The purchase or sale of a company can become relevant in the context of a company's establishment or an existing company's growth strategy.
Even if business management aspects are at the forefront in this context, the tax consequences of such an approach should not be underestimated and should therefore be checked in detail in advance. The first question is whether to acquire the company itself (= asset deal) or only shares in the company (= share deal). As a consequence, for example, this decision triggers deductibility of the costs of purchase or the tax-efficient structuring of future inflows from the acquired company. Depending on the situation, one of these two approaches can be significantly more favourable for the seller.
The decision on how to structure the company acquisition affects a variety of tax types, namely
- income tax
- corporate income tax
- trade tax
- real estate transfer tax
Particularly in the early stages of purchase negotiations, sales tax and real estate transfer tax issues rarely take centre stage, even though they can have considerable tax consequences and must therefore be the subject of a particularly thorough check. In the case of a share deal, for example, it may be attractive to acquire only a substantial part, instead of the entire company, in order to avoid real estate transfer tax charges or to postpone them into the future.
VAT consequences of an asset deal can result in considerable disadvantages for the seller and/or the buyer and therefore require scrutiny and, where necessary, coordinated action. For example, the potentially VAT-exempt sale of a non-autonomous division can lead to considerable input tax adjustments for the seller, which the seller must of course attempt to add to the buyer's purchase price.
In the context of company acquisitions, however, it is also important to keep a watchful eye out for any hidden tax traps. For example, a certain manner of proceeding can lead to the loss of an existing business split, which can lead to the disclosure of unrealised gains beyond the actual object of purchase.
Accordingly, from a tax point of view, comprehensive advice from competent consultants makes sense as early as when purchase planning starts, or at the latest when contract negotiations begin.
Benefit from our many years of experience:
- Expertise, forecasts, and analyses in the planning phase
- Performance of due diligence reviews
- Advice on civil and tax law issues
- Support with purchase negotiations
- Handling of the company acquisition
Thorough audits by our tax and legal experts make your company acquisition more successful. Talk to us about your questions.