Sell company in Germany

Selling your own business is undoubtedly a challenge which is why both rational and emotional aspects of the process should not be disregarded. In this article, we will try to provide you with a quick overview of how a company sale in Germany works, what are the legal specifics, stages of planning, and taxation principles. Let’s go into more detail.

The first question that you have to ask yourself is: Do I need a consultant for the sale of my own company in Germany?

At first, you might think that it would be better to make sense of everything on your own. Taking into account our experience, however, we can conclude that it is oftentimes wise to hire an expert for the transaction. We are talking about the specialist who is familiar with the prices, market, potential buyers, specifics of both the small firm sales, top firm sales, etc. Simply put, a qualified consultant for companies for sale in Germany offers you the specific knowledge in the various sales phases that you probably lack. This applies to contract design, tax optimization, and many other aspects.

Regardless of whether you decide to hire a specialist or not, it is still crucial to be informed about the sales planning and nuances, so let’s have a look.

When it comes to private firm sales, it is essential to:

  • decide what type of buyer is suitable for your company
  • determine the company value
  • calculate the net purchase price, which depends on the enterprise value and the individual parameters of your company
  • discuss the "story" of your sale
  • define target group
Yet it is important to mention that the sooner you embark on the preparation process, the better deal you are likely to end up with. The systems and machines should possibly be appraised by an independent party in order to obtain an objective market value. Afterward, there come the legal steps like creating meaningful sales documents, and the process of searching for potential buyers, examining interested parties, and drafting contracts.

It is oftentimes recommended to carry out all these steps discreetly so as not to provoke concern among employees, customers, and partners.

Briefly on the taxation of the business for sale in Germany

When it comes to the tax load on the seller, it strongly depends on the legal form of the enterprise (GmbH, AG, GbR, KG, OHG, or GmbH & Co. KG). Staying general, the things to consider about income taxation from the seller's point of view are:
  • how is a company sold (share deal or asset deal)
  • who is on the seller's side (e.g. a private person or a GmbH)
It must be taken into account that the sale of entire companies or parts of companies by natural persons can have income and trade tax advantages. The seller can claim certain exemptions and a reduction in the income tax rate for capital gains. Apart from that, the so-called one-fifth rule with its progression reduction and an exemption from trade tax can be applied.

If your business stands among companies for sale in Germany, professional consulting will always come in handy is the platform that can help you with solving multiple legal issues regarding doing business in Germany so let’s deal with everything together.

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