If the objective of a business split is the separation between a holding company and an operating company, then they must be treated differently for tax purposes. It is important here whether these are corporations, such as a GmbH, or partnerships, for example a GmbH & Co. KG. Furthermore, there are differences in the accounting of both individual assets and operating assets as a whole. It is also necessary to clarify the extent to which provisions relating to the replacement of assets affect the respective undertakings and the consequences thereof.

In the video we show you various strategies to avoid a division of operations in advance, as well as in retrospect or to consciously maintain it.

1. Accounting for assets

Due to the separation of ownership and operating companies, these are also to be assessed separately in the corresponding recording and accounting obligations. In general, each company must determine the profit for each marketing year. A commercial accounting obligation according to § 238 HGB and an associated tax accounting obligation according to § 140 AO exists if a commercial business operation or a commercial company exists. In the absence of the above-mentioned criteria, a tax-law accounting obligation is achieved when the size classes of § 141 AO are exceeded. If the size classes are undershot, a profit determination according to § 4 (3) EStG must be carried out. [122]

Due to the strict separation of the two independent companies, the assets can be assigned to only one company. These are to be applied to the respective company according to the universal principles. BFH also refused to allocate the main operating base as economic property in 1997. The attribution of the beneficial ownership was to be made despite the use by the operating company in the holding company.[123]

2. The holding company's main operating base

The necessary assets of the holding company include, on the one hand, the essential operating basis of the material interconnection and, in the case of the classical division of operations, the shares in the operating company. According to the case law of the BFH, a loan granted to the shareholders of the operating company is also to be regarded as necessary operating assets of the holding company.[124] Both shares in a corporation which has a dominant influence in the working capital company[125] and shares in a corporation which maintains frequent business relations with the operating company[126] count as necessary operating assets. In addition to the leased essential operating base, all other assets, with connection to the essential operating base, also belong to the necessary operating assets of the owner company.[127] Even arbitrary operating assets are not excluded in the case of the holding company, since the framework of the holding company does not only relate to the operating company, but assets can also be leased by the holding company to third parties, which then qualifies them as arbitrary operating assets. [128]

A possible transfer of assets from the holding company to the operating company in all cases constitutes a sale operation with possible discovery of the hidden reserves – provided that a consideration is paid in return. This operation is also referred to as an open deposit, in which the asset is transferred at the common value according to § 6 (6) EStG.[129] Furthermore, there is an acquisition process on the part of the operating company.[130] In the case of a corresponding concealed contribution, the participation in the operating company is increased by the partial value of the transferred asset according to § 6 (6) S. 2 EStG. [131]

If a claim arose between the holding company and the operating company and the holding company waives this claim, this leads to an increase in the cost of the holding of the operating company in a possible working capital company to a contribution.[132] The expense on the part of the holding company and the income on the part of the operating company are to be recognised in profit or loss. [133]

A special feature of a working capital company is a tenant renewal claim of the holding company. This means that the operating company must finance the use and wear of a possible repair or even a replacement. For the contractual obligation entered into, an expense-related provision must be made on the part of the operating company. The amount of exposure shall be the relevant amount of the provision. In the case of a new acquisition of a used asset, the acquisition costs are to be offset against the set value in the provision and a value exceeding this value is to be included as an item of debt to the holding company.[134] On the part of the holding company, contrary to the provision at the operating company, an activation of the renewal contract in the same amount is to be carried out. [135]

4. Precise assessment of assets after start-up

In the context of the spin-off of a part of the company by the start-up of a second independent company, an exact assessment of assets is required. Due to the new corporate structure, the leasing of the main operating base and other assets, a goodwill (GPF) is often passed on from the holding company to the operating company. However, this approach is not an essential part of the genuine division of operations, since the GuF can also remain with the operating company from the outset.[136] However, if the operating company leases all essential operating bases in the long term by the holding company, the case law assumes that the GuF is also left for use in this constellation.[137]

According to the case law of the BFH, this GuF must be defined in such a way that it describes the added value over the assets as well as the profit potential of a company.[138] It is also conceivable that, after the establishment of the real operating split, a new GuF is formed, which exists in addition to the existing GuF.[139] The aforementioned transfer of use, however, ties the BFH to the prerequisites that the operating company can continue on its own without the rental of the company value and the transferred use possibility is contractually determined for a longer period without prior termination. [140] In addition, the transfer of a GuF to the operating company is not permitted if the value is limited only to an asset which remains in the holding company at the time of creation. [141]

In addition, it is necessary to check whether a disposal transaction exists at the time of incorporation – when an asset is transferred to the operating company – and how an asset remains accounted for.[142]

5. Accounting for an asset

The accounting of an asset that remains in the holding company takes place at the book values (continuation of book values) and there is no profit-realizing situation on the part of the holding company. However, if an asset is transferred to the newly created operating company, the legal consequences of the consideration for the acquired asset are interpreted differently. In the case of consideration in return, a profit-realizing sale process arises from the ownership and a neutral purchase by the operating entity. Instead of a monetary consideration, a debt assumption[143] can also trigger the same legal consequence. The transfer of company rights for the transferred asset is also a sale, with the acquired shares in the operating company being accounted for with the common value of the transferred asset in accordance with § 6 (6) S. 1 EStG. A book value continuation on the part of the operating company according to § 6 (6) S. 3 EStG and no profit realization, on the other hand, is present in the case of a hidden contribution, if no consideration is received from the holding company. Only the acquisition costs of the participation in the operating company increase by the partial value of the asset.[144]

Tax consultants around the division of operations

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