New company promotion law in the case of the transfer of enterprises and parts of enterprises

An advantageous transfer of an establishment or part of an establishment occurs if:

• an operation or part of an operation is transferred for a fee or free of charge
• there is a change in the person of the operating owner who controls the operation with respect to an already existing (partial) operation, and
• the person in dominant position in the management of the business (the business owner) has not previously operated in a comparable manner in a dominant manner in business activities.

Here the Size of the transferred business or part of it not significant. The title "NeuFöG", which states that "the transfer of small and medium-sized enterprises is supported," merely describes the most common case of subsidized transfers.

To promote the transfer of businesses (partial businesses), the following are provided: No taxes, fees, or contributions collected:

• Stamp fees and federal administrative fees
• Stamp duty land tax
• Court fees for entries in the company register
• Court fees for entries in the land register
• Corporate tax

Stamp fees

The exemption from stamp fees (in particular the TP 2 Abs 1 Z 1 and 2, TP 5, TP 6 Abs 1 and 2, and TP 14 of § 14 of the Fees Act) and federal administrative fees apply - in addition to new company formation - also to writings and acts of office that are caused by a transfer of business.

These include, for example:

• In the event of transfers – e.g. conversions into a GmbH (§ 11 Abs. 4 and 5) – for the notice of the transfer of the company to be made known, with the provision of appropriate supporting documents within 6 months of registration in the company register by the district administrative authority
• Acknowledgement and approval of managing director’s orders upon the departure of the current business manager with commercial law authority
• Procedure for determining the individual qualification of the successor entrepreneur under § 19 GewO
• When registering (re-registering) motor vehicles required by the transfer of operation

Stamp duty land tax

Section 5a of the NeuFöG stipulates that the land acquisition tax shall not be levied on taxable transactions that are directly related to a transfer of business (this also includes land located in special business assets), insofar as the value used for calculating the tax is € 75.000 not exceed. Otherwise, the acquisition tax on the excess amount must be imposed. The amount of €75,000 constitutes a business-related tax credit, regardless of how many properties are transferred under this business. An essential criterion is that the transferee has not yet realized any profits from this business (e.g., through a lease arrangement).

Company registration

The provision in § 5a(2)(z) of the New Federal Tax Code (NeuFöG) that requires the literal application of the provision of § 1(3) of the New Federal Tax Code means that only entries in the company register that are directly necessary in connection with the transfer of the business are exempt from court fees.

Such entries can be, for example:

• The incorporation or change of the company
• The change of owner
• The registration, amendment or deletion of personally liable shareholders or
• The new registration, change or deletion of the managing director.

Land Registry

The following points should be taken into account in connection with court fees for land registry entries:

• The acquisition of ownership as the incorporation of a property into a company on a contractual basis must be evaluated
• This contribution must be made immediately in connection with the transfer of operations.
• In return for the contribution of the property, corporate rights or shares in the company’s assets must be granted to the contributor.

Missing even just one this Requirements, is the Refusing fee exemption.

Corporate tax

Pursuant to § 5a, paragraph 2, letter i, in conjunction with § 1, letter 5, of the NeuFöG, the acquisition of shareholdings in capital companies under § 4 of the KVG is immediately exempt from business tax in connection with transfers of business by the first acquirer. This exemption provision applies to business transfers only to a very limited extent. Since only the acquisition of shareholdings by the first acquirer is exempt from tax, subsequent contributions are also subject to tax, as are voluntary contributions by a shareholder in connection with the transfer of business.

The exemption from corporate tax is based on § 5a NeuFöG in the case of a newly founded capital company that takes over and is considered a controlling person of the company. If this process is fundamentally within the scope of application of the Umgründungssteuergesetz (e.g. in the case of a merger through new establishment, incorporation, or division), the exemptions of the Umgründungssteuergesetz apply.

When acquiring or increasing company rights, if and insofar as the capital company is transferred as consideration the entire assets, an operation or part of an operation of another capital company, the exemption provided for in Section 6, Paragraph 1, Item 3 of the KVG shall apply, provided that the capital company acquiring the company rights pays or provides for the transferred assets in cash or in other forms of consideration not exceeding 10% times the nominal value of the company rights.

Image: © Markus Bormann - Fotolia