Location matters when it comes to family business tax

According to a survey by KPMG Private Enterprise, South Korea, France, the US, and the UK have the highest tax rates in the world for the inheritance of a family firm worth at least EUR10 million. This is true even after adjusting for any tax advantages.

Following exemptions, South Africa, followed by Canada and Japan, is the country that consumes the most portion of family business heirlooms worth EUR10 million. South Korea, followed by South Africa and the US, is the country with the highest tax rates on family business inheritances exceeding EUR100 million after exemptions.

Venezuela has the highest taxes in the world before exemptions for family business transfers made during the owner’s lifetime (gifts) worth EUR10 million, with Spain, South Korea, and France trailing closely behind. Following exemptions, Venezuela has the highest tax rates on gifting of company assets, followed by South Africa and Japan. These are comparable for family companies valued at EUR100 million both before and after exemptions.

“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,” said Tom McGuiness, Global Leader, Family Business, KPMG Private Enterprise, KPMG International.

The research highlights three new trends: branching out, expanding, and giving back. It also offers insight into what business families view as their top priorities and concerns. The key themes include an increase in business families and the globalization of their assets, a growth in the significance of governance, a renewed focus on the management of family wealth, and the idea of giving back with charitable activities taking up more time.

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