Tax consulting for buyers and sellers of commercial property
Do you plan to buy substantial commercial property? In addition to the selection of suitable property to buy, a variety of legal and fiscal issues must be resolved well in advance.
Asset deal or a share deal?
The decision whether an asset deal or a share deal should be made, is important in terms of taxation. In addition, the possibility of avoiding or reducing real estate transfer tax is to be checked. One has to be careful of fiscal pitfalls in the sales agreement. We will be happy to provide support with respect to contract drafting and during the contract negotiations. Due diligence helps to identify and avoid the tax risks if possible and to leverage the opportunities that could be available. The purchase price must be appropriately allocated over the tangible assets and the intangible assets since it has an effect on the tax-deductible depreciation later on. Are retentions and provisions in order for possible risk exposure? It has to be checked whether the transaction is treated as a VAT-free purchase of a business or whether VAT must be paid on the purchase price. We audit closing date balance sheets, which prove to be decisive for the purchase price assessment. The exit strategy must be planned in advance at the time of the purchase so that a reasonable part of the profit is still retained even after tax deduction.
International taxation needs to be considered in case of owner or real estate is in a foreign country!
If the owner or if the real estate is located in a foreign country, possible international taxation consequences must be taken into account. From the German point of view, holding companies in foreign countries are only considered tax-wise in case they have sufficient substance for their business purposes, i.e. maintain their own business premises, office equipment and their own staff. As the Panama Papers have proven, the virtual office maintained through a lawyer or certified tax advisor or a letter-box is no longer sufficient. Otherwise, you are considered to be fiscally transparent and one will look through the holding company up to the actual beneficial owner. In this case, the beneficial owner could become liable to limited income tax in Germany, although they neither have a domicile in Germany nor do they stay here regularly and only indirectly own assets in Germany.
Gift or inheritance tax returns
When property is transferred, either as a gift or as an inheritance, the property must be valued according to the respective provisions, and gift or inheritance tax returns must be filed. While restructuring a real estate corporation, one has to make sure that the hidden reserves are not disclosed unintentionally, since otherwise the real estate transfer tax is incurred.
Foreign corporations with real estate property in Germany – just a small office can prove to be a big mistake with respect to tax
Foreign corporations with real estate property in Germany will only be subject to limited tax liability in Germany, if the business is operated from registered office abroad. This means that the profits are not subject to trade tax and are not liable to double entry accounting in Germany. However, a small mistake like a small office in Germany and you directly become liable to trade tax.
We have extensive experience in supporting buyers and sellers of real estate, and especially in the international taxation. Talk to us.
Tax consulting for real estate management
Manager of real estate property
Real estate agents have a demanding job profile. Errors in calculations especially when it comes to VAT and real estate transfer tax prove to be expensive. That is exactly when specialists like us in tax and accounting come into the picture, since diligence and knowledge of latest provisions are essential in this domain. Benefitax has vast experience in audit, valuation and consultation of companies in the real estate business.
Currently, we offer the following services for real estate managers:
- Financial and fixed assets accounting and the preparation of various reports
- Preparation of interim financial statements and reports
- Preparation of annual financial statements (balance sheet and profit and loss statement, notes)
- Compilation of a tax balance sheet derived from the commercial balance sheet
- Preparation of tax returns and review of all tax assessment notices
- Determination of special operating income and expenditure and preparation of special and supplementary balance sheets for partnerships
- Audits of annual financial statements and interim financial statements or audit reviews
- Consultation on or audits of compliance management systems, internal control systems, risk management systems as well as internal reviews
- Taking charge of all communication with the tax authorities
- Cooperation and representation in tax field audits
- Representation in special cases (e.g. before the fiscal courts)
- Other business and tax consultation such as advice on funding, purchase or leasing
- Audit-related consultation for property-specific invoicing / accounting issues
- Calculation of interest expenses and preparation of summaries for bank and shareholder loans so that you also get an insight on the actual financial position during the course of the year