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Introduction
Entrepreneurs running sole proprietorships often worry about the future of their business in the event of unforeseen circumstances. The institution of a succession manager, introduced in 2018, allows for the secure and continuous operation of the business even after the entrepreneur’s death.
Who is a Succession Manager?
A succession manager is an individual who temporarily takes over the management of the sole proprietorship after the death of the entrepreneur. Typically, they have 2 years to handle the formalities associated with “taking over” the business and to make decisions about its future.
How to Appoint a Succession Manager?
To appoint a succession manager, an entrepreneur must:
– Submit a written declaration appointing the manager;
– Obtain consent from the manager to perform the role;
– Register the management with the Central Registration and Information on Business Activity (CEIDG).
An entrepreneur can also appoint one “reserve” manager.
Heirs can also appoint a manager after the entrepreneur’s death. They have 2 months to do this, and it must be done at a notary’s office. However, it’s worth noting that appointing a manager post-mortem is more formalized and also tied with emotional difficulties due to the actions needed shortly after the death of a loved one.
Benefits of Appointing a Succession Manager
1) Smooth Business Transition: The business continues without the expiration of licenses and permits, allowing ongoing cooperation with existing JDG contractors.
2) Preservation of Tax Identification Number and Bank Accounts.
3) Tax Benefits: The possibility of remaining on the VAT white list, continuing to settle JDG in the existing form of taxation.
Potential Complications Without a Manager
The absence of a manager can lead to serious complications. Heirs can only undertake temporary tax activities related to the current business operations (up to 6 months). After 6 months without a manager, the business ceases to exist, resulting in the loss of accrued achievements.
Exemption from Inheritance and Donation Tax
Inheriting a business can be exempt from tax if:
1) The declaration of inheritance is made using form SD-Z2 within 6 months (for immediate family).
2) A buyer outside the family continues to run the business for 2 years after acquisition.
3) The business is contributed to a company (the 2-year condition applies to holding shares).
Summary
The succession manager is a valuable tool that ensures the continuation of a JDG after the entrepreneur’s death. It facilitates formalities, ensures smooth operation of the business, and offers a range of tax benefits. Our team of lawyers and tax experts is ready to assist you in establishing a succession manager and choosing the optimal solution for your business.
