<\/strong><\/span><\/h3>\n<\/p>\n
\n- Immediate transfer:<\/strong> Heirs can start managing the company without waiting for the death of the owner.<\/li>\n
- Simplicity:<\/strong> The donation process can be simpler and faster than other transmission mechanisms.<\/li>\n<\/ul>\n
<\/p>\n
<\/span>Considerations<\/strong><\/span><\/h3>\n<\/p>\n
\n- Personal Income Tax (IRPF):<\/strong> The donor may be taxed on the capital gain generated by the donation, especially if the company has increased in value since its acquisition. The donation of shares in the family business would be subject to the partner’s personal income tax only to the extent that a part of these shares is considered “not affected” by the business activity: that is, for the part of the shares that could not benefit from the ISD tax reduction.<\/li>\n
- Inheritance and Gift Tax (ISD):<\/strong> The donee must pay this tax, although reductions and allowances depend on the autonomous community and the fulfilment of certain requirements, such as maintaining the company for a certain period of time.<\/li>\n<\/ul>\n
<\/p>\n
To benefit from the tax advantages<\/strong>, the donor must be at least 65 years old and cease to manage the company, as well as have a shareholding of more than 5% at individual level or 20% at family level and have carried out management functions for which he\/she received more than 50% of the total income (this last requirement can be met by another person in the family group); and the donee must maintain the activity for a minimum of 5 years (in Catalonia).<\/p>\n<\/p>\n
<\/span>Comparison between inheritance pacts and donations<\/strong><\/span><\/h2>\n<\/p>\n
\n\n\nAspect<\/strong><\/td>\nInheritance pact<\/strong><\/td>\nDonation<\/strong><\/td>\n<\/tr>\n\nMoment of transmission<\/strong><\/td>\n| After the death of the holder (except for particular attribution with delivery of the present)<\/td>\n | Immediate<\/td>\n<\/tr>\n | \nTax implications<\/strong><\/td>\n| Generally more favourable<\/td>\n | It can generate IRPF and ISD taxation.<\/td>\n<\/tr>\n | \nGeographical requirements<\/strong><\/td>\n| Only in certain autonomous communities<\/td>\n | Available nationwide<\/td>\n<\/tr>\n | \nFlexibility<\/strong><\/td>\n| Minor, due to its irrevocability<\/td>\n | Larger, allowing for subsequent adjustments and modifications<\/td>\n<\/tr>\n | \nContinuity in management<\/strong><\/td>\n| The owner can continue to manage the company<\/td>\n | The donee takes over the management immediately<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n <\/p>\n <\/p>\n <\/p>\n The choice between a succession pact<\/strong> and a gift depends on many factors, including geographical location, tax situation and personal and family preferences. It is advisable to consult a legal and tax advisor specialised in family business succession<\/strong> to assess which option is best suited to your particular case.<\/p>\n[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section]<\/p>\n","protected":false},"excerpt":{"rendered":" Passing on a family business to the next generation is a momentous decision that involves not only emotional and legacy aspects but also significant legal and tax considerations.In Spain, two of the most commonly used tools to facilitate this transition are the succession pact and the donation. Both options allow the transfer of ownership during […]<\/p>\n","protected":false},"author":2,"featured_media":19325,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"on","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[699],"tags":[],"class_list":["post-19329","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-company"],"_links":{"self":[{"href":"https:\/\/gmtaxconsultancy.com\/en\/wp-json\/wp\/v2\/posts\/19329","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/gmtaxconsultancy.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gmtaxconsultancy.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gmtaxconsultancy.com\/en\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/gmtaxconsultancy.com\/en\/wp-json\/wp\/v2\/comments?post=19329"}],"version-history":[{"count":2,"href":"https:\/\/gmtaxconsultancy.com\/en\/wp-json\/wp\/v2\/posts\/19329\/revisions"}],"predecessor-version":[{"id":19331,"href":"https:\/\/gmtaxconsultancy.com\/en\/wp-json\/wp\/v2\/posts\/19329\/revisions\/19331"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/gmtaxconsultancy.com\/en\/wp-json\/wp\/v2\/media\/19325"}],"wp:attachment":[{"href":"https:\/\/gmtaxconsultancy.com\/en\/wp-json\/wp\/v2\/media?parent=19329"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gmtaxconsultancy.com\/en\/wp-json\/wp\/v2\/categories?post=19329"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gmtaxconsultancy.com\/en\/wp-json\/wp\/v2\/tags?post=19329"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}} | | | | | | | | |