Government should commit to further tax relief and exemptions for family business transfers
Brian Hayes MEP today said transfers of family businesses from one generation to another should be made easier, given the fact that approximately 150,000 family businesses are forced to close in the EU each year.
“Family businesses are the lifeblood of Ireland’s economy. Around 75% of all Irish firms are family owned businesses. Together they contribute more than 50% of the country’s GDP and approximately 50% of employment.
“Recent figures from the European Commission estimate that 150,000 businesses are forced to close each year in the EU leading to a loss of 600,000 jobs due to the difficulties of business transfers from one familial generation to the next.
“According to a 2014 PWC survey on family businesses, only one in ten Irish family businesses have a succession plan that is robust and properly documented.
“Although there is specific tax relief and exemptions for family businesses, Ireland imposes high inheritance and retirement taxes on family businesses compared to other European countries. The government needs to provide further tax relief for family businesses to make it easier for family businesses to survive.
“In Germany, family recipients of business assets are exempt from 85% of inheritance taxes if the owners do not cut jobs and wages for five years. This makes sense for keeping employment and keeping small business growth ticking over.
“In 2014 KPMG surveyed 23 countries on family business practice. The results show that Ireland ranks 4th highest in terms of the headline rate of tax due on succession through inheritance and 3rd highest in terms of the headline rate of tax due on succession on retirement. This needs to change.
“The full impact of family businesses to the Irish economy is much greater than GDP or employment figures. They are a hugely important part of the fabric of rural and urban communities.”