Subsequent business expenses after transferring a business free of charge

Even in the case of a business transfer free of charge, the previous owner may incur subsequent business expenses in individual cases.

The principle of formal balance sheet correlation, i.e. that the business assets at the end of a financial year are identical to the assets at the beginning of the following financial year, also applies to the new business owner in the event of a business transfer free of charge. According to the Federal Fiscal Court, incorrect balance sheet figures that were included in the last assessment of the previous business owner, which can no longer be changed, may therefore have to be corrected by the business transferee.

However, the Federal Fiscal Court has also determined that, despite this principle, subsequent business expenses may be incurred by the business transferor following a gratuitous transfer of the business if the previous owner incurs expenses in connection with his previous management of the business. The Federal Fiscal Court thus upheld the plaintiff who, many years after the free transfer of the business to her father, still had to pay social security contributions for the period of her ownership and can now claim these as subsequent operating expenses for tax purposes.