Inheriting shares in a company in another country is rarely the clean windfall it sounds. It arrives with obligations, exposures and decisions in a legal and tax system the heir does not know, often at a moment of grief and usually with a clock running. The single most common mistake is to do nothing, on the assumption that an inherited asset can be dealt with later. In cross-border succession, later is when the problems compound.
An inherited company is harder than an inherited flat because three systems act on it at once. Succession law decides who owns the shares. The company law of the country of incorporation decides what that owner can do, and what the other shareholders can do to him. Tax law, often that of two countries, decides the cost.
Which law decides who inherits, and which does not
Across most of the European Union the starting point is Regulation (EU) No 650/2012 on succession. Article 21 makes the applicable law that of the State where the deceased had his habitual residence at the time of death, unless he was manifestly more closely connected with another State. Article 22 allows him to choose instead the law of a State whose nationality he possesses, expressly in a disposition of property upon death or demonstrated by its terms. Denmark and Ireland are not bound.
What the Regulation leaves out matters more than what it covers. Article 1(1) excludes revenue, customs and administrative matters, so it says who inherits and nothing about who taxes. Article 1(2)(h) excludes questions governed by the law of companies, naming the clauses in the articles of association which determine what will happen to the shares upon the death of the members.
Those exclusions describe the trap. One law makes you the heir. Another decides whether the articles force you to offer the shares to the survivors, and whether the register will accept you. A third, unharmonised, decides the tax. A clean succession ruling at home solves the easiest of the three.
First, establish what you actually have
Before anything else, the heir needs to know what the shareholding is: what the company owns, what it owes, whether it is solvent, who else owns it, who runs it, and what obligations attach to it. An inherited company can be a valuable asset or a liability with a share certificate, and the two require opposite responses. This is the legal due diligence exercise, applied to something you did not choose to buy, and it is set out in our note on legal due diligence before you buy.
It differs from a buyer’s exercise in one respect that shapes the method. A buyer has a seller answering questions; an heir does not, because the person who knew where the guarantees were is the person who died. The work starts from the filed accounts, the register extract, the current articles and the recent minutes. Late filings are a finding.
Three things change the answer rather than colour it. Whether the death triggers anything, since change of control clauses in facilities and customer contracts are often drafted to catch transfer by operation of law. Whether guarantees or shareholder loans run between the estate and the company. And what the incumbent directors are doing meanwhile.
Proving you are the heir where the company sits
Being the heir and proving it to a foreign registrar are different achievements. The European Certificate of Succession exists for that gap. Article 62 creates it for use in another Member State, and Article 69 gives it effect in all Member States without any special procedure, with a presumption that the person named holds the rights it records.
Two features catch people out. Under Article 62(2) and (3) its use is not mandatory and it does not replace the internal documents used for similar purposes, so a national grant may still be needed alongside it. Under Article 70(3) the certified copies issued are valid for six months, shown as an expiry date, save in exceptional, duly justified cases. An heir who negotiates with siblings for eight months presents an expired one.
The bank is the harder gate. A death changes who ultimately owns and controls the company, which triggers a fresh compliance file: Article 14(5) of Directive (EU) 2015/849 requires due diligence on existing customers when the relevant circumstances of a customer change, and Article 20(1)(b) of Regulation (EU) 2024/1624, applicable from 10 July 2027, requires the institution to understand the ownership and control structure. Until the file is complete the accounts can be frozen while the company trades.
Establishing control and authority
Inheriting shares does not automatically put you in control. The transfer of the shares into your name may require formalities in the company’s jurisdiction, the existing directors remain in place until properly changed, and other shareholders may have pre-emption or other rights triggered by the death. Until the ownership is formalized and the governance addressed, the heir may own the company on paper without being able to direct it, which is a dangerous gap if the company needs decisions made.
Inheriting the participation is not inheriting the control. In a Dutch BV the articles may, under Article 2:192(1)(c) of Book 2 of the Civil Code, oblige a shareholder to offer and transfer his shares in cases they describe, and death is the case most commonly described. Article 2:194 leaves the shareholders register with the management board. Behind the articles sits a shareholders agreement, with quorums and drag-along rights, that the succession does not displace.
Registration is not a formality. Article 20(2) of the Handelsregisterwet 2007 requires the prescribed filings within one week of the event, and Article 25(1) provides that a fact which must be disclosed by registration cannot be invoked against third parties who were unaware of it until it is registered. An unfiled director change is not opposable to a counterparty unaware of it.
An inherited company does not wait for you to grieve. Its obligations continue, its directors keep acting, and the tax clock keeps running whether or not you have engaged with it.
The tax exposure comes first and fast
Inheritance tax may be due, and in more than one country: potentially where the deceased was resident, where the heir is resident, and where the company or its assets are located. The deadlines are often short and the reliefs, particularly for operating businesses, frequently depend on steps taken within a limited window. An heir who waits to understand the tax position can lose reliefs that were available only if claimed in time. We deal with the framework in our note on cross-border succession in Europe.
The exposure multiplies because the connecting factors differ. Article 1 of the Dutch Successiewet 1956 taxes everything acquired on the death of someone who resided in the Netherlands, wherever the shares are, and Article 3(1) deems a Dutch national who dies within ten years of emigrating to have been resident. Other States tax by location of the asset. The Commission Recommendation of 15 December 2011 regarding relief for double taxation of inheritances records that Member States have few bilateral conventions on the point.
Deadlines are jurisdictional and unaligned. Article 45(1) of the Successiewet requires the inspector to set the filing period so that it does not expire earlier than twenty months after the death, which misleads an heir who assumes the other country matches it. Article 21(1) fixes the valuation standard as the value attributable in economic traffic at the time of acquisition, and the liability has to be funded from an asset that produces no cash.
The business relief and the conditions that follow it
Most European systems relieve a genuine operating business at death, because taxing it at full value forces its sale. The Dutch facility in Articles 35b to 35f of the Successiewet grants, on request, a conditional exemption of 100 per cent where the business assets of the enterprise do not exceed EUR 1,543,500 and of 75 per cent above that figure. Article 35b(5) requires three years of continuation, and Article 35b(6) withdraws the exemption where it is not met.
Three conditions decide whether an inherited company qualifies at all. Article 35c(1)(c) reaches a substantial interest only where the company actually carries on an enterprise, and only the value attributable to that enterprise counts, so a company that has drifted into holding property and securities falls largely outside. Article 35d requires a one-year holding period before death, during which the company must already have run the enterprise. And Article 35b(7) requires the request with the return, so the relief is not granted on the authority’s own initiative.
Comparable reliefs carry longer strings. Article 20.2(c) of Ley 29/1987 reduces the Spanish taxable base by 95 per cent of the value of qualifying participations provided the acquisition is maintained for the ten years following the death, unless the acquirer dies first, failing which the tax not paid becomes due with late-payment interest. Article 20.1 applies regional reductions after the State ones. The heir is not free to restructure for years.
Keep, restructure or sell
Once the position is understood, the decision is strategic: run the company, restructure it into a coherent holding, or sell it. Each has consequences. Keeping it may mean taking on the management of a business in a country you do not operate in. Restructuring may bring it into an existing family holding, as we describe in our note on how family offices use Dutch BVs and stichtingen. Selling may be the cleanest answer, but a company sold in haste, without the housekeeping that makes it saleable, sells at a discount, as we set out in our note on keeping a company in good standing.
The three doors are not equally open at every moment, which argues for deciding early. A sale needs clean title, so the registers have to be corrected and the offer machinery in the articles dealt with rather than discovered at signing. A restructuring may be blocked by the maintenance conditions of a relief already claimed.
Do not run it by neglect
The default outcome, doing nothing, is the worst one. An unmanaged inherited company can accumulate filing failures, tax liabilities and governance gaps, and the heir who has become a shareholder, and often unwittingly a director, can face personal exposure for the neglect, as we set out in our note on serving as a director of a European company. Inheriting a company is the start of a set of obligations, not the end of a process, and the sooner it is engaged with, the more options remain open.
The exposure does not wait for an appointment. Article 2:248(7) of Book 2 of the Dutch Civil Code equates with a director, for the insolvency liability regime, anyone who has determined or co-determined the policy of the company as if he were a director. An heir who instructs the accountant while declining to be appointed is doing what that provision describes.
If you are facing this, we can help. Montclare handles exactly these situations for international businesses and families. Our services are set out on our services page.
This article is informational and does not constitute tax, legal or financial advice. The right course depends on the facts. Each engagement is subject to scope and applicable regulation.