Step 1: Status quo, options and feasibility
A comprehensive determination of facts and ideas provided by the relevant stakeholders is the starting point for the status quo analysis. Based on our established strategy (possibly in cooperation via our gkn advisory GmbH), we develop tax and legal fields of action. In this context we will assess existing legal and tax risks and highlight the need for detailed review where necessary. The result is a feasibility study that outlines the key points of a possible succession in the sense of a roadmap.
We offer modern rolling inheritance tax control systems and can provide indicative business valuations and calculations of deferred tax burdens (administrative assets, payroll, etc.) at any time. Action options to reduce tax burdens can also be modeled and calculated indicatively (e.g. life estate calculations).
Step 2: Detailed examination, valuation, and tax relief analysis
After clarifying the options under consideration, we will perform the relevant detailed tax and legal reviews. This applies particularly if a restructuring of corporate or private assets is necessary prior to succession. We perform dedicated valuations of all asset classes, as well as a determination of the regulations on business asset tax exemption (§§ 13a, b and § 19a Inheritance Tax Act).
Step 3: Implementation and tax declaration
We assist in the implementation of business succession and draft the relevant (tax-appropriate) contractual framework. Finally, we prepare the corresponding declarative statements and gift tax declarations or inheritance tax declarations and accompany the tax assessment procedure.
This internationality is associated with a colorful bouquet of tax and legal stumbling blocks. What happens if a shareholder moves away or involuntarily stays abroad longer than planned? What are the tax implications of international investments and what are the reporting requirements? What is the effect of a marriage abroad or to a partner with a different nationality?
Tax deprivation and exit taxation rules must be observed, and private international law can lead to surprising results in questions of inheritance law, family law, and matrimonial property law. With our advice we create legal certainty for assets and family.
If desired, we can develop structures for your assets that accommodate mobility within the circle of owners and avoid tax disadvantages. We coordinate the considerations with the relevant foreign legal systems through our network partners. This applies, for example, to foreign investments or to the involvement of asset holders or beneficiaries who live abroad and are to participate in such structures.
In addition, based on asset reporting, we identify special circumstances that justify the reclaiming of capital gains tax initially withheld by banks in the case of corporate transactions (stock splits, spin-offs, etc.) and prepare the corresponding applications for capital gains tax refunds.
Our tax reporting for business assets is divided into two parts including the tax balance sheet profit determination and the off-balance sheet profit determination. As part of this determination, we create an accounting report that includes all assets and liabilities as well as income and expense components. In addition, the following evaluations are usually prepared:
- Partial exemptions for investment income
- Tax reserve in accordance with §§ 56 (3) InvStG (Investment Taxation Act)
- Stock profit determination (fund acquisitions prior to 2018)
- Creditable withholding taxes by country
We reconcile information we receive with our data for the tax return. If our client acquires or establishes a new business entity, we note this in our client overview, take care of the tax registration/assignment of a tax number, and set up the necessary powers of attorney. When it comes to cross-border matters, we work closely with colleagues abroad who are part of our long-established network.
Based on our information, we prepare all required tax returns in a legally secure and efficient manner and fulfill reporting obligations under both §§ 138 of the German Tax Code (AO) and the Foreign Trade Ordinance (Außenwirtschaftsverordnung).
Are individual properties purchased to be held for the long term or rather to be developed and restructured? Are certain properties of emotional value (family residence, vacation home on the island of Sylt) and therefore have less focus on investment returns? How will they be financed? Are ongoing returns needed on a private level? Should children be involved in this asset class at an early stage?
Based on the insights we gather from asking these questions, we then identify the right legal structure, e.g. to allow the intended participation of minor children without the need for involvement of third parties such as the family court or supplementary guardians, and to bring about a cohesion of the portfolio. From a tax point of view, we consider which structure provides the most favorable current taxation and how an exit/sale might be realized tax-free. In the case of a planned succession, we will collaborate with you to design a transfer that is as tax efficient as possible.
Together we develop governance structures for your assets, discuss the advantages and disadvantages of a joint investment platform for the family, and support you in finding suitable decision-makers or network partners. This also includes the implementation of beauty contests, in which various asset managers compete to take over your individual asset management. Modern asset reporting rounds off the service and serves as an operational basis for the defined asset and investment strategy. Through gkn Gräfe Klümpen-Neusel PartG mbB we transfer the investment, governance, and investment strategy into legally and fiscally suitable entities (holding and investment structures as well as the setup of a Family Office) and support in ongoing issues.
Automated determination of foreign currency gains for capital investors.
Taxpayers who hold a foreign currency account and use their credit balance to purchase securities may realize tax-relevant capital gains that are not necessarily shown in the banks’ tax certificates. Particularly in the case of frequent transactions, taxpayers and tax advisors are faced with the challenging task of meticulously determining and reconciling foreign currency gains, which of these gains have already been taken into account by the bank and are included in the annual tax certificate as capital gains, and which must now also be included by the taxpayer in the tax return as other gains. We will be happy to relieve you of this time-consuming and cost-intensive task! We work with Noveras Services AG from Switzerland for the determination of foreign currency gains.
Securities accounting for capital investments held as business assets.
We receive information on your company’s business transactions within the relevant business or calendar year via your bank’s digital interfaces. Based on this information, we feed the transactions into an automated securities accounting system in accordance with the rules of German commercial law.
You or your tax advisor then only have to adjust the data prepared in accordance with commercial law for tax purposes. It is no longer necessary to use tables created for manual recording and processing of securities accounting. We offer HGB reporting in cooperation with Noveras Services AG from Switzerland.