When should we begin planning?

Three to four years before the planned handover. The unbundling of private and business assets belongs years ahead — whoever is still unpicking it in the last twelve months risks tax consequences that can no longer be smoothed out.

What if none of the children wants to take over the business?

Then there are routes: strategic buyers, search funds, MBO/MBI, business exchanges or a foundation solution. With three to four years of lead time, workable solutions are usually found.

Does the managing director’s house belong to the business or to private assets?

That is settled case by case — what matters is the land-register entry, the tenancy agreement between business and family and the tax treatment in earlier years. A tax adviser checks this before the handover.

Where do most conflicts arise?

Rarely between the generations, more often between the siblings — who gets the business and who is paid out. A mediator for the conversations between siblings is therefore often the most important of the four roles.

Knowledge · Guide · German law applies

Company and family home at once.

A handover on two tracks — and what holds it together. When business and home are to pass to the next generation in good order over the years ahead.

Read the full guide · 9 pp.

Updated: June 2026 · General orientation, not legal or tax advice in the individual case (§ 3 RDG, § 4 StBerG)

In a great many family businesses the owning family also owns both the business premises and the private home — the double handover is the rule, not the exception. Whoever settles matters in good time leaves the next generation room to arrive. There is no reason to hurry — but a good reason to begin early.

Three conditions come together. Entangled valuation: the managing director’s house on the business plot, private guarantees for business loans — whoever does not unpick this hands over two things that cannot be cleanly separated. Liquidity position: gift tax, payouts between siblings and bridging loans often run into the seven figures; whoever plans too late pays the interest of haste. Family optics: one child takes the business, one the house, one is paid out — and the values are not trivially equal.

§§ 13a/13b of the Inheritance Tax Act exempt part of the favoured business assets: standard relief of 85 % (five-year holding period, minimum payroll), optional relief of 100 % (seven years, a higher payroll requirement). Private assets held within the business (securities without a business purpose, for instance) are often excluded as administrative assets — and are then fully taxable. The law remains under ongoing constitutional scrutiny; specialist tax advice checks the current position.

Three frequent questions — the managing director’s home (private or business asset? what matters is the land register, the tenancy agreement, the tax treatment), the managing director’s car and a mixed holding structure. For all of them: clarify years before the handover, not weeks before — whoever is still unpicking at the last risks tax consequences that can no longer be smoothed out.

An orderly double handover calls for at least three roles: a tax adviser specialised in mid-sized succession, a notary (notarial form is required for land and GmbH shares, § 311b BGB / § 15 GmbHG) and — where there is an external sale — an M&A adviser. A fourth, often forgotten role: a mediator for the conversations between siblings. In mid-sized families the conflict more often lies between siblings than between generations.

In roughly one case in two no successor is found within the family. Then: strategic buyers (competitors, customers — often the highest price), search funds (an incoming entrepreneur buys a company with investor capital and runs it), MBO/MBI (the existing or an external management takes over), business exchanges such as nexxt-change or, rarely, a foundation solution. An honest assessment belongs in the year before the handover becomes pressing — three to four years of lead time usually find workable solutions.

Business-asset relief (Betriebsvermögensbegünstigung): Inheritance- and gift-tax exemption of part of the favoured business assets (§§ 13a, 13b ErbStG).
Holding period (Behaltefrist): A period of 5 or 7 years after the transfer that must be observed so that the relief does not lapse.
MBO / MBI: Management buy-out / buy-in — handover to the existing or an external management together with capital partners.
Administrative assets (Verwaltungsvermögen): Assets without a business purpose held within the business — excluded from the relief and therefore fully taxable.

When should we begin planning?: Three to four years before the planned handover. The unbundling of private and business assets belongs years ahead — whoever is still unpicking it in the last twelve months risks tax consequences that can no longer be smoothed out.
What if none of the children wants to take over the business?: Then there are routes: strategic buyers, search funds, MBO/MBI, business exchanges or a foundation solution. With three to four years of lead time, workable solutions are usually found.
Does the managing director’s house belong to the business or to private assets?: That is settled case by case — what matters is the land-register entry, the tenancy agreement between business and family and the tax treatment in earlier years. A tax adviser checks this before the handover.
Where do most conflicts arise?: Rarely between the generations, more often between the siblings — who gets the business and who is paid out. A mediator for the conversations between siblings is therefore often the most important of the four roles.