Selling a GmbH: Tax in a Share Deal and an Asset Deal

When selling a GmbH, the transaction structure decides the tax burden. Two routes are open: selling the shares (share deal) or selling the individual assets out of the company (asset deal). Both lead to the same economic goal, but to very different tax results. Seller and buyer often have opposing interests here.

This article frames the tax logic. It is not tax or legal advice. The concrete burden depends on the individual situation — on the history of acquisition costs, on loss carry-forwards and on detailed rules. Always involve a tax adviser and a lawyer before you fix a structure.

Share deal: selling the shares

In a share deal the shareholders sell their GmbH shares. The company itself remains unchanged; only the owner changes. Contracts, permits and employment relationships continue, because the legal entity stays the same. This is the more common route when selling a healthy company.

How the gain is taxed depends on who holds the shares.

If a natural person sells a GmbH participation, the capital gain falls, in Austria, under income from capital assets. It is taxed at the special rate of 27.5 percent. The tax base is the sale proceeds less the acquisition costs — the paid-in share capital, any capital increases and a former purchase price. When this rate is applied, costs connected with the sale are not deductible.

If a corporation sells the participation, a different regime applies. For an international qualifying holding — a participation of at least ten percent in a foreign corporation held for at least one year — the capital gain is in principle tax-free. In return, capital losses and write-downs are not tax-effective unless an option for taxation was exercised.

Asset deal: selling the assets

In an asset deal the GmbH sells its individual assets — plant, inventories, customer relationships, trademarks. The purchase price flows into the GmbH, not directly to the shareholders. At the level of the GmbH a business disposal gain arises, subject to corporate income tax. If the shareholders then want to withdraw the money, the distribution is taxed a second time. This economic double burden is the central drawback of the asset deal from the seller''s perspective.

The buyer sees it the opposite way. They can restate and depreciate the acquired assets, which lowers their future tax burden. It is precisely this depreciation base that they largely lack in a share deal. The conflict of interest between buyer and seller over the structure is therefore a regular subject of negotiation.

Share deal and asset deal compared

Feature	Share deal	Asset deal
Object of purchase	GmbH shares	individual assets
Legal entity	continues	stays with the seller GmbH
Taxation of seller (natural person, AT)	capital gain at 27.5% KESt	gain in the GmbH plus later distribution
Taxation of seller (corporation, AT)	possibly tax-free under intl. qualifying holding	gain in the GmbH taxable
Depreciation base for buyer	low	restatement possible
Transfer of contracts	in principle automatic	to be transferred individually
Preference tends to be	rather seller	rather buyer

The German legal position in brief

In Germany, for the sale of GmbH shares by a natural person holding them privately with a participation of at least one percent, the partial-income method under the relevant provisions applies. Under it, 40 percent of the capital gain is tax-free and 60 percent is subject to the personal income tax rate. Accordingly, acquisition and disposal costs are also only recognised at 60 percent.

If a corporation sells the shares, capital gains are 95 percent tax-free under § 8b of the German Corporate Income Tax Act, regardless of the size of the holding and the holding period. The remaining five percent count as non-deductible business expenses on a flat-rate basis. The German rules therefore differ markedly in the detail from the Austrian ones.

For the question of what your company is worth at all, a structured company valuation helps. We accompany the overall structure of a sale in our selling a company guide. A fundamental comparison of the structures is in the article asset deal or share deal.

Frequently asked questions

Is the share deal always cheaper than the asset deal?

Not across the board. For the seller the share deal is often more tax-attractive because the double burden is avoided. The buyer often prefers the asset deal for the depreciation base. The result depends on the individual case.

What tax rate applies in Austria to a share sale by a private person?

The capital gain is subject to the special rate of 27.5 percent. The tax base is the proceeds less the acquisition costs.

What does the international qualifying holding mean?

Under certain conditions it exempts capital gains from participations in foreign corporations from corporate income tax. In return, corresponding losses are not deductible unless an option for taxation is exercised.

Why does a double burden arise in an asset deal?

The gain is first taxed at the level of the GmbH. If the proceeds then flow to the shareholders as a distribution, they are taxed a second time.

Can this article replace tax advice?

No. It frames the mechanics. The concrete burden depends on many individual factors. Involve a tax adviser and lawyer before any decision.