The sale of a company and the transfer of business

The transfer of an employer’s business refers to the handing over of a company, enterprise, organization, foundation, or a functional part of these to another employer. The business being transferred, or its part, remains the same or similar after the transfer, and employment relationships also transfer as they are. According to legal practice, a business transfer is considered to occur when there is a contractual relationship between the transferor and the transferee, and the subject of the transfer is a business or a part of the business that forms a functional entity. The operations must continue in roughly the same manner and without delay.

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Therefore, for example, when purchasing the entire share capital of a limited liability company, it is not about a business transfer but a change in ownership of the company. Different types of business transactions, generational changes, and other ownership arrangements fall under changes in ownership. In cases like generational changes, business operations continue through agreements among relatives, which are also considered in the taxation of the transfer.

There is a distinction between a share purchase and a business transaction. Even if the seller owns all the shares of the limited liability company, they do not personally own the business operations and assets of the company. The aforementioned are owned by the limited liability company, meaning that in the sale of the business operations, the seller is the company, not the entrepreneur. This implies that the money obtained from the transaction also goes to the company. In many cases, it is advisable to first convert a general or limited partnership into a limited liability company, and then proceed to sell the business operations of the company. Transfers of business operations are easiest and most cost-effective to execute within a limited liability company.