Internal Market, Industry, Entrepreneurship and SMEs

Family business

Family business

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:

  1. 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.
  2. The majority of decision-making rights are indirect or direct.
  3. At least one representative of the family or kin is formally involved in the governance of the firm.
  4. 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:

  • policy makers are unaware of the needs of family businesses and their economic and social contribution to society;
  • access to finance and taxation issues;
  • the importance of preparing business transfers early;
  • 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.

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: