Sale of a commercial enterprise
December 11, 2012 | 35,00 EUR | answered by StB Steffen Becker
I have been running a business (tanning studio) on the side since 01.01.2009. I am also employed full-time. In the years 2009/2010/2011, I made losses due to depreciation and acquisitions, and in 2012 it will be just under zero. By the end of 2012, I have fully depreciated everything, so there is nothing left in the books except for depreciation. Now I would like to sell the studio (as of 01.01.2012 or 01.02.2013). Let's say the buyer wants to pay 30,000€, and I earn 40,000€ as an employee.
1. How do I have to tax these 30,000€?
2. What will be left net?
3. Can the buyer fully depreciate the 30,000€ again as depreciation?
Currently, my car is in the studio's books, meaning in July 2011 I bought a vehicle that is accounted for under the studio (retrieving 19% through input tax, approximately 4,000€ annual depreciation over 4 years). Will the buyer purchase it as part of the tanning studio purchase price? Is it now also part of the inventory? Can he buy it with the purchase price and then sell it back to me, or can I take it into private ownership beforehand? Are there things I should consider to be tax-efficient and potentially take advantage of tax loopholes?
Dear inquirer,
Thank you for your inquiry. I will answer this as part of an initial consultation based on the information provided. Missing or incorrect information can affect the legal outcome.
Regarding 1: It depends on whether you are above or below 55 years old. If you are above that age, you will receive an exemption of €45,000 when selling a business in its entirety; then the profit from the sale of the business as a whole (-> sale of all essential business assets, § 16 EStG) is tax-free. If you are under 55 years old, the profit from the sale (sale proceeds - capital) is taxed according to the so-called fifth rule:
§ 34 (1) sentence 2 EStG: "The income tax to be applied to extraordinary income is five times the difference between the income tax for the reduced taxable income (remaining taxable income) and the income tax for the remaining taxable income plus one fifth of this income."
Regarding 2: Using the basic table (assuming no joint assessment for spouses) and applying the aforementioned fifth rule, the income tax to be assessed is approximately €17,350, without the fifth rule it would be around €18,710. The already paid wage tax (from employment) is credited, without considering further personal circumstances.
Regarding 3: The purchase price consists of assets and possibly goodwill. The purchaser will have depreciation allowances for these assets (depreciation of any goodwill over 15 years).
The vehicle can be retained if it is not an essential business asset. The withdrawal gain (market value at the time of withdrawal - book value at that time) is to be taxed as current income (VAT + income tax).
Under the conditions of § 1 (1a) UStG, a business sale in its entirety is not subject to VAT: § 1 (1a) UStG: "The sales within the scope of a business sale to another entrepreneur for his business are not subject to VAT. A business sale occurs when a business or a separately managed branch of a business is transferred in its entirety, for consideration or free of charge, or contributed to a company. The acquiring entrepreneur takes the place of the seller."
It should be noted, among other things, that the purchaser also takes over or continues the input tax adjustment period (repayment of proportional input tax in case of different use of business assets within 5 years, in case of buildings/land, etc., 10 years, § 15a UStG).
I hope I was able to provide you with a brief overview of the tax situation. However, in order to make a comprehensive and more specific statement, detailed information about your personal circumstances will definitely be needed.
Kind regards,
Steffen Becker
- Tax Advisor -
stb-becker@arcor.de
