Selling part of a Business

[makooy]

Hi all

I have a limited company and number of business operating as part of the company.

One of which is an online booking service, I was hoping to sell this part of the business as an "intellectual property" sale i.e website, branding, domain names without selling any of my company, there would be some goodwill included in the sale too; upcoming bookings, client contact list. Theres no stock, inventory or anything tangible.

I was thinking of selling the IP to the other party as a website for €x amount+vat but I was told that goodwill might be considered as capital gains.. if thats the case, could I sell the IP as a transaction+ vat and sell the goodwill separately for €1 ?

thanks a mill

 

[dublin67]

CGT has transfer pricing rules that treat assets as being sold at open market value so selling one asset for a Euro and the remainder for a different amount don't get you a separate tax treatment. If the sales proceeds are big enough it will be worth you talking to a tax consultant/accountant so that the sale can be structured in a tax effective manner. Sales of a business can be complicated and lots of different tax issues come into play.

 

[makooy]

Thanks for the reply

How would it work if I was to give away the part of the business to the other party for free and charge a consultancy fee for services which i will be providing afterwards?

 

[dublin67]

If your business has no value then you shouldn't have any tax issues. However, if your business has value and you give it away in return for a consultancy contract then you have converted a capital gain, taxable at 10%/33% depending on the circumstances, to income which is taxable at rates of up to 55%.

There are lots of valuation models which will put a value on a business. However the real value of the a business is what a third party will pay for it. If the business, and thus your shares, has no value then you have no tax issues. However if there is value then you need advice.