Convert UG to GmbH and purchase company shares with share capital.
August 5, 2015 | 150,00 EUR | answered by StB Patrick Färber
Background:
I hold 70% of the shares in A-GmbH.
I have founded a B-UG (limited liability) in which I hold 100% of the shares.
Plan:
I want to increase the share capital of B-UG (limited liability) to 25,000 EUR in order to convert it into a GmbH.
With the share capital, this B-UG or B-GmbH should buy my shares in A-GmbH at face value.
Explanation:
At the time of the last capital increase, A-GmbH received a post-money valuation of 1,000,000 euros.
Question:
Are there any problems here? To me, this looks like a zero-sum game. However, I want to avoid the tax office having a different opinion and taxes becoming due.
Dear questioner,
Your question contains a lot of tax law! However, in an initial statement, I can help you as follows:
By selling 70% of the shares of the assumed share capital of EUR 25,000 of A-GmbH (= EUR 17,500.00) to your own B-GmbH at a price of EUR 17,500.00, there is initially a disposal according to § 17 of the Income Tax Act, if you were directly or indirectly involved with at least 1% in the last 5 years. It would be tempting if we could calculate now: Selling price EUR 17,500.00 minus acquisition costs EUR 17,500.00 = disposal gain = 0.00.
However, you assign a share of nominal EUR 17,500.00 for EUR 17,500.00, even though the fair value based on your information for these 70% would be EUR 700,000.00. So, you are selling the shares to your own B-GmbH (for corporate law reasons) much too cheaply. From a tax perspective, this leads to a so-called hidden contribution to the B-GmbH, i.e. the tax acquisition costs of the B-GmbH are not EUR 17,500.00 but EUR 17,500.00 plus EUR 682,500.00 (difference between purchase price and fair value).
§ 17 para. 1 sentence 2 of the Income Tax Act now provides that the sale of a participation is equated with the hidden contribution of a corporation into another corporation.
§ 17 para. 2 sentence 2 of the Income Tax Act provides for a different determination of the disposal gain in this case: Instead of selling price minus acquisition costs, it is unfortunately fair value minus acquisition costs. Therefore, you have to immediately pay income tax on a disposal gain of approx. TEUR 680!!! This type of arrangement should be strongly discouraged!
"In return," these hidden reserves will not be recognized in a later sale of the shares in B-GmbH at a profit, because the acquisition costs have already been increased for tax purposes (transfer to the tax reserve account).
You should seek qualified advice from a law firm specializing in corporate law. There may be alternative arrangements available here, such as transformations or contributions at book value, which usually trigger holding and blocking periods of several years. Such advice is completely impossible through internet forums. Therefore, I advise you not to carry out the transaction as you asked and to seek tax advice locally.
I hope I could help you!
Best regards,
Tax Advisor P. Färber
