Business sale according to section 16
August 31, 2011 | 30,00 EUR | answered by Dr. Yanqiong Bolik
Hello everyone!
I am currently working on a semester project and I am stuck on a couple of questions that I unfortunately cannot solve.
It is about the disposal of a 100% interest in a corporation and its tax treatment. The solution is probably relatively simple, but neither the law, nor the guidelines, nor the commentary are helping me.
So my questions would be:
1. If the 100% interest is held in the business assets of a commercial individual entrepreneur:
- Does he, if he is older than 54 of course, have the right to the exemption according to §16 IV EStG and can he claim the reduced tax rate according to §34?
2. If he holds the interest - let's say 50%/50% - in business and private assets:
- Does this also count as a 100% disposal within the meaning of § 16 EStG? If not, how is it then treated? If yes, does he have the right to exemption, special tax rate, etc.? Will the portion in the private assets be treated according to §17 EStG or will it be included in the treatment according to § 16 EStG?
I would be so grateful if you could somehow help me out.
Best regards
Dear inquirer,
Thank you for your inquiry, which I am happy to answer taking into account your contribution and the rules of this platform.
Please note that my explanation is based on the facts presented, and that adding, omitting, or changing information can alter the tax result.
1. Participation in business assets
According to § 16 Abs. 1 Sentence 1 No. 1 Sentence 2 EStG, a 100% participation in a corporation in business assets constitutes a partial business. Therefore, the sale of this 100% participation is equivalent to the sale of a partial business. The gain from the sale is the amount by which the sale price, after deducting the selling costs, exceeds the value of the 100% participation. The gain from the sale is to be allocated to extraordinary income according to § 34 Abs. 2 No. 1 EStG and taxed at a reduced tax rate. If the taxpayer has reached the age of 55 or is permanently occupationally disabled in terms of social security law, the gain from the sale will only be subject to income tax to the extent that it exceeds €45,000 upon request. The tax exemption is to be granted to the taxpayer only once. It is reduced by the amount by which the gain from the sale exceeds €136,000. (according to the current state of §16 Abs. 4 EStG). Since the tax exemption is only granted once, the eligible taxpayer should consider whether to claim the exemption when selling the participation.
2. 50% ownership in private assets
§ 16 Abs. 1 Sentence 1 No. 1 Sentence 2 EStG does not apply if the ownership of the corporation is partly also part of the taxpayer's private assets (R 16 Abs. 3 Sentence 8 EStR).
2.1. Gain from the sale of the 50% share in business assets is considered ordinary income (§ 16 Abs. 1 Sentence 2 EStG) and not a gain from the sale according to § 16 EStG. As of 2009, 60% of the gain from the sale is subject to income tax and, if applicable, trade tax.
2.2. Gain from the sale of the 50% share in private assets is considered gains from the sale according to § 17 EStG. For income tax purposes, the taxpayer can either pay tax on the gain from the sale at 25% (flat rate tax, with no deduction of advertising costs due to the saver lump sum) or tax the gain from the sale according to § 17 EStG (the partial income procedure of § 3 No. 40 Letter c EStG). A tax exemption is granted according to § 17 Abs. 3 EStG. The tax exemption amounts to €4,530 for the shares sold. The tax exemption is reduced by the amount by which the gain from the sale exceeds €18,050.
I hope this helps provide you with an overview.
Yours sincerely,
Dr. Yanqiong Bolik
Tax consultant
Bildstöckle 6, 70567 Stuttgart
Tel: +49 (0)711 / 9332 2657
Email: info@zdbz.de
