Context
NAWI Europe was approached by a client who had purchased real estate through his commercial company seven years ago. He has now decided to transfer this real estate to his personal use with the lowest possible tax consequences, seeking to avoid any penalties or tax risks during an audit by the tax authorities.
Task
- Propose a legally and tax-optimized method of transferring real estate from a legal entity to an individual.
- Check the possibilities of a free transfer versus a standard sale.
- Eliminate possible risks associated with targeted actions, hidden payments, or abuse of rights.
- Ensure compliance with current court practice and tax regulations (in particular regarding VAT, corporate income tax, personal income tax, and acquisition tax).
Legal analysis and procedure
- We conducted a thorough analysis of the accounting and tax implications for both options: a purchase and sale agreement and a gift agreement.
- We assessed the initial value of the property, how it was recorded in the company's assets, and any depreciation deductions that had already been applied.
- We checked whether the transfer could be considered a hidden payment (for example, in the case of a gift) and determined the level of tax risk.
- We ensured that an expert appraisal was obtained that corresponded to the current market value of the property for tax purposes and for the transfer of ownership itself.
- Together with the client, we considered the option of liquidating the company with the subsequent transfer of assets, but due to time and administrative costs, this option was rejected.
- Ultimately, we recommended a transfer in the form of a purchase and sale agreement at market price, using the company's losses from previous years to offset the tax liability (corporate income tax).
Key point
The decisive factor was that the client’s company had tax losses from previous years, which could be used to completely avoid taxation on this sale. This made it possible to reduce the tax burden to zero and avoid any doubts on the part of the tax authorities.
Result
- The transfer of real estate was successfully carried out through a purchase and sale agreement at market price.
- The company did not pay corporate income tax thanks to the offset of losses from previous years.
- The client, as an individual, did not pay VAT and income tax, as he was not a VAT payer and did not acquire the property within the scope of his business activities.
- The entire transfer was completely transparent, without tax risks and with legal support, including notarization and submission of an application to the real estate cadastre.
“I appreciate that I had lawyers who did not look for loopholes, but offered a reliable and legal solution. The transfer was quick and financially beneficial — exactly what I wanted.”
Legal areas
- Tax law (corporate income tax, VAT, personal income tax)
- Civil law — real estate transfer
- Compliance and financial planning
Keywords
#real estate #tax optimization #income tax #real estate transfer #NAWI
