Goodwill is in principle not depreciable as an intangible asset. Exceptions apply, however, if the entrepreneur has either acquired the goodwill or created it in private assets and then put it into business assets. Because here the prohibition of accounting of § 5 paragraph 2 EStG does not apply for the time being. Entrepreneurs can benefit from this tax.

First principle: Goodwill as an unusable asset

According to § 5 (2) sentence 1 EStG, intangible assets of the fixed assets created by the entrepreneur himself are not accountable assets. They therefore do not even appear on the company’s balance sheet, are subsequently not subject to depreciation and have no impact on the company’s profits. Goodwill is such usable assets of fixed assets.

Nevertheless, the goodwill falls under § 5 (2) sentence 1 EStG only if the entrepreneur has created it in his capacity as a trader or freelancer. If the goodwill, trademark or patent was created privately or by another person, § 5 (2) EStG does not apply (BFH 26.2.1975 – I R 72/73, BStBl. II 1976, 13).

The entrepreneur can also contribute his company value to the company. The rule, however, is that the company value – for example, the name of the company – “grows” over time. Only in rare cases is there already a name or other right with high value, which could be sold to the entrepreneur or contributed from the private assets.

Bringing Company Value: When Is It Possible?

Bringing the goodwill into the company – this possibility always exists if the intangible economic good has not arisen in the company assets themselves. Specifically, the goodwill must currently still be outside the entrepreneurial assets, for example in the assets of the spouse or children. A name mark can also arise outside the company assets (BFH judgment of 12.06.2019 – X R 20/17).

If the entrepreneur wishes to contribute and write off a goodwill, he or she has the following options: