date | theme

23. November 2022 | GmbH sale: agree on variable purchase price (this contribution)

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

25. November 2022 | Assignment of profit in the GmbH sale

In the case of the GmbH sale, there may be uncertainty as to who is entitled to the profit of the current financial year until the completion of the purchase process – the seller or the buyer. In fact, during sales negotiations with the buyer, it is often agreed that the profit is due to the seller. At least for the part of the year in which the seller has managed the fortunes of the GmbH, this is understandable. However, there is often no profit at the time of sale. This is only determined by the balance sheet drawn up by the buyer after the end of the financial year. However, buyer and seller can agree on a variable purchase price in the GmbH sale, in which after the accounting the profit share is subsequently due to the seller as an additional sales price.

We would like to propose an option for this today in this post. For this purpose, we explain how a GmbH sale can be agreed with a variable purchase price in order to divide the profit between the seller and the buyer after the preparation of the first balance sheet after the GmbH sale. Further possibilities are, for example, the assignment of the profit or a pre-arranged agreement for the distribution, which we present separately.

Imagine the following situation: They want to sell their GmbH and find a buyer during the year. During the negotiations, they clarify all aspects except the division of the annual profit. For example, you agree that the transfer of the GmbH shares and the payment to be made for them should take place at the beginning of the year.

But if the turn of the year defines the transition of ownership of the GmbH, then this time is still premature to determine the annual profit. At the earliest in March of the following year, you can expect the tax consultant to draw up the balance sheet for the current financial year (here we want to assume that the financial year corresponds to the calendar year).

So what could the conditions look like with which the GmbH sale via a variable purchase price? Very many details can of course be regulated in detail. However, the principle here is as follows: You agree with the buyer the actual purchase price, the one on which you have agreed in relation to the company value. In addition, however, they also include another clause in which a later surcharge is imposed on the buyer. This surcharge is based on the amount of the annual profit that it establishes in the annual balance sheet of the financial year ending under your direction.

The whole thing again with exemplary values: At the end of 2022 you will take the GmbH sale at a selling price of EUR 1,000,000. You agree with the buyer a variable selling price, which guarantees you a surcharge equal to the annual profit 2022. In March 2023, the buyer determined in the balance sheet for 2022 that the GmbH had generated a profit of EUR 200,000. Thus, the variable purchase price totals EUR 1,200,000.

Whether you receive the actual purchase price from the buyer in advance or receive the full amount later in a sum is of secondary importance. In any case, the entire amount is relevant for your tax return.

Since we now know how the GmbH sale via variable purchase price ensures that you receive the profit you are still entitled to, we should also think about some side aspects of this option.

In this case, the buyer bears a tax disadvantage. If he has to pay the profit you had earned with your former GmbH in the following year in order to pay it to you, then this means that he has to pay capital gains tax on this dividend quite regularly (plus solidarity surcharge and, if necessary, church tax). This means that in order to pay out the entire profit to you, he must contribute about 25% of the amount from private funds. So if we want to make a fair distribution of the annual profit in the GmbH sale, then as a seller you should also be open to the fact that you only receive the share of the profit that you would have received if you were to tax the profit yourself.

In addition, there is a risk that during the preparation of the balance sheet measures will be taken to either artificially increase or reduce profit. So to avoid such risks, both buyer and seller should agree that an independent tax consultant will prepare the balance sheet. In doing so, he should be obligated to make recognition and measurement in the accounting in the same way as they had already been applied in the past in the accounting of the GmbH. This ensures that neither the seller nor the buyer has a dishonest influence on the amount of profit. The continuity in recognition and valuation should therefore ensure an objective result in the determination of profits.

If the buyer and seller address the issue of profit distribution in the negotiations for a GmbH sale, then they can succeed in the fair distribution via a variable purchase price. However, further details have to be specified so that this actually works fairly for both parties. This is particularly relevant if the profit-making balance sheet is only drawn up after the sales transaction has been completed. As this is usually the case, buyers and sellers should be aware of the scope of this method of division and make it open and constructive. However, other alternatives are also available to them. Therefore, buyers and sellers should always weigh in the GmbH sale, which of the possible methods for dividing the annual profit seems most sensible for them.