Handing your business to your child: settling up or rolling over
Written by Ilias Aarrass6 min read · Published on · Last reviewed on 
In short
Handing your business to your child means ceasing and settling on goodwill and hidden reserves, unless you roll over; for that your successor must have been a co-entrepreneur or employee for three years.
- Gifting does not remove the settlement: market value is used.
- With a rollover your child takes over your book values and pays the claim on their own cessation.
- For business assets there is a separate gift tax scheme, with a continuation requirement.
- Start preparing at least three years before the intended transfer date.
You have spent years building your business and your child wants to take it over. Emotionally that is often easier than it is for tax. Because the moment you hand over the business, it ends for you, and the tax authorities want to settle up on everything that has built up in value over the years: goodwill, written-down premises, a van worth more than its book value. There are schemes to roll that moment forward, but they set conditions you must start on years in advance. This article explains how it works and what to begin in good time.
Handing over means ceasing
If you hand over your sole proprietorship, whether you sell or gift it, you cease your business. You then settle up on the cessation profit: the difference between the real value and the book value of everything in your business, plus the goodwill you built. The cessation relief and the SME profit exemption offset part of that, but what remains is simply taxed in box 1. The full calculation is in selling your sole proprietorship: goodwill and cessation profit.
Gifting the business instead of selling it does not remove that settlement. For income tax the market value is used, even if no money changes hands. On top comes gift tax, because your child receives something of value. If you deliberately sell too cheaply, the difference is treated as a gift.
The rollover: working together first
There is a scheme allowing you not to settle the tax claim but to roll it over to your successor. Your child then takes over your book values and later, on their own cessation, pays the tax on the value you built. The key condition is that your successor has genuinely been involved in the business for some time: they must have been a co-entrepreneur or employee in the business for a period of three years before the transfer.
That makes the planning concrete: if you want to hand over in three years, your child must already be working in the business now, for example as a partner in a general partnership or on the payroll. Those three years are not a formality; without that period the rollover option lapses and settlement simply follows. See also starting a partnership with a business partner as an intermediate step.
| Ordinary transfer | Rollover | |
|---|---|---|
| Tax now | You settle on hidden reserves and goodwill | No settlement for you |
| Book values | Your child starts with new values and depreciates those | Your child takes over your old book values |
| Condition | None | Three years as co-entrepreneur or employee first |
| Later | You are done | Your child pays the claim on their own cessation |
Gift tax and the business succession scheme
Alongside income tax there is gift tax. If your child gets the business for less than its value, that difference is a gift. For business assets there is the business succession scheme: a large part of the value stays outside gift tax, on condition that your child continues the business for a number of years. The amounts and percentages of that scheme have been adjusted several times in recent years, so have the current figures checked for your situation.
If business premises are part of the transfer, look at transfer tax too. For transferring a business within the family an exemption exists under conditions. That is exactly the kind of point where a conversation with your bookkeeper or a tax specialist beforehand pays for itself, especially because the conditions have to line up.
Worked example: why thinking three years ahead pays
- Value of the business
- € 180,000
- Book value of the assets
- € 60,000
- Cessation profit on an ordinary transfer
- € 120,000
- With a rollover
- no settlement now
Result: Without a rollover you pay box 1 tax on that € 120,000, less the cessation relief and the SME profit exemption. With a rollover that amount stays put until your child eventually stops. The difference is not in the price you agree, but in the three years of preparation beforehand.
What to arrange in practice
Start with a valuation, because everything hangs on it: the price, the gift tax and the tax claim. Do not have it worked out on a napkin but substantiated, for example based on the profit of recent years and the fixed assets. Then record in writing what transfers: equipment, stock, client base, trade name and possibly the premises. For the buyer's side see taking over a business.
Think about what happens after the transfer too. Will you keep working in the business, and if so, in what capacity? A fixed monthly amount for advice is simply revenue and must be invoiced. If you stop entirely, report it to the Chamber of Commerce and the tax authorities and close your records properly, see stopping or pausing as a freelancer.
Frequently asked questions
Do I settle up if I gift my business?
In principle yes. For income tax the real value is used, even without money changing hands. A rollover can defer that settlement.
What is the key condition for a rollover?
That your successor was a co-entrepreneur or employee in the business in the three years before the transfer. Without that period the option lapses.
Does my child pay gift tax on the business?
On the difference between the price paid and the value, yes, but for business assets there is a separate scheme exempting a large part, provided the business is continued.
When should I start preparing?
At least three years before the intended transfer date, because your successor must already be working in the business during that period. Valuation and agreements happen in the same process.
Sources
- Transferring your businessBelastingdienst · belastingdienst.nl
- Cessation relief 2026Belastingdienst · belastingdienst.nl
Sources checked on
This article provides general information based on the rules known for 2026 and does not replace personal tax advice. For your specific situation, we're happy to take a look with you.
