1. Introduction
Selling a company is a complex process that involves both legal and tax aspects. Particularly in the area of sales tax, numerous pitfalls can arise when transferring a business as a whole. These can have significant financial consequences for both the seller and the buyer.
It is therefore crucial to find out in advance about the sales tax regulations and possible tax traps. In particular, constellations in which a supposed exemption from sales tax according to Section 1 Paragraph 1a UStG does not (yet) exist.
But first step by step:
2. The VAT treatment of a business transfer as a whole
According to Section 1 Paragraph 1a UStG, the sales from the sale of a business to another entrepreneur are not subject to VAT for their company.
A sale of a business as a whole occurs if a company or a separate business is transferred as a whole or is incorporated into a company.
It is not necessary that the purchaser continues the company in an unchanged form; it is also a non-taxable sale of the business if the entrepreneur continues the company in a changed form.
3. Constellations in which there is no (assumed) sale of the business as a whole
There are various constellations in which there is no sale of the business as a whole.
One of these is if the acquirer immediately winds up the business activity taken over (cf. ECJ ruling of November 27, 2003, C-497/01, Zita Modes).
The same applies if a business operation that has already been discontinued is transferred in its entirety.
Another constellation is when a sole proprietorship is transferred to a person who is not an entrepreneur and does not want to continue the business himself, but wants to incorporate it into a GmbH. In this case, there is also no sale of the business within the meaning of Section 1 Paragraph 1a UStG, since it is not the purchaser but the GmbH that continues the company.
If individual (essential) items of the company are not transferred, a sale of the business as a whole – and thus VAT exemption – can also be ruled out.
There are various other constellations that can (unrecognized) cancel the supposed sales tax exemption.
4. Legal consequences if sales tax is not recognized and sales tax exemption is mistakenly assumed
If there is a non-taxable sale of the business as a whole, but the entrepreneur carrying out the transaction has shown the sales tax for this transaction separately in the purchase contract or in an invoice, he owes this tax in accordance with Section 14c Paragraph 1 UStG (incorrect tax statement). This also applies if the material requirements for sales taxation in accordance with Section 1 Paragraph 1a UStG are met.
If the sales tax exemption according to Section 1 Paragraph 1a UStG is mistakenly claimed even though the requirements are not met, this can have significant, unwanted legal consequences. These include, among others:
Additional sales tax claims by the tax office.Late payment surcharges and possible penalty interest.criminal consequences intentional tax evasion.
It is therefore very important to examine the facts carefully and, if necessary, obtain tax advice.
5. Conclusion
The VAT aspects of transferring a business as a whole are complex and require careful consideration and planning. It is important to understand and take into account the specific requirements and exceptions of Section 1 Paragraph 1a UStG in order to avoid unexpected tax burdens. Exceptional constellations must also be known and recognized.
If you are uncertain, you should always seek professional tax advice from a tax law specialist or tax advisor to avoid economic and legal disadvantages.
This article does not represent specific and individual legal advice, but rather only provides a rough initial overview of the very complex legal matter described. You can only obtain legal certainty for your specific case constellation through coordinated examination and advice from an expert lawyer.
I would be happy to assist you as a lawyer and specialist lawyer for a legal assessment and assessment of your case and represent your interests assertively and resolutely. the tax authorities and the tax investigation. Please feel free to contact me by phone or write to me.
I advise nationwide on site or via Zoom as a specialist lawyer in the legal areas of corporate law, tax law and insolvency law, including in the cities and metropolitan areas around Stuttgart, Heilbronn, Karlsruhe, Freiburg, Ulm, Augsburg, Munich, Frankfurt, Wiesbaden, Saarbrücken, Kaiserslautern, Bonn, Wuppertal, Duisburg, Nuremberg, Münster, Saarbrücken, Düsseldorf, Cologne, Dortmund, Hanover, Kassel, Leipzig, Dresden, Bremen, Hamburg and Berlin.
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