Year | Loan amount | Interest | Taxes | Repayment

1 | 2.000.000,00 € | 80.000,00 € | 60.000,00 € | 180.000,00 €

2 | 1.820.000.00 € | 72.800.00 € | 62.160.00 € | 185.040.00 €

3 | 1.634.960.00 € | 65.398.40 € | 64.380.48 € | 190.221,12 €

4 | 1,444,738.88 € | 57,789,56 € | 66,663.13 € | 195.547.31 €

5 | 1.249.191.57 € | 49.967.66 € | 69.009.70 € | 201.022.64 €

6 | 1,048,168.93 € | 41,926.76 € | 71.421.97 € | 206,651,27 €

7 | 841.517.66 € | 33.660.71 € | 73.901.79 € | 212.437.51 €

8 | 629.080.16 € | 25.163.21 € | 76.451,04 € | 218.385.76 €

9 | 410.694.40 € | 16.427.78 € | 79.071,67 € | 224.500.56 €

10 | 186,193,84 € | 7,447.75 € | 81,765,67 € | 186,193,84 €

Who wants to buy a GmbH, basically has two options: the share deal and the asset deal. In particular, the share deal offers sellers tax and other benefits. The asset deal, on the other hand, is of interest to buyers from a tax point of view. However, there are situations in which buyers can only make the acquisition of a GmbH according to the wishes of the sellers, i.e. by share deal. Nevertheless, buyers can save taxes when buying GmbH via Share Deal. We refer to this with our design by means of a holding company and an organ. In this context, external financing of the purchase price via a bank loan also plays a role. After all, the interest costs are tax deductible as operating expenses; We want to use that in our tax design model.

A GmbH purchase is always a special moment in the life of an entrepreneur – whether as a seller or as a buyer. Certainly, there may be companies that specialize in such transactions, certain hedge funds, for example. Nevertheless, it is indicative for most business transfers that the buyers combine the takeover of a company with the intention of a long-term, sometimes also strategic commitment. This is particularly evident when acquiring startups. Dr. Oetker’s purchase of the bottle post is a prime example.

However, there are different options to buy a business. The two major alternatives are the share deal and the asset deal. The share deal is the classic share purchase, in which the buyer acquires the shares in a company. As a rule, this involves the acquisition of all GmbH shares. The asset deal, on the other hand, is made by buying only the individual assets of a company – the tangible as well as the intangible. They then transfer these assets either to an existing company or to a company that was previously set up for this purpose. Thus, the seller will receive an empty GmbH after a successfully concluded asset deal. Consequently, he can then either liquidate them or resell them as a shell company. However, this is always associated with further effort. In particular, the time effort and the accompanying costs should be considered.

So much for the practical side of a company sale. In this regard, there is no reason to opt for one or the other form of corporate transaction. But if we also include tax aspects, we see when a share deal and an asset deal are beneficial.

More specifically, the question should be worded less situational but rather personal. For sellers and buyers, it sometimes makes a considerable tax difference whether you make a share deal or asset deal. In a share deal, the seller is able to tax the profit in a tax-advantageous manner. This is the case, for example, by using the part income method. For the buyer, on the other hand, the asset deal is the preferred option. In contrast to the share deal, buyers have the opportunity to write off the acquired assets in the future, thus saving taxes. The volume of depreciation corresponds to the purchase price. In other words, you save the value of the purchases in about 1:1 at the future taxes again. Or even more clearly: the Treasury pays the acquisition costs back gradually. Such a big tax advantage can hardly be missed by a buyer when buying GmbH voluntarily.

But often buyers have no choice but to accept the share deal preferred by the seller. How you can then save taxes as a buyer despite share deal in the GmbH purchase, we want to explain on the basis of one of our tax design models. For this purpose, the following example should give you an easily understandable overview.

For this we introduce you to a fictitious entrepreneur: Mr. Anton Engel leads a company in the legal form of the GmbH that is praised worldwide for its high-performance fishing rods. He has earned this reputation over many decades of successful business. In addition to the exceptional quality of his products, his business acumen is phenomenal: his Arch-Angel-GmbH makes an annual profit of EUR 280,000 before taxes.

But now he wants to enjoy the fruits of his entrepreneurial success in his second half of life – as a passionate angler on the Lofoten. In order to be able to finance his life dream and at the same time free himself from the time-intensive work as managing director, he decides to sell his Arch-Angel-GmbH.

In fact, Ms. Friederike Fischbein, an entrepreneur whose company is focused on the production of ropes, ropes and fishing nets, is very interested in a purchase of Arch-Angel-GmbH. Since she also has the financial means to afford the purchase of Arch-Angel-GmbH, Mrs Fischbein and Mr Engel will soon agree on a purchase price. So it should be EUR 4,000,000. In return, he brings Ms. Fischbein 100% of the shares in Arch-Angel-GmbH. Accordingly, Ms. Fischbein agreed that the GmbH purchase should be made via a share deal – this was an irrefutable demand from Mr. Engel.

Before Mrs Fischbein and Mr Engel conclude the share deal, Mrs Fischbein makes some preparations. As a well-advised entrepreneur, she had founded a holding company long ago, under which she initially positioned her own company as a subsidiary. In connection with the GmbH purchase, the holding company now borrows from a bank in the amount of half of the purchase price. The interest rate should be 4 %.

Now the holding company of Mrs Fischbein buys the Arch-Angel-GmbH for EUR 4.000.000. Arch-Angel-GmbH becomes the second subsidiary under the aegis of the holding company. However, the holding company establishes a profit transfer agreement with Arch-Angel-GmbH. This results in an organization with the holding company as organ carrier and Arch-Angel-GmbH as organ company. And despite the share deal in the GmbH purchase, this offers the advantage that the holding company can save taxes.

Through the profit transfer agreement, the holding company now receives an annual untaxed profit of EUR 280,000 from Arch-Angel-GmbH. In addition, the interest of 4% on the loan amount of EUR 2,000,000 with EUR 80,000 is incurred. They are tax deductible as operating expenses and thus reduce the taxable profit to EUR 200,000. This then accounts for 15% corporation tax and a further 15% business tax, i.e. a total of EUR 60,000 in taxes. Thus, the holding company remains EUR 140,000 of the profit to repay the loan. This allows the loan to be repaid within about 14 years and 4 months.

During this period, the holding company saves about EUR 342,857 in taxes due to the deduction of interest costs. And she has financed half of the purchase price via the loan. In this way, it has significantly optimised the return on equity via the leverage effect.

For an annuity loan, the bill looks even better. Because the loan is already completely repaid in the tenth year. The following table as impressive proof:

The interest adds up to an amount of only EUR 450.581.82. In the same period, however, the tax totals EUR 704,825.45. The tax saved during this period thus amounts to a total of EUR 135.174,55. This clearly shows that an annuity loan in this context can be very advantageous in several respects.

At this point, the most important question in connection with our tax design model is who is worth it. Since we work with debt financing here, the answer should be quite clear: our tax design model is especially advantageous where an asset deal is excluded on the one hand and debt financing is pending on the other hand. If these two conditions coincide with the GmbH purchase via a share deal, then you can save at least part of the taxes that you would avoid in an asset deal. Nevertheless, buyers always remain the first choice when purchasing the asset deal. Finally, in the course of this acquisition process, the entire acquisition costs are saved in taxation.