Share merger: how it works and these are the benefits

In a share merger, shareholders exchange shares in BV A for shares in BV B. Both BVs continue to exist; only the shareholder structure changes. Often tax-favorable via the merger exemption (Article 3.55 of the Income Tax Act) — shareholders do not settle immediately. Widely used in investment rounds, holding structures, and bringing multiple companies together under a single top holding company. Costs: €2,000 – €8,000, depending on complexity.

The short answer

• What: shareholders exchange shares in BV A for shares in BV B; both BVs continue to exist.
• Tax: generally neutral via merger exemption under Article 3.55 of the Income Tax Act — no direct assessment of the shareholder.
• Notarial deed: required for the share exchange.
• Lead time: 4 – 8 weeks.

When do you use a share merger?

Four scenarios:

• Building a holding structure retrospectively. Shareholders of an existing BV transfer their shares to a new holding company. Exchange shares for shares in the holding company.
• Merging two private limited companies under a single top holding company. Shareholders of A and B receive shares in a new holding company C, which acquires A and B.
• Bringing in an investor. Existing shareholders and the investor contribute their shares to a new company with new relationships.
• Family holding transfer. Generations contribute shares to a family fund or holding company via exchange.

For the broader context: business merger.

The merger exemption

Article 3.55 of the Income Tax Act 2001 exempts shareholders from income tax in the event of a share merger, provided that conditions are met:

• The acquiring BV acquires an interest of ≥ 50% (at least the majority of the voting rights after the merger).
• The shareholder exchanges his shares for shares in the acquirer (possibly with a limited cash payment).
• The share exchange has a business background — not predominantly tax motives.

With an exemption, the book values ​​are carried forward; upon a later sale, you settle the account. It is a postponement, not a cancellation — but postponement can last for years or decades and therefore be very valuable.

Step-by-step plan

1. Preparation: structure, valuation, tax advice.
2. Shareholder resolutions at the relevant private limited companies.
3. Notarial deed for the transfer of shares — see share transfer.
4. Possible registration in the shareholders' register of the acquirer.
5. Tax treatment in income tax return; check exemption.

Difference from a legal merger

• Share merger: only the shareholding changes. Both private limited companies continue to exist.
• Legal merger: one BV is absorbed into the other. One BV ceases to exist.

A share merger is administratively lighter and faster; however, a legal merger changes the final structure more dramatically. Discuss both options with your advisor.

Pros and cons

Advantages:

• Tax neutral for the shareholder (subject to merger exemption).
• Lighter than a legal merger in terms of procedure.
• Both BVs continue to exist; no complete merger execution is required.
• Fast — often 4–8 weeks turnaround time.

Disadvantages:

• Structural merger fails to materialize — two limited liability companies with separate bookkeeping and administration.
• No reduction in operational overhead.
• Conditions for merger exemption must be exactly right — error in design leads to immediate settlement.

Honest recommendation

A share merger is an efficient instrument for changing structure without tax damage. The merger exemption alone often makes it thousands to tens of thousands of euros more attractive than other routes. Ensure the conditions are correct beforehand — a tax specialist can check this in a few hours.

For alternatives: legal merger and business merger.

Frequently Asked Questions