Grupo Asegi has been supporting succession planning for family businesses in the Basque Country since 1982. Effective succession takes between 5 and 10 years of prior planning and combines tax aspects (foral Inheritance Tax reliefs) with corporate, legal and operational ones.

Why succession in a Basque family business is different

The Basque foral regime applies to Inheritance and Gift Tax a system of reliefs and allowances for the family business that is significantly more generous than that of the common regime. Where the requirements are met, the transfer of family business shareholdings can benefit from reliefs of 95-99% on the taxable base of the tax.

A note on scope: this article refers to the foral regime of the Autonomous Community of the Basque Country (Bizkaia, Gipuzkoa and Araba). Navarra has its own regime under the Economic Convention, with different rates, deductions and deadlines; if your company is taxed in Navarra, talk to us about your specific case.

The foral Inheritance Tax reliefs for family businesses

Shareholding requirements

The deceased must have held a minimum shareholding in the company’s capital for a given period before the transfer.

Requirements on carrying out management duties

The deceased, or a member of the family group, must have effectively carried out management duties in the company and have received for them a remuneration representing a minimum percentage of their total income.

Continuation of the activity

After the transfer, the heirs must keep the business and the shareholding for a minimum period (usually 5 years) in order to consolidate the relief applied.

When to start planning the succession (the short answer: now)

Effective business succession planning takes between 5 and 10 years’ notice. Starting late limits the tax options, makes the necessary corporate restructuring harder and multiplies family conflict.

The family protocol: what it is and why it matters

The family protocol is a document governing the relationship between the family and the business. It defines:

  • Who can be a director or board member.
  • How dividends are distributed.
  • What happens if a family member wants to sell their shareholding.
  • How conflicts between family shareholders are resolved.
  • The rules for bringing in the next generation.
  • Orderly exit mechanisms for family members who do not want to continue.

Corporate structures that make succession easier

Family asset holding company

A holding company owning the operating shareholdings. It allows family ownership to be centralised, the exemption for intra-group dividends and capital gains to be applied, and the transfer of the holding company’s shares to be made easier.

Portfolio companies

In complex estates, investment property (in one company) is separated from the operating business (in another), which makes separate succession easier and reduces risk.

Case study (anonymised) of a succession managed by Grupo Asegi

A third-generation industrial family business in Bizkaia. Three sibling shareholders (aged 60-65), six children in the fourth generation, two of them working in the business.

  • Phase 1 (years 1-2): analysis of the estate and the corporate structure. Design of the family holding company.
  • Phase 2 (years 2-4): drafting and signature of the family protocol. Definition of roles.
  • Phase 3 (years 4-6): progressive gifts of shareholdings to the fourth generation.
  • Phase 4 (years 6-8): operational transition of the board of directors to the fourth generation.

Result: transfer of control completed at a tax cost of 1.5% of the total value (against a potential 30-35% without planning).

Frequently asked questions

At what age should I start planning the succession?
Ideally, from the age of 50 onwards. Effective planning takes between 5 and 10 years.
Will my children pay Inheritance Tax if they inherit the business?
If they meet the foral family business requirements, they can apply reliefs of 95-99% on the taxable base. The tax cost can come down to 1-5% of the value of the shareholding.
Is the family protocol legally valid?
Yes. The family protocol is a contract between the members of the family with full legal force.
Can I sell the business to my children instead of leaving it to them?
Yes. One alternative is a gift with deferred payment, or a sale with a family loan.
What happens if I do not plan the succession?
Without planning, the succession is governed by the general rules. That creates conflict between heirs, risks to the continuity of the business and a substantially higher tax cost.

General information only; it does not replace professional advice. Foral legislation changes frequently — check the date it was last updated.