Transfer of business to spouses
August 11, 2013 | 30,00 EUR | answered by Steuerberater Thomas Textoris
Hello,
I have two commercial businesses. I would like to deregister one of them promptly, as it is no longer generating profits and will not be generating any future income. I would like to transfer the second business to my wife free of charge (as I plan to retire early). As far as I could research, she would have to continue the assets at book values. What about the first business (which will be deregistered)? I would like to transfer assets from this business (even those that have already been written off) to the second business at book values. Is this possible? Or what do I need to do?
Thank you
Dear inquirer,
In the context of an initial consultation and your fee commitment in compliance with the regulations of this forum, I would like to answer your question.
As you correctly pointed out, in the case of the free transfer of the second business to your wife, the book values must be continued according to § 6(3) of the Income Tax Act.
Due to the deregistration of the first company, it would first need to be determined whether a complete business cessation is present according to § 16 (1)+(3) of the Income Tax Act. In this case, all essential business assets would need to be transferred to private assets or sold to different purchasers within a short period of time, in a unified process.
If the conditions are met, a tax-free allowance may be granted according to § 16 (4) of the Income Tax Act, if you have reached the age of 55. The amount of the allowance depends on the amount of the cessation gain. Additionally, the favorable taxation of these income can be applied according to § 34 (1)+(3) of the Income Tax Act.
Regarding your situation, the assets transferred to the second business would first need to be transferred to your private assets. This withdrawal would be valued at the fair value according to § 6 (1) No. 4. Accordingly, a contribution from your wife to the second business at the fair value would need to be made according to § 6(1) No. 5 of the Income Tax Act.
If both businesses are still in existence at the time of the transfer of these assets, meaning the first business has not been deregistered and the second business has not yet been transferred to your wife, you can transfer individual assets from one business entity to the other at book values according to § 6 (5) of the Income Tax Act. The condition here is once again that these are not, or at least only partially, essential business assets (as mentioned above).
Otherwise, hidden reserves would need to be disclosed and a corresponding cessation gain taxed (§ 16 of the Income Tax Act).
Yours sincerely,
Thomas Textoris
Tax Advisor
