2025 Global 500 Report Family Business Index, The Global 500 Family Businesses, conducted by EY and the University of St. Gallen (Switzerland), shows that more than 25 million people work in the world's 500 largest family-owned companies in 43 countries, generating total revenues of almost $9 trillion. According to the figures, family businesses are the world's third largest economy after the US and China.
The strength of family businesses, beyond the figures, means tradition, added value in all the economies in which they have developed globally, stability, continuity, respect for strong values. Romania is on this map, both with its pre-war history and with its significant growth over the last 35 years, since the fall of communism. In these three and a half decades, we are talking not only about complex economic issues, but also about taxation and legal aspects of succession in companies founded and positioned as family businesses, argue Corina Mîndoiu, Partner, Income Tax and Social Security Contributions, EY Romania and Geanina Ciorâță, Senior Manager, Income Tax and Social Security Contributions, EY Romania, in a new analysis.
Strategic challenges
Succession planning is seen as critical by almost half (49%) of respondents globally, revealing that it has become a top priority concern worldwide. The EY survey highlights some other interesting figures, which could be extrapolated quite accurately for the Romanian market. More and more family businesses are considering structural changes: more than a quarter of them (26%) are considering attracting external capital, a fifth (19%) are planning to bring in top management from outside the family, and 12% are considering a stock market listing.
On the other hand, M&A is seen as a potential growth driver: 47% of the top 500 family-owned companies have been involved in M&A deals in the past two years, and a significant proportion are expecting large sums for this activity.
If family businesses are looking for growth through innovation and flexibility, digital transformation and the use of AI, changing the business model seems to be a low priority, considering that only a very small percentage (3%) are planning a complete reinvention.
Family businesses in Romania
Problema succesiunii, aspectele fiscale și legale – înțelegerile (sau neînțelegerile) între generații, între fondatori și copiii acestora (moștenitori), politica de transfer a proprietăților ori de împărțire a acestora între membrii familiei, sunt doar câteva dintre potențialele chestiuni de rezolvat în cazul acestui tip de afaceri în România.
For families with significant assets or international elements, succession planning from a tax point of view becomes essential in this context. The larger and more diverse the assets, the more significant the tax impact becomes. And if they are distributed in several countries, the risk that the wealth is reduced when it is divided between heirs, and after inefficient payment of the related taxes, can no longer be ignored.
What needs to be taken into account when inheriting large fortunes?
First, the fact that not all assets are treated the same - we have different tax rules for the transfer of real estate, shares in companies, financial assets, works of art or other assets. Still in Romania, amounts received as inheritances or gifts are non-taxable, as are transfers of real estate between family members.
Second, tax residence of the deceased and heirs, and where assets are located are essential elements in a discussion about succession. In many tax systems, inheritance tax overlaps with other forms of taxation: annual property taxes, taxes on financial assets or investments, capital gains taxes or even „exit tax” in the case of a change of tax residence.
In this context, it is worth considering a number of „friendly” tax regimes, which provide both during life and in the context of succession a predictable and favorable framework for the transfer of wealth. Some systems provide for annual flat-rate taxes for high-income earners, others offer exemptions for foreign and/or domestic income. In some cases, these facilities can be extended to family members for an additional fee.
However, such schemes come with clear conditions: usually a minimum number of days per year must be spent in the jurisdiction in order to demonstrate a genuine connection with the jurisdiction and to reduce the risk of challenges from the tax authorities. The period of validity of these facilities is usually limited, ranging from a few years to longer periods, depending on local legislation.
Last but not least, estate planning through sophisticated wills, family holding companies, trusts and foundations or other cross-border structures can be essential to protect wealth. These tools, when implemented consistently, can significantly reduce tax costs, but can also provide clarity and control over how wealth is divided between heirs.
Segmentul afacerilor de familie din România este relativ „tânăr”: majoritatea companiilor sunt la prima generație, ceea ce poate fi văzută și ca vulnerabilitate (lipsa expertizei în succesiune), dar și ca oportunitate – generația nouă poate aduce inovație, digitalizare, viziune pe termen lung. Cert este însă faptul că lipsa unor planuri de succesiune bine puse la punct, fiscal și din punct de vedere legal, înseamnă riscuri majore de prăbușire a unor afaceri construite cu greu.
Without a well thought-out transition, many of these businesses will not survive the generational change, especially if the founders do not prepare their „successors” in advance. In order to remain competitive and sustainable, family businesses in Romania need to adopt modern governance structures: not only families, but also professional managers, independent boards or external advice can be important.
