New report from KPMG Private Enterprise reveals tax consequences on family business transfers can vary in the millions based on location

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For many business families, sustaining prosperity for the long run depends on how well they plan for transfers of business assets and family wealth from one generation to the next, according to the KPMG Private Enterprise Global Family Business Tax Monitor .

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Provider: 
Business Wire, Inc.Business Wire, Inc.
Retrieved on: 
Tuesday, February 28, 2023
Information
Tags: 
Venture Capital, Finance, Business, Professional Services, Small Business, Retirement, Family business, Tax, Human, KPMG, Bank, Life insurance
Geotags: 
ONTARIO, NORTH AMERICA, CANADA, SPAIN, UK, VENEZUELA, FRANCE, SOUTH AFRICA, JAPAN, US
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Organisation: 
KPMG, KPMG PRIVATE ENTERPRISE, KPMG INTERNATIONAL
Summary
Key Points: 
  • For many business families, sustaining prosperity for the long run depends on how well they plan for transfers of business assets and family wealth from one generation to the next, according to the KPMG Private Enterprise Global Family Business Tax Monitor .
  • The report has been a go-to source for family business tax planning for almost a decade, comparing the vastly different tax liabilities among jurisdictions on the transfer of family business through gifting during the owners’ lifetime (including on retirement) and through inheritance.
  • Among the 57 jurisdictions covered in the report, some have geared their tax policies in ways that recognize how a thriving family business sector contributes to a vibrant economy.
  • Others give no special tax exemptions for intergenerational family business transfers, increasing tax costs and likely reducing the family’s ability to compete with business families in more tax-friendly jurisdictions.


For many business families, sustaining prosperity for the long run depends on how well they plan for transfers of business assets and family wealth from one generation to the next, according to the KPMG Private Enterprise Global Family Business Tax Monitor. The report advises business families with footprints in multiple jurisdictions to monitor potential new or increased taxes and consider taking action in advance.

The report has been a go-to source for family business tax planning for almost a decade, comparing the vastly different tax liabilities among jurisdictions on the transfer of family business through gifting during the owners’ lifetime (including on retirement) and through inheritance.

Among the 57 jurisdictions covered in the report, some have geared their tax policies in ways that recognize how a thriving family business sector contributes to a vibrant economy. Others give no special tax exemptions for intergenerational family business transfers, increasing tax costs and likely reducing the family’s ability to compete with business families in more tax-friendly jurisdictions.

“Location can make a world of difference! Tax-efficient transfers between generations can leave wealth in the hands of entrepreneurial families to invest in profit-producing activities — and that can help stimulate job creation and innovation for future generations,” says Tom McGuiness, Global Leader, Family Business, KPMG Private Enterprise, KPMG International

KPMG Private Enterprise’s report found that globally, South Korea, France, the US and the UK impose the highest tax rates for transfer of a family business valued at EUR10 million by inheritance, before any tax breaks are accounted for. After exemptions, South Africa takes the biggest bite from family business inheritances valued at EUR10 million, followed by Canada and Japan. For inheritances of family businesses over EUR100 million, the most expensive taxing jurisdiction is South Korea after exemptions, with South Africa and the US coming in second and third.

For transfers during the owner’s lifetime (gifts) of family businesses valued at EUR10 million, Venezuela imposes the highest taxes globally before exemptions, followed by Spain, South Korea and France. After exemptions, South Africa and Japan come second and third behind Venezuela as the jurisdictions imposing the highest tax costs on business transfers by gift. These comparisons are similar for family businesses valued at EUR100 million before and after exemptions.

Top priorities for today’s business families

The report also provides insights on what business families consider their biggest priorities and risks and calls attention to three emerging trends — branching out, building up and giving back. The trends crucially reveal an increase in business families and their assets becoming more global, a rise in the importance of governance and a renewed focus on the management of family wealth and the notion of giving back with philanthropic activities commanding more time.

“Amid rising geopolitical tension and unparalleled economic uncertainty, the leading business families that we work with are diversifying globally and putting more focus on the sustainability of their businesses, their wealth and their communities,” says Tom McGuiness, Global Leader, Family Business, KPMG Private Enterprise, KPMG International. “By doing so, they can position their families for sustainable success down the generations. As a result, we are seeing more business families around the world that are focused on branching out, building up and giving back.”

Download the report for details.

Notes to Editors

About KPMG Private Enterprise

Passion, it’s what drives entrepreneurs, it’s also what inspires KPMG Private Enterprise advisers to help you maximize success. You know KPMG, but you might not know KPMG Private Enterprise. KPMG Private Enterprise advisers in KPMG firms around the world are dedicated to working with you and your business, no matter where you are in your growth journey — whether you’re looking to reach new heights, embrace technology, plan for an exit, or manage the transition of wealth or your business to the next generation. Working with KPMG Private Enterprise, you’ll gain access to a trusted adviser — a single point of contact who shares your entrepreneurial mindset. Access to KPMG’s global resources and alliance network can help you drive your business forward and meet your goals. Your success is KPMG Private Enterprise‘s legacy.

About KPMG International

KPMG is a global organization of independent professional services firms providing Audit, Tax and Advisory services. KPMG is the brand under which the member firms of KPMG International Limited (“KPMG International”) operate and provide professional services. “KPMG” is used to refer to individual member firms within the KPMG organization or to one or more member firms collectively.

KPMG firms operate in 143 countries and territories with more than 265,000 partners and employees working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. Each KPMG member firm is responsible for its own obligations and liabilities.

KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.

For more detail about our structure, please visit kpmg.com/governance.

About the KPMG Private Enterprise Global Center of Excellence for Family Business

As with your family, your business doesn’t stand still — it evolves. Family businesses are unique and KPMG Private Enterprise family business advisers understand the dynamics of a successful family business and work with you to provide tailored advice and experienced guidance to help you succeed. To support the unique needs of family businesses, KPMG Private Enterprise coordinates with KPMG firms from around the world that are dedicated to offering relevant information and advice to family-owned companies. KPMG Private Enterprise understands that the nature of a family business is inherently different from a non-family business and requires an approach that considers the family component.

Visit: kpmg.com/familybusiness

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