Prepare your organization for the future with an optimal tax structure

You want to optimally prepare your organization for changes, such as a business sale or increasing inflation. But is your legal and tax structure flexible enough for that? And what are the implications of the current setup of the structure on your business operations?

Prepare your organization for the future with an optimal tax structure

February 9, 2023
Fiscale structuur Structuuroptimalisatie Toekomstgericht ondernemen Economische veerkracht Belastingadvies

Business is doing well. Your ideas are increasingly taking shape and there is (still) sufficient liquidity. However, there are some obstacles: such as high energy, personnel, and procurement costs. Maybe your organization is managing well for now, but what if it starts causing problems?

You want to prepare your organization optimally for changes, such as rising inflation. For this, it is – of course – important to have sufficient financial resources, but equally important is having an optimal structure that allows you to flexibly respond to future situations. The examples below explain why it's important to look at this in a timely manner.

Example – one limited company is not a company (1/2)

Suppose you operate from one limited company but have two distinct business activities: in a simple example, a grocery store and a bakery. There are rumors of an impending economic downturn or crisis. Your financial dashboard, with set predictions, indicates that your bakery will no longer generate enough margin in the event of such an economic crisis. As a result, you decide that you want to sell the bakery.

If you want to do something with an eye on transfer, you need to have arranged your structure 3 years in advance.

The grocery store, on the other hand, is doing well, so you want to keep it. A disadvantage is that you operate under one limited company, causing both stores to influence each other. If your bakery makes a loss, it comes at the expense of the grocery store's (profitability). With two limited companies, or two legal entities, you could shut down or sell the bakery without making your grocery store liable.

Therefore, in this case, you want to move from one to two limited companies, but this requires a restructuring at an early stage. If you want to do something with an eye on business transfer, then for maximum fiscal flexibility, you need to have arranged your structure 3 years (!) in advance accordingly.

Rob Borgerink
Rob Borgerink Senior belastingadviseur
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Example – reduced sales due to delivery issues (2/2)

Suppose you have sold and profited from many products in recent years, leading you to decide to close a (yearly) contract with your supplier. In this, you agree to purchase a minimum number of products for a year. However, unforeseen circumstances such as high energy costs and delivery issues have led your customers to buy far fewer products. As a result, you end up with an (excessively) high inventory and face liquidity problems.  

In this case, it's important to assess how the current setup of your structure impacts your business operations. A fiscal unity and the concentration of assets and activities in one company can have significant consequences regarding risk and liability. It's wise to consider your options within your current structure, such as:

  • Reorganization
  • Restructuring
  • Sale & leaseback 
  • Loss compensation
  • Applying for appropriate business financing
  • Merger or acquisition

Making choices

There is no one-size-fits-all solution for every company; what works best for your organization depends partly on your current structure and the industry you're in. Always make decisions from a well-thought-out strategic vision to best ensure the continuity and liquidity of your organization. 

Also consider the impact a particular change has on your staff. Something may seem attractive financially and fiscally, but your staff must adapt to make it succeed.

If you have any questions or need help with a (re)structuring, feel free to contact us.

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