Tax is becoming a big issue for family businesses

The tax burden for family businesses is becoming a bigger issue for the sector, particularly in Europe where governments increasingly look to plug budget deficits by raising taxes.

A recent study by the business services group PwC and and the Swiss business association economiesuisse calculated what an increase in the country’s estate tax would have on family businesses. A rise in the tax, which is being considered by the Swiss government, could result in the loss of up to 50% of the equity held by the country’s family businesses, according to the research.

The report said that up to 80% of businesses in Switzerland are family controlled and out of those one in five will be transitioning to the next generation by 2020. “A deteriorating in the conditions for family companies would have serious consequences for the economy as a whole and for workers in Switzerland,” said Heinz Karrer, President of economiesuisse.

Concern about increasing tax burdens has also been expressed recently by German family businesses. Lutz Goebel, the president of the country’s powerful lobbying group the Association of Family Businesses, has been strident in his objections to any changes in inheritance tax that have been talked about by the country’s finance minister Wolfgang Schäuble.

“Schäuble has promised… a minimally invasive proceed when it comes to inheritance tax reform,” said Goebel in a statement. “Now he is reneging on these intentions and getting an axe out to hurt family enterprise as well as Germany’s unique financing culture.”