Although the recommendation is not binding, it is particularly relevant because it anticipates the direction that future national and European policies could follow in the field of family businesses, generational renewal and tax incentives for business transfers.
On 22 June 2026, the European Commission adopted Recommendation C (2026) 3799, which replaces the long-standing Recommendation 94/1069/EC of 7 December 1994 on the transfer of small and medium-sized enterprises.
This recommendation is not binding, but it will undoubtedly serve as inspiration for policies relating to family businesses. In fact, since the Court of Justice Judgment of 13 December 1989, Grimaldi (C-322/88), it has been established that recommendations are not devoid of all legal effect and that national courts are bound to take them into consideration in order to decide disputes before them, in particular where they cast light on the interpretation of national measures adopted in order to implement them.
This new text places special emphasis on the need to promote business continuity, an issue of strategic European interest in the current socio-economic context, marked by the progressive ageing of the population (which reduces the number of potential successors) and the lack of European buyers, which may favour the acquisition of strategic companies by foreign investors, with risks for the economic sovereignty and value chains of the EU. In this framework, the family business is expressly recognised as a pillar of the European economic model, the failed transfer of which constitutes a loss that is not only private, but also social. For this reason, the Commission stresses the importance of taking appropriate action in, among others, the following areas:
- Promote awareness and training among entrepreneurs, encouraging advice that facilitates early succession planning, including for specific groups, given that early exposure to business transfers increases the chances of success and broadens the pool of potential successors. In short, analyse today to avoid worries tomorrow.
- Facilitate the change of legal form without the need to liquidate the company or create a new entity, so that the corporate structure can be adapted to the requirements of the transfer operation.
- Offer financial instruments (subsidized loans, guarantees, microcredits) to facilitate the acquisition of existing SMEs, with special attention to rural areas, micro-enterprises, cooperatives and employee buyouts.
- Promote digitalisation in transfer procedures, the creation of platforms to connect buyers and sellers and cross-border interoperability of national systems.
- Adopt national tax measures that favour the continuity of the activities of SMEs that are the subject of transfers within the family or to certain third parties, especially in the following areas:
- Tax incentives: exemption, reduction and deferral: It is recommended that States consider exemption, reduction or deferral of taxation to support transfers of SMEs within the EU. States are urged, among other things, not to discriminate based on the legal form of the transaction or the type of transfer, whether intra-family, to employees, to management (management buyout) or to external third parties. In addition, it is considered advisable to establish specific tax incentives, such as (i) reductions on business assets in the event of transfer by gift or inheritance, (ii) incentives for the reinvestment of capital gains derived from the sale of shares of unlisted companies in other unlisted SMEs that carry out productive activity, or (iii) reduction, elimination or deferral of stamp duties, registration fees and other similar taxes associated with transfers of this type of company.
- Inheritance taxation and double taxation: The Commission urges Member States to adjust their tax regimes to take account of inheritance taxes paid in another Member State and promotes the conclusion of bilateral treaties to avoid double taxation. This second recommendation is particularly relevant given that, unlike income taxation, the network of inheritance and gift tax treaties in the EU is notoriously limited (in the specific case of Spain, there are treaties only with France, Greece and Sweden).
- Cumulative impact and adjustment for subsequent value: It is recommended that the cumulative impact of the various forms of taxation during the transfer be taken into consideration, in order to prevent the overall tax burden from jeopardising the continuity of the company, as well as the possibility of tax assessments taking into account changes in the value of the company after the transfer, in order to better reflect market value and support financial planning. This last issue, although conceptually attractive, raises technical aspects that are difficult to articulate (review period, triggering events, interaction with statute of limitations rules) which the recommendation leaves unresolved.
The recommendations on tax matters do not overlook the anti-abuse dimension, according to which Member States should reconsider incentives where the main purpose of the transfer is to obtain a tax advantage that defeats the object or purpose of the applicable legislation.
Finally, the recommendations establish a conditionality clause (which makes tax incentives conditional on the company remaining operational in the EU for a minimum period or on the new owner guaranteeing employment), which can generate interpretative tensions in practice.
Undoubtedly, the Commission’s recommendation is of particular importance, as it reminds us, three decades later, that the structural obstacles inherent in business transfer have not been fully overcome.
In the current economic context, an effort is needed to broaden the approach (incorporating the digital, cross-border and strategic dimensions) and, at the same time, to adopt an active position to take advantage of the room for improvement that exists in certain areas, such as in tax matters. On this point, the experience accumulated in recent years shows that the different types of territorial incentives and the complexity associated with their practical application have led to increasing conflict and litigation linked to the review of their application. The Spanish experience is a good example of these difficulties, especially in relation to the application of tax benefits linked to family businesses, where the coexistence of complex requirements and changing interpretative criteria has led to significant litigation.
All these issues increase the uncertainty inherent in the handover process in an already complicated context, to the point that many business groups find it necessary to closely monitor regulatory changes, as well as the administrative and judicial interpretations of the applicable rules, in order to anticipate points of friction with the tax authorities and adopt corrective measures that allow them to address these in the best possible way, so that the tax aspect does not become an additional obstacle to the business transfer.
It is therefore desirable, without prejudice to the practical implementation of the tax incentives set out in the Commission’s recommendation, to give further attention to the need (stressed by the Commission itself) for Member States to establish national focal points for the early detection of these challenges and the coordination of activities at national level, and to participate actively in the exchange of experiences and best practices with a view to its implementation.
