Six Catalan associations and professional colleges have prepared a report with proposals to facilitate the transition in family businesses. They have submitted it to the Department of Finance.
Six Catalan associations and professional colleges have joined forces to ask the Generalitat to review the rules of business succession. According to El Periódico, the working group was created after receiving a high volume of inquiries and complaints from entrepreneurs and advisors, and met for the first time in April.
The initial diagnosis is concerning. Around 75% of family businesses in Catalonia believe that the lack of succession puts their continuity in doubt, and 66% of them would consider selling in that scenario. Only 1% are run by the third generation of the same family.
The entities that make up the group are AEDAF, APttCB, the Col·legis d'Economistes, Gestors Administratius, and d'Advocats, and Pimec. They have collaborated with ASCEF, the Col·legi Notarial de Catalunya, and Femcat. Their aim was to study the regulations, identify what can be improved, and present a report to the Generalitat.
The current regulation already includes a tax advantage for these cases: a 95% discount on the inheritance and donation tax when transferring a family business. Sílvia Gabarró, president of the economy and taxation commission of Pimec, explained the presentation of the report, which has already been submitted to the Department of Finance.
“It is a regulation that has significant shortcomings and interpretations that complicate its practical application”
The entities are not asking for new legislation. They demand that the current regulation be adapted to how businesses are today. Among the most critical points, they mention that the discount only applies if the sale is made to a relative up to third degree, excluding cousins, which becomes problematic when ownership is divided among several family branches.
They also consider the calculation of the company's value incoherent, as it only takes into account the treasury intended to pay short-term liabilities. Àlex Segarra, Emma S. Corretger, and Leonardo Cárdenas, representatives of some of the participating entities, summarised it with a question.
“Do we want to have weak companies? Or better capitalised ones that can face contingencies?”
The report highlights other limitations. A self-employed person starts in a worse situation than a commercial company, the outgoing entrepreneur must be over 65 years old and leave the management, and if the business is transferred to an employee, they must have 10 years of seniority and mandatorily receive half of the share. Furthermore, if a family loses the discount, they are automatically excluded from any other, such as the ordinary succession between parents and children.
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