Everyone loves a tax-free exit… but does it exist?
Owners often ask:
“How much of my sale is tax-free?”
The reality: tax allowances exist, but they rarely cover your full exit gain. Misunderstandings can lead to surprises in the net proceeds.
1. The basic idea: what is a tax allowance?
A tax allowance (Freibetrag) is a fixed amount or percentage of capital gains exempt from taxation.
Designed to reduce the burden for small business owners
Often applies to private sales of shares in small corporations
Key point: It’s not a “free pass” — it’s a partial relief.
2. Common misconceptions
Myth 1: “I can sell my entire company tax-free”
Reality: Freibetrag is capped, often at €45,000–€120,000 depending on national rules.
Myth 2: “It applies automatically”
Reality: Must be claimed, documented, and conditions met (holding period, active management, legal form).
Myth 3: “All owners qualify equally”
Reality: Different shareholders (private vs holding, majority vs minority) have different eligibility.
3. How allowances actually impact your net
Example (simplified, private shareholder):
Sale price: €2.0m
Capital gain: €1.8m
Freibetrag: €45k
Taxable gain: 1,755,000 € → still heavily taxed Net impact: Freibetrag reduces tax by ~2–3%, not more.
4. Planning around allowances
Freibeträge can help in early-stage exit planning:
Combine with holding structures
Use in staggered sales (tranches)
Align with income splitting strategies
But: they are never a replacement for proper exit planning.
Conclusion
Tax allowances for business sales are real, but limited. Owners should treat them as small boosters, not as “tax-free tickets”.
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Theory is good, but concrete numbers are better.