Family Business

Family Business

 

For a number of years, family businesses faced uncertainty when transferring wealth from one generation to the next. Without clearly defined laws and a framework against which it could be regulated, family members resorted to the creation of communities and lobby groups so as to be able to find assistance when seeking a smooth continuity in their business over the years. The Family Business Act, enacted in 2017 provided guidelines for the transfer in family business, which would enable growth in the sector and which better defined blurred lines in the field.

 

A major catalyst in the enactment of the Family Business Act was the European Commission, who saw in family businesses a way to help economic recovery and to build a more sustainable future. Indeed, the Act’s main aim is to encourage the continuance of family businesses and the creation of new ones by alleviating administrative doubts and legal uncertainties. This is done through a definition of who a family member is, what defines a family business, how foreign-owned family businesses can make use of the Act to their benefit and how its governance is regulated. The Act also outlines incentives and schemes which families now have access to, as well as assisting with the businesses’ internal architecture, organisation and structure.

 

The Fiscal benefits of the Family Business Act are multiple. Stamp duty is reduced to 3.5% on the first €500,000 of immoveable property and the first €150,000 of value in shares will not be taken into account for stamp duty.

 

The key advantages can be summed up as the following:

 

1) Loan guarantee – Enhanced capping of up to €500,000 on maxi­mum guarantee;

2) Micro invest – Enhanced tax credit of up to €50,000;

3) Positive consideration of lease renewal of industrial government leased  premises;

4) Educational and training – funds of €1,000 annually for family business owners and their employees;

5) Advisory – Funding of up €2,500 for legal, accountancy advice;

6) Mediation through arbitration – Funding of five sittings up to a value of €1,000 for the establishment of the fair value of the family business;

7) Investment aid 2014-2020 – Waivering of the condition that assets are to be bought by unrelated third parties – now applicable to family businesses, allowing them greater access to investment aid.

 

Our values at TACS Malta are closely tied with this act. Being a family-run business ourselves, we believe the Family Business Act can help Maltese and foreign families flourish and enjoy higher profits. Our legal experts can help you with the legal and administrative tasks, ensuring your family business reaps the benefits of this Act and to grow sustainably from generation to generation.

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