date | theme

23. November 2022 | GmbH sale: agree on variable purchase price

24. November 2022 | Sub-annual division of profits at the GmbH sale

25. November 2022 | Assignment of profit at the GmbH sale (this contribution)

The sale of a GmbH contains a special aspect: who is entitled to the profit that arises up to the deadline of the sale, the buyer or the seller of the GmbH? This question can only be clarified by an open exchange between seller and buyer. Usually one agrees that this profit share is due to the seller. After all, he has also ensured with his commitment that the profit is created. But in order to divide the current profit according to the actual relations between seller and buyer, a sophisticated methodology is necessary. One option here is the assignment of the profit in the GmbH sale.

In fact, there are several ways to divide the profit of the current financial year between seller and buyer. One such solution in the GmbH sale is the assignment of the profit. We would like to explain this procedure in more detail in this article, but at the same time refer to the other methods that we deal with elsewhere. This includes, on the one hand, the agreement of a variable purchase price and the sub-annual division of profits by means of an internal interim balance sheet at the reference date of the company sale. Now for the transfer of profit.

First of all, let’s see what situation we usually find ourselves in when we make a GmbH sale. As a rule, you will find a buyer during the year. Or a buyer comes to us as a GmbH shareholder with an attractive purchase offer. In any case, we will soon agree on a purchase price. Often you go and agree that the transfer of the GmbH should take place at the end of the year. Of course, this is especially obvious if the financial year corresponds to the calendar year.

As already emphasized, however, the profit generated by the GmbH in the current year should also be allocated fairly. After all, we can also expect this because we made the business decisions that ultimately brought about the profit for the GmbH. So it is understandable that the buyer also grants us this profit. The catch, however, is that at the time the shares in the GmbH are transferred to the buyer, it is still unclear how high the profit will be. The buyer notes this only in the following year in his first balance sheet.

So this is the point where you try to design an allocation of the profit or profit share with one method or another. We now want to do this by assigning the profit in the GmbH sale.

How does the assignment of profit in the GmbH sale work? Quite simply: the seller and the buyer agree that after compiling the balance sheet for which we as the seller make a profit claim, the profit recorded there will be distributed to us. Only next year will the buyer receive a profit distribution, which is quite fair. After all, this is the first profit that the buyer has generated through his own business activity.

What deserves attention here is the fact that the seller and buyer agree in advance on a neutral tax consultant to prepare the balance sheet. Because if the buyer now sets up his own tax advisor and instructs him to show the profit as low as possible, then this is at the expense of the seller. However, if the seller determines that his tax consultant prepares the balance sheet including the profit and loss statement, he can influence the result so that the profit is as high as possible. However, it is fair if a neutral tax consultant makes the accounting according to the same standards as in previous years. In addition, it could be agreed that both parties each bear half of the costs for drawing up the balance sheet.

However, there are also some aspects that have to be considered. Without professional support, for example, the tailor-made allocation of capital gains tax may have a bit of a hitch. In addition, it is necessary to ensure that the respective tax liability is maintained and kept separate from each other. Nevertheless, it is possible to take these special features into account in advance with corresponding measures, so that the assignment of the profit in the GmbH sale ultimately leads to the desired goal.

For example, you can look at this shortly before the transfer of the GmbH shares in the business evaluation. On the basis of this data, you can then calculate a provisional profit that applies at least for this deadline. If the forecasts do not suggest any losses for the time until the actual transfer of ownership, this can also be used as a basis for an early distribution of profits. This would have paid out a large part of the profit transferred anyway later to the seller.

Compared to the solution of the distribution of profits by means of a variable purchase price for the GmbH, the assignment of the profit in the GmbH sale is often the preferred method of allocation of profits. This is also due to the fact that in this way the buyer must first tax the profit distribution himself before paying the remainder of the variable purchase price to the seller on the basis of the dividend. When the profit is transferred to the seller, on the other hand, the seller bears the tax liability with regard to the capital gains tax itself (including solidarity surcharge and church tax).