How can I save on taxes when passing on my company?

If an excessive tax burden were to arise when transferring a company, it may lead to the company not being able to survive a change of ownership. While owners of a sole proprietorship or partnership benefit from privileged tax rates on liquidation profits, they may still incur taxes and social security deductions of 15 to 25% on the sale profits. It may therefore be worth converting a sole proprietorship into an incorporated company no later than five years before a planned sale.

With a few exceptions, owners of incorporated companies don't need to pay tax on profits from the sale of their shares. However, buyers usually don't wish to acquire any assets which aren't necessary for the running of the company. As such, any superfluous liquid assets and other assets not required to operate the company should be transferred out of the company in good time into the owner's personal assets in the most tax-efficient way possible.