Tax-free transfer of business

Tax-free business transfer

In a tax-free business transfer, a business or parts of it are transferred to another person or company without triggering tax on gains and other tax consequences that would normally arise when selling assets or the business. This may be relevant in connection with succession planning, restructuring or reorganisation.

There are several methods and rules in Danish legislation that can be used to carry out a tax-free business transfer:

Tax-free business conversion

Used to convert a personally operated business into a company (typically an ApS or A/S) without triggering tax. We refer to the category – Tax-free business conversion.

Tax-free merger or demerger

A tax-free merger is used between companies where two or more companies are combined without triggering tax. A tax-free demerger is used when a company is split into two or more companies without triggering tax.

Succession planning (generational transfer)

Transfer between closely related family members or employees.

In connection with succession planning, it is possible to use one or more of the tax-free models for transferring a business to the next generation.

The rules on tax succession, where the recipient takes over the previous owner’s tax position, can also be used in connection with succession planning.

We refer to the category – Tax succession.

Succession planning can be a complex process, but with proper planning and professional help it can be carried out in a way that ensures the business’s future success.

Transfer of ownership within companies

If ownership is transferred within group-connected companies, the transfer can take place without tax consequences, as it occurs within the same tax unit.

With planning of the company structure, it may also be possible to establish a relevant structure using the rules on tax-free share exchange. These rules are widely used after a business conversion.

Advantages of a tax-free business transfer

• No immediate taxation of gains
• Opportunity to ensure continuity in the business
• Facilitates succession planning and restructuring

Disadvantages and considerations

• Requires careful planning and often professional advice
• The rules are complex and must be complied with strictly to avoid unwanted tax consequences
• Tax succession means that the tax liability is merely deferred to a later point in time

Contact us today

SkatteInform can help assess whether the succession planning or transfer of ownership can be carried out through a tax-free restructuring and whether the conditions are met. We can also assist with proposals for the optimal business structure in the specific case. We can provide the necessary statements, as we are a state-authorised audit firm. You can also contact us via the contact form below.

Disclaimer

As the above is for guidance only, we do not accept liability for dispositions that may be made on the basis of the above without

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