Business and company succession

Operational and corporate succession has major tax implications for the seller or the acquirer in Germany. It is important to make early succession decisions. Business succession affects the seller’s inheritance tax and income tax. Succession regulations affect the inheritance law and the family. Therefore, inheritance law and family law peculiarities must also be observed and legally secure regulations must be made. Finally, it should also be ensured that the company continues to exist.

By combining legal and tax advice, our law firm can make legally certain and efficient succession arrangements. In doing so, both the tax meaning on the side of the older generation and on the part of the younger generation which takes over the operation should be kept in mind.

What taxes does the seller of a company pay?

Anyone who sells his company must tax the so-called capital profit of the commercial enterprise. The profit must be taxed according to § 16 of the income tax law. This profit includes:

• The whole commercial enterprise or a partial enterprise
• The total share of a partner who is to be regarded as a co-entrepreneur of the company
• The entire share of a personally liable partner of a limited partnership on shares.

A tax allowance can be claimed for income tax. If the taxpayer has reached the age of 55 or is permanently disabled in the sense of social security law, the capital gain on request is only used for income tax purposes if it exceeds € 45,000. The capital gain is the difference between the sales proceeds for the company and the costs of the sale.

What taxes does the heir pay?

The heir pays inheritance tax based on the value of the company. There are also allowances for inheritance tax. On the one hand, there are allowances for children and the testator’s spouse. On the other hand, there is an exemption for business assets and shares in corporations in which the testator holds a share of more than 25%.

By individual preparation, both the seller’s income tax and inheritance tax can be optimized through the fiscal design so that they are reduced or even avoided altogether.