(DUBLIN, 19 April 2016) A report by KPMG has found that while tax regimes vary globally, in general, countries are supporting and encouraging investment and growth in family businesses. KPMG’s Global Family Business Tax Monitor finds that low tax liabilities generally arise in advanced economies on the transfer of family businesses to the next generation upon retirement or inheritance due to the impact of tax reliefs or exemptions in national laws, notwithstanding the tax burden on gifts or inheritances being significantly higher in such economies.
Key findings of the KPMG report include:
Colin O’Brien, Partner and Head of Private Irish Business at KPMG in Ireland said: “The importance of family-owned businesses cannot be overlooked as they generate over 70 per cent of global GDP annually. Succession planning is an essential process for family businesses. Tax considerations don’t drive the decision to pass on the business to the next generation but tax is one of the fundamental aspects which needs to be taken into account. Longevity is fundamental to family business and tax policy aimed at promoting that longevity is welcomed.”
Tim Lynch, Partner at KPMG in Ireland, added: “From a gift and inheritance tax perspective, family businesses here in Ireland are treated similarly to family businesses in advanced economies globally. Whilst Irish gift and inheritance tax burdens could be described as being relatively higher, Irish reliefs from those taxes in passing on the family business are quite competitive. Given the importance of family businesses in contributing to the Irish economy, these reliefs are essential and any measures aimed at simplifying the complex rules should be encouraged.”
Other findings include:
The Global Family Business Tax Monitor is based on the findings of 42 countries which undertook a taxation review on two scenarios for a Family Business valued at €10m. The Monitor has explored the effects taxation can have on the transfer of the business to family members upon inheritance and as a lifetime transfer (on retirement). The 42 countries engaged in the study are: Australia, Austria, Belgium, Bosnia & Herzegovina, Brazil, Canada, China, Croatia, Cyprus, Czech Republic, Estonia, Finland, France, Germany, Greece, India, Ireland, Isle of Man, Italy, Jamaica, Japan, Jordan, Latvia, Lithuania, Luxembourg, Malta, Mexico, Netherlands, Norway, Pakistan, Poland, Portugal, Senegal, Serbia, Slovakia, South Africa, Spain, Sweden, Switzerland, Turkey, UK, USA.
About KPMG in Ireland
KPMG in Ireland employs 2,200 people across its audit, tax and advisory services from offices in Dublin, Belfast, Cork and Galway. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services.
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