The tax burdens that accrue when you acquire an enterprise materially affect the amount of the purchase price and the best approach for the takeover. We provide you with many years of experience with company purchases and their tax treatment in Austria. This is one reason why we, unlike most other consulting firms, are able to structure and implement the best option for our clients in each individual case.
Limited liabilities companies can be transferred in two different ways:
- The public entity itself can sell your operations and distribute the proceeds resulting from the sale to the shareholders and/or reinvest them in some form (asset deal)
- The shareholders can sell the rights to their shares to the public entity (share deal)
The transfer of shares (share deal) will have no influence on the company’s accountability. Hidden reserves in the limited liability company’s operating assets will not be disclosed by a sale of share rights. In a share deal, the taxes apply solely at the shareholder level.
In an asset deal, hidden reserves are realized on the corporate level. The sale will only have tax consequences for the shareholders if there is a subsequent distribution of profits or corporate liquidation.
Aside from in the legally defined case of a universal legal succession (inheritance, under corporate law), companies cannot be transferred to the purchaser in a single transaction that would include all material, asset, and immaterial rights and legal relations; rather a singular succession is required. More: In Article 38, the Austrian Commercial Code (UGB) provides new transfer rules for rights relating to the company being transferred. Now, when there is a continuation of a company (unrelated to the continuation of the corporate name), the law provides that the acquirer will generally assume the business-related, not specifically personal, legal relationships of the seller together with the rights and liabilities established up until the time of the transfer (assumption of contract in law). Within a waiting period of three months, the third party can object to the assumption of a contractual relationship. The seller will indemnify those liabilities which come due within a 5 year period following the transfer of the enterprise (Article 39).
Tax Treatment Details on the Sale of Operations and Interests in Limited Liability Companies