Depreciation of a receivable in the GmbH
February 4, 2012 | 25,00 EUR | answered by Oliver Burchardt
Dear Mr. Tax Advisor,
the situation is as follows:
Entrepreneur A owns two companies; 1. a GmbH and 2. a sole proprietorship. Goods and services were exchanged between both companies. There are proper invoices and payment transactions for all transactions. In the GmbH, the receivables were booked against the sole proprietorship and in the sole proprietorship as liabilities against the GmbH (expense and revenue accordingly, with VAT). Entrepreneur A decides to deregister his sole proprietorship at the trade office as he no longer has any turnover and wants to cease business activities. The GmbH is to continue to exist. Business transactions continue to take place there. Can A now write off the receivables against the sole proprietorship in his GmbH and correct the VAT? If so, how? Does a certain amount of time have to pass before he can write it off, if it's even possible? If not, will A be left with the receivable in the GmbH? How does he get rid of the liability? Please provide the journal entry (SKR 03) as well. Thank you and best regards, M. Förster
Dear Mr. Förster,
Thank you for your inquiry, which I would be happy to answer as part of an initial consultation.
The claim against the sole proprietorship or the entrepreneur remains valid regardless of the deregistration of the sole proprietorship. The deregistration in terms of trade law does not affect the existence of the claim against the natural person of the business.
Therefore, a write-off with VAT correction is not possible. Furthermore, if the conditions for a write-off with VAT correction were met, the sole proprietor would also have to correct his input tax and repay it to the tax office.
Since I understand from your description that the sole proprietor is also the sole shareholder of the GmbH, a write-off of the claim in the GmbH would not benefit you from a tax perspective. The resulting effort would be treated as a hidden profit distribution from the GmbH, and would be taxable for both the GmbH and the shareholder.
The only way to write off the liability in the GmbH without tax consequences is to pay off the claim by the entrepreneur or set it off against other liabilities of the GmbH against the entrepreneur, e.g. from profit distribution.
I hope my explanations have been helpful to you.
Best regards,
Oliver Burchardt
Auditor
Tax consultant
