Sell GmbH Taxes: 8 tips for optimal taxation
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Sell GmbH Taxes: 8 tips for optimal taxation

If a GmbH is to be sold, various criteria must be taken into account. On the one hand, it depends on the shareholder agreement, on the other hand, different taxes are due depending on the division of the shares. It is also relevant whether the GmbH shares are in the private or business assets of the shareholder.

Which taxes are incurred in detail and Which special regulations The question of what is possible is clarified in this article.

You don't have much time to read? Everything about selling a GmbH Taxes at a glance:

  • If a limited liability company is sold, the profit from the sale is a Income from business operations. Nevertheless, the proceeds are not subject to trade tax, but to income tax and final withholding tax.

  • A GmbH can be sold either as a whole or in shares. GmbH shares are freely saleable and can be by a legal or natural person be transferred to a third party.

  • If a Company share of a GmbH sold, an assignment shall be made in accordance with §§ 413 and 398 BGB.

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How does selling a limited liability company work?

Since a limited liability company is registered in the commercial register, this must be transferred accordingly when selling the company. So if you want to sell a Sell limited liability companythis must be certified by a notary public.

When selling a limited liability company All rights and obligations are transferred to the buyer of the company..

The rules for the sale of a GmbH

In principle, every shareholder is free to sell his shares in the GmbH. Exceptions apply if something else has been agreed in the shareholders' agreement: If it is stipulated there that the Shares sold only with the consent of the other shareholders If the sale is not permitted, a lawyer may have to be consulted to ensure that the sale is legally effective. A partial sale among several shareholders often involves conflicts and protracted disputes.

It is highly recommended to involve an experienced M&A advisor as moderator and mediator. This saves time and money and protects against emotional entanglements.

If a shareholder wishes to sell his shares in the company only in part, it is in any case necessary to obtain the Consent of the other shareholders irrespective of the provision in the articles of association.

Learn more about all relevant details for the safe sale of your GmbH:

In our online seminar Selling a Business you will learn how to find the right buyer for your company.

GmbH Sale Taxes FAQ

How is the selling price of a GmbH calculated?

There are several recognised methods for calculating the market value of a GmbH. Then add the capitalised earnings value of the last two years. The result is divided by 3 to determine an average. The capitalised earnings value method according to IDW S1 determines a specific company value on the basis of expected future earnings. Alternatively, the multiple method is common for an initial value estimate. Here, the EBIT or EBITDA figures of the last three to five years are averaged and multiplied by an industry and company size factor.

When does a gain on sale arise that must be taxed?

A gain on sale arises when the selling price less the costs incurred by the seller on the sale is greater than the book values of the shares sold. This gain on sale must then be taxed accordingly.

What is the taxable income on the sale of a GmbH?

Tax must be paid on the profit from the sale less the acquisition costs. Acquisition costs are, for example, the share capital, the purchase price of the shares (if these were acquired by purchase) and any capital increases.

What is the basis of taxation for GmbH shares?

The value of GmbH shares for cases of inheritance tax or gift tax assessment is to be determined according to the Valuation Act (BewG). This determined value according to the simplified capitalised earnings value method (§ 200) then forms the basis for the tax.

What taxes are due on the sale of a GmbH?

If a GmbH is sold, the seller has corresponding income. These are liable to income tax in Germany. However, there are different scenarios that may occur in a Company sale must be taken into account. Accordingly, different regulations are also anchored in the tax law.

Here are three situations that occur frequently in practice in detail.

Tip 1: Share deal or asset deal

In a share deal, the shareholders sell their shares in the GmbH. The sellers then receive the sales price accordingly. The liabilities that the GmbH has towards suppliers and banks often remain in the company and are transferred to the buyer. Nevertheless, this is taken into account in the purchase price structure. The Buyer takes over the company with all assets.

In a share deal, only the shares change hands. Otherwise, the legal framework and liability remain as before.

The seller of the shares must tax them in accordance with the statutory regulations.

In an asset deal, on the other hand, the GmbH itself is the seller and the assets are transferred to the seller. Both the Tangible as well as intangible assets must be listed individually in the contract. This also includes land as well as legal and contractual relationships.

Furthermore, the individual assets must be determined. They must be identified in such a way that it is clearly recognisable which asset they are. In addition, it must be recorded where the respective asset is located in the company.

The GmbH itself is not transferred, but remains as the legal entity. This means that in the case of an asset deal it is also possible to transfer the GmbH only in partnamely above the value of the fixed assets. The GmbH itself receives the sales price and the buyer transfers the purchased assets to his own company or establishes a new one.

In principle, the proceeds from the sale in an asset deal are subject to VAT (§ 2 UStG), but there are also exceptions (§ 1 para. 1a UStG)

Turnover within the scope of a sale of business to another entrepreneur for the latter's business is not subject to turnover tax. A business sale occurs when a business or a business that is separately managed in the structure of a business is transferred in its entirety for a consideration or free of charge or is contributed to a company. The acquiring entrepreneur takes the place of the seller.

§ 1 para. 1a UStG

The share deal is usually more advantageous for the sellers as it involves a low tax burden. Thus, the sale with the Asset deal taxed at approx. 30 percent for corporations. For natural persons, the taxation is up to 47 percent, if one disregards the special regulations in the tax law. In addition, it should be checked at an early stage whether, for example, the tax burden for the seller can be extremely reduced by means of a holding structure.

Tip 2: Sale as a natural person (shareholder)

If a private individual sells his shares in a GmbH, a distinction must be made as to whether the GmbH shares are held as business assets or as private assets. If a shareholder has shares in a GmbH but has nothing to do with it professionally, the shares are private assets.

In the case of shares which are held as business assets, the Partial income procedure. This means that the profit from the Sale only subject to 60 per cent income tax is.

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In the case of shares that are in the private assets of the shareholder, it must first be examined whether the natural person holds a substantial share in the company. A substantial share is deemed to exist in the case of a Shareholding in the GmbH of 1 percent or more before.

The partial income procedure also applies in the case of a significant participation and 60 percent of the sales profit is taxable and is taxed at the shareholder's personal income rate.

If there is a shareholding of less than 1 per cent, there is a Final withholding tax of 25 percent plus solidarity surcharge and church tax an. If the shares in the GmbH were acquired before 2009, the sale is tax-free.

Tip 3: Sale of GmbH shares by a corporation

If a corporation sells its shares in a limited liability company, the Total capital gain almost tax-free. 5 per cent of the capital gain arising from the sale is added back to income and taxed at around % 30. Thus, the final tax burden is about 1.5 per cent.

In the event of the sale of GmbH shares by a legal entity, the GmbH shares are regarded as business assets, which is why the Tax exemption of 95 percent arises.

Sell GmbH ? Save taxes?

The proceeds received from a sale of a GmbH or the individual shareholder shares are in principle income from business operations. However, no trade tax is due, but rather the trade tax is levied. Income tax, more precisely the final withholding tax. This legal regulation enables the seller of the GmbH to save taxes, as there are corresponding allowances and special cases in the Income Tax Act.

How can you minimise the tax burden?

In order to keep the tax burden as low as possible when selling a GmbH, the sale should be planned with foresight. It is therefore advisable to deal with this topic before planning a sale. This enables the seller to plan the sale in such a way that the corresponding tax advantages used can become. 

Partial income procedure

In German tax law, the partial income procedure applies to the sale of a GmbH. The partial income procedure means that only 60 percent of the sales proceeds must be taxed at the seller's personal income tax rate. This leaves 40 percent of the sale proceeds tax-free.

The partial income procedure applies if the seller's GmbH shares are held as business assets. We would be happy to examine your individual situation with experts to see if there are ways to optimise it. It is worthwhile to think about this early on.

Free initial consultation on the subject of selling a GmbH Taxes
KERN Partner Map DACH on the subject of selling GmbH Taxes

Tip 4: Sell company shares Taxes

The partial income procedure also applies to the sale of shares in the GmbH. This means that 60 percent of the profit from the sale is taxed and 40 percent is tax-free.

However, the partial income procedure is only applicable if the share in the GmbH is at least 1 percent.

If the participation is less than 1 percent, the final withholding tax plus solidarity surcharge and church tax is due. The The tax burden is then around 30 per cent.

Tip 5: Taxes on the sale of a GmbH with business splitting

A special tax feature can occur in the case of a sale of a GmbH with business splitting:

If the shareholder(s) sell their shares to a GmbH (limited liability company) which has chosen the way of business splitting in advance for liability reasons, this may result in a considerable additional tax burden.

If the shareholder of the GmbH rents out a property (land and building) that is used as business property, but the majority of which is in the private assets of the shareholder, this property is consequently entangled for tax purposes. It cannot be sold tax-free even after the holding period of 10 years has expired.

As a result, hidden reserves are regularly disclosed when the GmbH is sold. The hidden reserves arise from the difference between the book value and the market value of the land and building. They are subject to taxation even if the property is not sold. If, for example, the GmbH shareholder sells the company but keeps the property for reasons of old-age provision and rents it out to the successor, this additional tax burden arises. This is referred to as 'dry income', i.e. a tax burden without an inflow of liquidity - worst case!

A recommendable solution is the prior sale of the property to a new ownership limited liability company (GmbH & Co.KG) to be founded beforehand. In this case, the property can be Transferred to the GmbH & Co.KG at book value and no taxes are due on the hidden reserves as long as the property is held. A gift of the property, e.g. to the wife, before the sale of the GmbH is not a solution, as hidden reserves are also taxable then. First, a transfer to the GmbH & Co.KG must have taken place and then the KG shares can be transferred to the wife.

Prerequisite to the use of this construct is that the property is Rented to the GmbH for at least 6 years has been made. Long-term deadlines do not have to be observed and this structure can be built up in the process of the entire transaction. If the conditions are right, tax burdens from the capital gain of the GmbH shares can also be minimised (6b reserve).

Conclusion: With the correct procedure, a Very large tax relief be achieved.

Tip 6: Contributing shares to a holding company

In order for a GmbH to become the property of a holding company, the shareholder shares must be transferred in full to the holding company. There are two possibilities:

  1. One sells the shares to the holding company at the current market value. The market value must be determined and is checked by the tax office. On the proceeds of this sale, one then pays the corresponding taxes.
  2. The Qualified share exchange. This involves exchanging the shares in the GmbH for shares in the holding company. These shares are then subject to a lock-up period, which means that seven years have to pass before they can be sold. Shares sold with only 5 per cent tax can become.

If the contributed shares are to be sold before the Blocking period of 7 years are sold, then these are subsequently taxed. The tax burden is borne by the person who contributed the shares to the holding company. The retrospective tax is calculated on a pro rata basis. Each year that has elapsed since the contribution of the shares, the tax is reduced by one seventh.

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More tips for saving taxes

Tip 7: Claim transaction costs

In addition to the purchase price of the GmbH, transaction costs for advisers, surveyors, notary etc. are also incurred. These Transaction costs are incidental acquisition costs, if applicable. and usually to be borne by the buyer of the GmbH. They are expenses that reduce the profit and thus reduce the tax burden.

Tip 8: Spread GmbH sales over several years

The proceeds of the sale are taxable in the year in which they accrue to the shareholder. If the Sale spread over several yearsonly the part that has accrued in the respective year is taxable.

Conclusion

If you want to sell a GmbH, you should use the points listed above to check exactly when and in what form a sale makes sense. With the the right strategy and the right time can be Minimise the tax burden enormouslywhich means a correspondingly higher profit. In addition, it makes sense to think about a possible sale at a later date when founding the company and to draft the articles of association accordingly.