The Business Succession Scheme (BOR) is a tax provision under the Inheritance Tax Act that exempts business successors from gift or inheritance tax when business assets are transferred by gift or inheritance: 100% up to €1.5 million (2025) and 75% on the amount exceeding that threshold. Conditions include an active business, a minimum holding period by the previous owner, and a continuation period for the successor. Starting in 2026, the scheme will be further tightened to prevent misuse.
For business succession within family circles, the tax authorities have a special business succession regulation: the BOR. This allows you as successor to enjoy a significant tax advantage. During the succession process, it is therefore wise to have a financial expert determine the optimal tax burden.
What is the business succession regulation?
The BOR is a provision of the Inheritance Tax Act designed to ensure that business succession proceeds smoothly without various financial obstacles. The BOR applies to the inheritance of business assets. A distinction is made between:
- The first involves the transfer of business assets through the succession of a “family business” whose owner is retiring or taking on a different role;
- The second is inheriting business assets, when you take over the family business from a deceased owner.
How does the business succession regulation work?
The amount of your tax benefit depends on the going-concern value and the liquidation value. The going-concern value is the value of the business, based on the current situation and its continued operation without change. The liquidation value is the total estimated sales value of all assets, such as inventory and machinery. The Tax Authority uses the higher of these two values when calculating the exemption.
For convenience-and because the going-concern value is usually higher than the liquidation value-we look at a business succession situation with a higher going-concern value.
In this case, you’ll receive a 100% exemption on an amount of €1.5 million (2025), and for assets exceeding this amount, you’ll receive a 75% exemption. In addition, you may be granted a deferral of inheritance tax payments on the 25% that exceeds the established tax threshold. You will then have 10 years to repay the inheritance tax owed, plus interest.
What are the requirements for the BOR?
The business must be an active, operating enterprise. Are you receiving the business through an inheritance? In that case, there is no minimum age requirement for the recipient. Are you receiving the business as a gift? In that case, the recipient must be at least 21 years old to qualify for the BOR.
Furthermore, the previous owner must have owned the business for at least 5 years. Did the owner pass away? Then this is 1 year.
Finally, the business should not stop right after the acquisition. How long you must continue with the business depends on when you got the business.
After January 1, 2025
You must continue to operate the business for at least 3 years. Have you acquired shares in a business? Then you must continue to own those shares for at least 3 years and the business must continue its operations for 3 years.
Before January 1, 2025
You must continue in business for at least 5 years. Have you acquired shares in a business? Then you must continue to own those shares for at least 5 years and the business must continue its activities for 5 years.
What changes will take effect in the BOR starting in 2026?
The business succession regulation is under fire. The secretary of state for finance has put forward proposals in 2020 to abolish, or greatly relax, the BOR so as to create a more level playing field between schemes within the European Union.
The Business Succession Scheme will remain in effect for the time being, although it will be gradually adjusted. According to the Tax Authority, these are the changes effective January 1, 2026:
- Are you getting a business from an entrepreneur who started the business later than 2 years after his or her state retirement age? This entrepreneur must have been the owner of the business for longer at the time of gift or inheritance (longer ownership requirement). Otherwise, you cannot use the BOR. Now for this situation, the normal possession requirement of 5 years when donating a business and 1 year when inheriting a business applies.
- Have you previously owned the business you are getting? If so, you can no longer use the BOR.
- Are you getting shares in a business? You will soon be able to use the BOR only for ordinary shares. No longer for profit-sharing certificates or options on shares, for example. The shares must represent at least 5% of the value of the business.
- It will become easier to restructure the business you inherit. For example, you’ll be able to split or merge the business without losing the tax benefits of the BOR because you no longer meet the ownership or continuity requirements.
With these changes, the government aims to make it easier to continue running a business. It also aims to make it more difficult to abuse the BOR. For example, if someone of advanced age buys a business in order to avoid gift tax or inheritance tax.
Frequently Asked Questions About the Business Succession Scheme (BOR)
What is the Business Succession Scheme (BOR)?
The BOR is a provision in the Inheritance Tax Act that simplifies business succession from a tax perspective: when business assets are gifted or inherited, the successor receives a substantial exemption from gift or inheritance tax.
How much of a tax benefit does the BOR offer?
You’ll receive a 100% exemption on the first €1.5 million (2025) of business value and a 75% exemption on the amount above that. Inheritance tax is due on the remaining 25%, but you can obtain a 10-year deferral of payment (with interest).
What are the eligibility requirements for the BOR?
The business must be an active enterprise. The previous owner must have owned the business for at least 5 years (in the case of a gift) or 1 year (in the case of death), and the transferee must continue to operate the business for a specified period after the transfer. In the case of a gift, the transferee must also be at least 21 years old.
How long must you continue to operate the business after a business succession?
For acquisitions after January 1, 2025, a 3-year grace period applies. For acquisitions prior to that date, a 5-year grace period applied.
What changes will take effect in the BOR starting in 2026?
Starting in 2026, new rules will take effect, including a longer ownership requirement for businesses started shortly before the owner reaches the state pension age, a ban on double use of the BOR for the same business, and stricter rules regarding shares and restructuring. The goal is to prevent abuse while simultaneously facilitating business succession.
