Changes to Family Company as of Jan. 1, 2026

What is a Family(-owned) Company?

If your company meets the conditions below, then it is a family company and you can gift the shares (to direct heir) to 0%. In case of death, an inheritance tax of 3% (direct heir or partner) or 7% (heirs not in the direct line) is due.

The conditions today are:

• Participation condition: at least 50% of the voting rights (or 30% if together with one other shareholder 70%, if with two other shareholders: 90%)
• Activity condition: company must have a "real economic activity". E.g. pure property, holding, or management companies are generally excluded from this.
  After all:
  • Land and buildings may represent a maximum of 50% of the assets
  • Remuneration, social charges and pensions may represent a maximum of 1.5% of the total assets
• Continuity condition: after inheritance or donation, the economic activity must continue for at least three years. During this period, the capital (Equity) may not decrease through distributions or repayments.

What will change on January 1, 2026? 

Till now, subject to acceptance by Flemish taxes, the entire family company -with all its assets- could be gifted or inherited at the above favorable rates. However, because this was sometimes abused, Flanders has decided to exclude all properties intended for residential purposes. On these "properties intended for habitation", as of 1/1/2026, the normal inheritance or gift tax in direct line must be paid.

This is:

• 3% up to €150.000 (€4.500)
• 9% between €150.000 and €250.000 (€9.000)
• 18% between €250.000 and €450.000 (€36.000)
• 27% from €450.000

A practical example

The family-owned company "Company X", located in Flanders, owns an apartment block in addition to its own production hall.

If the owner/entrepreneur would like to gift the shares of his company to his only son, this is currently still possible at 0% (provided that all the above conditions for family-owned company are met).

From January 1, 2026, the entrepreneur will have to pay the "normal" gift tax for direct heirs on the value of the apartment block (because intended for residential use) according to the table above.

If the value of the apartment block were €1mio, this would cost the entrepreneur €198.000 in gift tax.

Conclusion

If you are considering gifts or took your family-owned company into account with your estate planning; be sure to contact FONS to further review the impact of these changes and explore possible solutions.

FYI: these changes were published as a preliminary draft decree on the website of the Flemish Government and are subject to acceptance by the Flemish Government.