A donation for free allows you to pay less fees than you would for a transfer for value. The earlier this donation is made, the more interesting it is with regards to tax.
When we talk about a donation for free, it is necessary to take a certain number of possibilities into account, between which the director will have to arbitrate. In fact a free contract is not easy with regards to tax, and different taxes need to be paid. However, the tax burden can be more or less important according to the situation and the country. Each case is considered individually. In all cases however, it is best to start as early as possible.
All contracts are subject to a ‘general’ tax, which is applied whatever the type of contract. However each one also benefits from special provisions.
Transfer duties are reduced depending in the age of the donator. This can add to exemptions and lead to a reduction in the taxable amount in the case of collective or individual commitment to conserve titles. An exemption from capital gain is possible so long as the business (or its assets) does not exceed a certain amount.
Tax burdens affecting the donator vary a lot depending on the country.
With regards to Italy and Switzerland, free contracts are particularly interesting. They are exempt from a lot of conditions.
The tax system in these countries makes them competitive. In Switzerland, the tax burden varies depending on the canton. It is because it is on a regional and communal level that these rights are deducted.
Great Britain and Belgium have put procedures in place, which strongly encourage transfer in advance but this limits tax exemptions in individual cases. France and Germany focus more on tax allowances rather than total exemptions.
Valuation: It is difficult for the director to valuate the company themselves as they have a tendency to only see the company’s strengths. An external person is often the best person to offer an objective estimation of the situation and its perspectives.
Legal and financial profusions: Many more or less complex profusions are possible during a company transfer. In the context of a family succession, certain profusions are particularly advantageous such as OBO (see the section on the website) and the creation of a Holding company. The choice of provision must be made with help from specialists in this type of operation such as accountants, lawyers, consultants…
Tax optimisation: When a sale is planned, the seller must pay particular attention to the tax, which they will have to pay. It is strongly advised to ask a professional for help in order to optimise the sale with regards to tax.
It is often advantageous for the seller and the buyer to combine the two transfer methods of donation and sale. This allows you to benefit from the tax benefits connected with the two types of transfer.
Actoria has a lot of experience in all financial, legal and technical areas for the sale/ transfer of a company and offers services, which are adapted and which respond perfectly to the demands for a successful family transfer. The Actoria experts accompany the seller and buyer at every stage of the transfer from the preparation to post-sale advice.
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