BUSINESS TRANSFERS TO EMPLOYEE OWNERSHIP IN EUROPEAN SMEs

  Employee share ownership, employee ownership - two families
Large companies seek a large number of shareholders, making it logical for employees to participate in this shareholding by investing some of their own money.
In SMEs, the situation is quite different. Share ownership is generally limited to a few managers and it is very stable, except when succession needs to be planned. In this case, collective employee ownership becomes relevant. In this form, the individual employee does not become a shareholder and does not invest any personal funds. The new shareholder of the company is a trust-like legal entity that represents the collective of employees who are its beneficiaries.

  Great Britain – The rise and sabotage of employee ownership in SMEs
For a long time, the ESOP model, implemented in the US in 1974, was the benchmark for employee ownership. Then, in 2014, Great Britain introduced the Employee Ownership Trust (EOT) model, simpler than the American mechanism. Within a few years, it became clear that the number of business transfers to employees was growing much faster than in the US.
Since 2014, 2,578 SMEs have been transferred to employees in Great Britain, with 180,000 employees generally becoming 100% owners of their company. The proportions are more significant than the numbers. This points towards an economy where one in ten SMEs would be owned by its employees. Never before in the world had employee ownership reached such proportions.
Then, a new government was elected in the United Kingdom in 2024. It made the decision to tax and re-tax business transfers. In her 2025 Budget Speech delivered on November 26, the new Chancellor of the Exchequer announced that the tax exemption for business transfers to employees will be halved. Since November 27, the effect is dramatic. Overnight, business transfers to employees in Great Britain have come to a halt.
The graph below shows the evolution of business transfers to employees as a proportion of all business transfers.

                                                                                                                                                           Update: 12-12-2025

  Chronicles on employee ownership in SMEs 2000-2025
Here is a selection of our monthly chronicles which have covered multiple topics over the years: employee share ownership and employee ownership - the two families, the ESOP model and the EOT model, rise and sabotage in Great Britain, why the legal mechanism must be that of a trust, remarkable cases - Wolfgang Digital in Ireland, Iteratec in Germany, and many others...  Download

  Belgium – Proposed Law 2025
In 2001, Belgium was the first country outside the USA to adopt legislation aimed at implementing an ESOP-type model. However, at that time, Belgian legislation did not include a "trust" type vehicle. Therefore, the law of May 22, 2001, provided for a cooperative holding company to fulfill this role. Unfortunately, it quickly became apparent that this Coop-ESOP was impractical under European tax rules, and it therefore had to be abandoned. Avis sur la Proposition de loi modifiant la loi du 22 mai 2001

 

 

 

 

For information and contact
 EFES - EUROPEAN FEDERATION OF EMPLOYEE SHARE OWNERSHIP
FEAS - FEDERATION EUROPEENNE DE L'ACTIONNARIAT SALARIE
Avenue Voltaire 135, B-1030 Brussels
Tel: +32 (0)2 242 64 30 - Fax: +32 (0)2 808 30 33
E-mail: efes@efesonline.org
Web site: www.efesonline.org
EFES' objective is to act as the umbrella organization of employee owners, companies and all persons, trade unions, experts, researchers, institutions looking to promote employee share ownership and participation in Europe.