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Tax compliance in the family business

​The Spanish business fabric is built mainly on the basis of the family business. It is the business families, even through large companies, that have been weaving the spider web of our economy, with SMEs being the main typology in which we could frame them.

Sofía Sanmartín

Date 13/02/2020

The Spanish business fabric is built mainly on the basis of the family business. It is the business families, even through large companies, that have been weaving the spider web of our economy, with SMEs being the main typology in which we could frame them.

It is therefore not strange that, both in the legal and economic fields, the family business has been subject to almost obsessive analysis by the professionals that we dedicate to these areas. In this sense, the last need that has been noticed for companies of these characteristics, by virtue of the requirements of the most recent regulations, is the creation of Compliance protocols. We do not intend to make here and now the nth exposition of this issue in a general way, but rather as regards the Family Business Tax Compliance.

In tax matters, the family business is especially vulnerable, since areas with a specific taxation coexist, such as the ownership and development of an operational or equity business and the conduct of economic transactions; the relationships and operations between group companies and the frequency of transactions between family members and partners, on the one hand, and the family business on the other (related operations); and the ownership of the business and its eventual transmission within the framework of a generational relief process (special tax regime of the family business).

That is why it is essential for the family business the implementation of a fiscal policy that analyses this in its entirety, detecting possible risks and establishing appropriate and tailor-made business action policies and protocols.

In this regard, it is advisable to be cautious, anticipate tax trends, develop control and prevention measures, and periodically and orderly review the legal requirements to avoid or minimize the damages arising from a tax inspection or verification.

¿ How can your lawyers and referral consultants help you contain the fiscal impact? Well, without a doubt, preparing and applying a protocol to review the tax structures and policies of family businesses, in which they are assigned responsible for their monitoring and correct implementation; verify the possible tax risks that exist in the company; analyse the valuation of the operations carried out by the partners, their relatives and the administrators with the company; study whether the corporate structure of the family group is fiscally optimal and assess the creation of a holding or company that owns the family shares or of each of the family branches; and of course review the personal taxation of the members of the business family and assess whether it should be agreed that all tax returns of family members and their societies be made by the same team of lawyers and tax advisors to ensure a homogeneous application of tax criteria.

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