Company tax valuation

Company assets, e.g. in the form of GmbH shares or KG company shares, are sometimes included in the estate. These must then be valued for tax purposes as part of the inheritance tax return .

However, a tax valuation of company assets is recommended in advance of a planned (gift) transfer of shares. In this way, the transfer quotas can be determined more optimally by utilizing the allowances. This is also necessary in order to determine whether a tax exemption for business assets pursuant to Sections 13a and 13b ErbStG could apply in the specific transfer case.

As with the valuation of real estate, it is not the actual market value of the acquired shares that is generally relevant from the perspective of the tax office, but the so-called fair market value.

The Valuation Act provides for the so-called simplified capitalized earnings value method for the valuation of companies.

To determine the simplified capitalized earnings value, the average of the annual surpluses of the previous three financial years is calculated - in abbreviated form - after deducting a flat tax rate of 30% and multiplied by a factor of 13.75.

At the same time, however, the so-called net asset value must always be determined as a minimum value. This involves valuing all assets and comparing them with the debts.

As a rule, the simplified capitalized earnings value is higher - particularly in the case of companies with high turnover - and is therefore decisive. On the other hand, the simplified capitalized earnings value may be lower than the net asset value for companies with losses in one or more previous financial years, meaning that the latter would be decisive for determining the value of the transferred shares for tax purposes.

Due to the highly schematized valuation according to the simplified capitalized earnings value method, very high company values can sometimes arise that are far below a possible purchase price achievable on the market that an investor, for example, would pay to acquire the shares. It may therefore make sense to have the company valued by an auditor or tax consultant in accordance with the IDW S 1 method and to use this valuation result as the basis for the share valuation.

Our specialist lawyers for tax law in Frankfurt and Berlin will be happy to support you if you would like to determine the tax value of an inheritance tax return or a planned transfer of company shares. If you would also like a valuation in accordance with the IDW S 1 procedure, we can arrange this for you via our network of auditors or tax consultants.