Family businesses make up more than 60% of all companies in Europe. They range from sole proprietors to large international enterprises. Big or small, listed or un-listed, family businesses play a significant role in the EU economy. The European Commission recognises this role and promotes the creation of a favourable environment where family businesses can grow and develop.
Common European definition of a family business
- The majority of decision-making rights are in the possession of the natural person(s) who established the firm, or in the possession of the natural person(s) who has/have acquired the share capital of the firm, or in the possession of their spouses, parents, child, or children’s direct heirs.
- The majority of decision-making rights are indirect or direct.
- At least one representative of the family or kin is formally involved in the governance of the firm.
- Listed companies meet the definition of family enterprise if the person who established or acquired the firm (share capital) or their families or descendants possess 25 per cent of the decision-making rights mandated by their share capital.
Main challenges faced by family businesses
- the importance of preparing business transfers early
- access to finance
- taxation issues
- family governance - balancing family, ownership, gender balance rules, and business aspects
- attracting and retaining a skilled workforce
- entrepreneurship education and family-business-specific management training
Support available to family businesses
Family businesses are eligible for all support provided for small and medium-sized enterprises (SMEs) such as funding under COSME an EU structural funds.
Commission activities in the area of family business
The European Commission promotes a family business-friendly environment, helps to spread information, and supports the sharing of best practices between EU countries. The EU also encourages national governments to adopt business-friendly taxation and company law, and support entrepreneurial education.
Commission actions include
- the Small Business Act which highlights the role of family business and the need to exploit their full potential
- the expert group on family business between 2007-2009 – consult the final report (214 kB)
- a study 'Overview of family business relevant issues' (4 MB) completed in 2008