Generational Change of a Principal Shareholder Company

Line Bloch Møller

Student thesis: Master thesis


This thesis examines generational change of a principal shareholder company. The purpose of the thesis is to examine and analyze the tax law by a generational change and examine the possible ways to accomplish the optimal generation change. The optimal generational change requires planning, regarding the involved parties, opportunities and needs. There must be shown consideration for the current owner, the new owner and the company. Furthermore, you must plan regarding the legislation. You’ll need to focus on the tax law but also in addition with the “soft values”. It must be taking in to consideration, who the company should be handed over to. There are pros and cons whether you want to hand over the company to a dependent or an independent part. A generational change can be expensive if the planning and structure isn’t optimal. It’s hard to say, what the optimal generational change means, because of the factors which affect the individual company. This thesis will suggest different generational change models, which are all optimal. If a company should be restructured by a tax-free restructuring there is a holding period requirement. Therefore, you’ll need to do the restructuring a good while ahead before the generational change is to take place. A bill has been passed through, regarding a reduce in the inheritance tax and the gift tax. The reduce of the taxes can become economical important and is therefore relevant to consider. Depending on the size of the gift, it is important whether you must pay a tax of 15 % or 5 %. The reduction of the inheritance tax and the gift tax does not apply to money bin companies such as property companies. Money bin companies can’t use succession or the low part of the inheritance tax nor the gift tax. Therefore, it can be very expensive to make a generational change of a money bin company. Also, it can drain the capital and the liquidity of the company. If you own a money bin company you’ll need to consider, whether you are able to make some changes that will change the characteristic of the company as a money bin company. For example, you could split the company in an active and a passive part, thus transfer over the active part with succession and pay the low part of the inheritance and the gift tax. It will be exciting to follow the development of the reduction of the inheritance and gift tax, including the change regarding money bin companies and property companies.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
Publication date2018
Number of pages87