Exchange operations are subject to taxation if the respective hidden reserves lead to a profit. In order to avoid adverse consequences for private individuals and entrepreneurs, § 6 (5) EStG provides for a special provision. It enables a tax-neutral transfer between business assets and special business assets, provided that subsequent taxation of hidden reserves is ensured. We look at facts and legal consequences in practice!
If two persons decide to exchange an asset “A” for an asset “B”, this operation must be divided into acquisition and disposal. The acquisition costs are based on the common value of the transferred asset (§ 6 (6) sentence 1 EStG). “Common Value” is the price achievable in general trade, including any VAT included (§ 9 BewG).
Example: Schreiner S agrees with dealer H that he will receive a used mid-range car (common value EUR 30,000) in return for the renovation of the reception area. Without exchange (here specifically: exchange-like sales) he would demand EUR 25,000 for the craft services.
Solution: S has acquisition costs of EUR 25,000. At the same time, H has a sales proceeds of EUR 30,000. With a book value of the company car of EUR 10,000, a corresponding profit of EUR 20,000 is generated.
Even if assets were transferred to a partnership, this would result in a tax-detrimental discovery of hidden reserves. With § 6 (5) EStG, the legislature has therefore created an exception to the general exchange principle. If the corresponding conditions are met, a tax-neutral transfer between operating assets is accordingly possible.
According to § 6 (5) sentence 1 EStG, a tax-neutral transfer between two business assets of the same taxpayer is considered. The legislator solves the case in such a way that the book value in the receiving operating assets is taken over by the transferred operating assets. However, the transfer to book values is excluded if the right of the FRG to tax existing hidden reserves is lost (§ 6 (5) sentence 1 half sentence 2 EStG). As a rule, this is the case when transferring assets to a foreign company.
The following transactions are treated as a tax-neutral transfer between two business assets within the meaning of § 6 (5) sentence 1 EStG in accordance with § 6 (5) sentence 2 and sentence 3 EStG:
This article does not replace tax or legal advice in an individual case. Facts, current law, jurisdiction, documentation and implementation remain decisive.