Succession in a family business – how do you pass the company to the next generation?
Succession is about much more than moving shares from one owner to another. Who should own, who should run it, should the shares be given or sold, should the children own personally or through a holding company – and how are siblings who will not join the business treated? Take the decisions together, before the shares move.
There is no inheritance tax in Norway in 2026
Norway has had no inheritance tax since 1 January 2014. An ordinary gift or inheritance of shares therefore does not trigger inheritance tax today. That does not mean the historical tax in the shares disappears. On inheritance or gift the general rule is tax continuity. If the parent bought the shares for NOK 100,000 and the company is worth NOK 20 million today, the child does not automatically get 20 million as a new tax base. The child takes over the parents' historical base and other tax positions, including the shielding basis and unused shielding. The latent gain follows the shares and is calculated from the carried-over base if the child later sells personally.
Gift, sale, or something in between?
There is no single right model for every family business. A pure gift. The parents transfer the shares for no consideration. That does not normally trigger a taxable gain for the giver, but the child takes over the historical tax positions. Often the simplest model where the parents do not need payment. An ordinary sale. The child buys the shares. Where a parent sells personally owned shares at a gain, the taxable gain is taxed under the shareholder model, at 37.84% in 2026 after any shielding. Where the business is owned through the parents' Norwegian holding company, a gain on a sale of Norwegian shares will normally fall under the participation exemption. A gift sale. The shares are sold to the child for less than market value, so the transaction has both a sale and a gift element. A gain or loss is as a general rule calculated for the giver based on the actual consideration, while the recipient takes over the historical tax positions under the continuity rules, adjusted for any gain or loss already taxed. Before choosing a model, get a documented picture of what the business is worth.
Can the shares be given directly to the child's holding company?
Yes, that can be possible. Skatteetaten's guidance takes the view that a gift or gift sale can also be made to a limited company owned by the person the giver wants to benefit. Where the child's holding company receives the shares in the family business, future share gains within the participation exemption will normally be tax-free in the holding company. What a holding company actually gives you and costs should be assessed before the structure is chosen. Ordinary dividends within the participation exemption normally give an effective tax of 0.66%, with further exemptions in qualifying group relationships. The money can therefore largely stay in the structure and be reinvested. But there is an important detail: the gift to the holding company does not increase the child's personal tax base or shielding basis on the shares in the holding company. Complicated arrangements can also be caught by the anti-avoidance rules. A direct gift to a holding company should therefore be planned for the specific case – not copied uncritically from another family's structure.
Should the child pay the parents over time?
Where the parents want payment but the next generation does not have enough capital, vendor credit can be an option. The parent sells the shares to the child's holding company for, say, NOK 5 million. The holding company pays one million at completion and owes the remaining four under a promissory note, and can later receive dividends from the family business to pay the debt down. But there is a tax trap here too. When a personal taxpayer lends money to a limited company, interest above a specific shielding rate can be taxed additionally under section 5-22 of the Taxation Act. The shielding rate is set periodically by the Directorate of Taxes. Calculate the interest, the payment schedule and the tax effect before the note is signed.
What about siblings who will not join the business?
This is often the hardest part. One daughter may take over the business and work there full time, while two other children have entirely different careers. Equal treatment does not have to mean everyone owning a third of the business. The parents can let the active child take over the company and compensate the others with cash, property or other assets. What matters is that the family decides which principle applies. A documented valuation can be very useful even though there is no general statutory requirement for an external valuation on a gift. The family then knows what values were actually transferred at the time of the succession.
Should the gift count as an advance on inheritance?
You have to decide this. Under the current Inheritance Act a gift to a child is not automatically deducted from that child's later inheritance. Where the parents want the value to be set off against the child's future inheritance, that has to be made a condition of the gift. The Act recommends the condition be put in writing and made known to the other direct heirs. It is far better to write that the gift is to be set off against the recipient's later inheritance by a specified amount than to hope the siblings all read the parents' intention the same way twenty years later.
Forced heirship does not necessarily stop a succession during your lifetime
Children have a forced share. Under the Inheritance Act that is as a starting point two thirds of the estate, capped at 15 times the National Insurance basic amount per child or per child's line. From 1 May 2026 the basic amount is NOK 136,549, so 15 G is NOK 2,048,235. But the forced share rules do not mean every gift the parents make during their lifetime has to be shared equally. The Inheritance Act distinguishes between lifetime dispositions and dispositions on death. A real gift that actually takes effect while the giver is alive will normally be a lifetime disposition. A gift that has no real effect, or was not meant to have any, before the giver's death can instead be a disposition on death and has to meet the rules for a will. That distinction can matter a great deal where much of the family wealth sits in the company.
A and B shares can separate ownership from voting power
Some parents want to transfer economic value to the next generation without giving up all control at once. The Companies Act allows different share classes where the differences appear in the articles, and a class can have no voting rights or limited ones. The family can therefore have A shares with strong voting rights held by the senior generation and B shares with weaker or no voting rights held by the children. But that does not mean the parents obtain full control with a very small part of the share capital. Several rules in the Companies Act are measured by capital and not only by votes – amending the articles requires at least two thirds both of the votes cast and of the share capital represented. Creating or changing share classes should therefore be planned before the transfer.
The gift can be made the child's separate property
Where the shares are given to the child personally, the giver can decide that the gift is to be the child's separate property (særeie). The Marriage Act expressly allows a giver to set such a matrimonial property regime as a condition. As a starting point, whatever later replaces the separate property, and the return on it, is also separate property unless otherwise decided. That can be particularly relevant where the shares represent value built up in the family over several generations. Where the shares are transferred directly to the child's holding company instead of to the child personally, the family law effect and any separate-property protection have to be assessed separately.
Remember the articles before the shares are given away
A gift is also a change of ownership. In an ordinary AS the starting point is that company consent is required unless the articles say otherwise. Consent cannot be refused where the shares are transferred to the former owner's children or other relatives in the direct ascending or descending line, and the ordinary statutory pre-emption right cannot be exercised against such close relatives either. There is a practical trap here, though: the child and the child's holding company are two different legal persons. A direct transfer to the child and a transfer to the child's holding company can therefore be treated differently under the articles, the shareholders' agreement and the Companies Act's rules on consent and pre-emption. Settle that before the deed of gift is signed.
Update the documentation after the transfer
Once the succession is complete, the share register has to be updated and the change reported in the company's shareholder register statement, due 31 January in the year after the income year. Where the company's beneficial owners change, the register has to be updated within 14 days. There should at the same time be order in the deed of gift or purchase agreement, any provision on setting off against future inheritance, any separate-property provisions, the basis of the valuation, the promissory note where there is vendor credit, the articles and share classes, a shareholders' agreement where several family members will own together, and the share register and tax reporting. The best succession rarely happens on the day the parents decide to stop. It can take time to establish who actually wants to run the company, to separate the business from property or investments, to set up holding companies, and to find a solution that works for siblings who will not be active owners.
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This is general guidance, not advice on your specific case. Deadlines, rates and amounts change – always check the current rules, or get in touch with us.
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