Selling a GmbH: How to reduce the tax on the proceeds of the sale

Many entrepreneurs have set up their businesses as limited liability companies (GmbH). Doctors and dentists are increasingly running their practices as medical centres (MVZ-GmbH). When a buyer comes along, they are not selling a practice or a business, but shares in the GmbH. From a tax perspective, this makes a big difference.

The reduced tax rate for those over 55 does not apply when selling shares. Nor does the ‘one-fifth’ rule. The capital gain is taxed at the top rate in full. This is precisely why there is one strategy here that can make a particularly big difference – one that many sellers are completely unaware of.

Tip: You can see straight away how much tax you’ll have to pay on the sale of your GmbH shares and how much an IAB saves you with my Business Sale Calculator →

If you’re selling a sole trader business, a practice or a share in a partnership, you’d be better off reading my post Selling your practice or business: How to save on tax. Different rules apply there.

How the sale of shares in a GmbH is taxed

If you hold at least 1 per cent of the GmbH, the sale is treated as a business profit under Section 17 of the Income Tax Act (EStG). The purchase price, less your acquisition costs (usually the share capital) and the costs of the sale, is subject to tax.

Under the partial income scheme, 60 per cent of this is taxable. 40 per cent remains tax-free. That sounds good. But the taxable 60 per cent is added to your other income in a single year, and the top tax rate of 45 per cent can quickly apply there.

What is not involved in the sale of shares:

• not half the tax rate, not even from the age of 55,
• no fifths rule, because the partial income is excluded from this,
• virtually no tax-free allowance. The small allowance under Section 17 applies only where profits are small.

The calculation example

A married entrepreneur sells his limited liability company (GmbH) in 2026 for €2,000,000. His acquisition costs were €25,000 and his selling costs were €40,000. The capital gain therefore amounts to €1,935,000, of which 60 per cent is taxable: €1,161,000. In addition, his managing director’s salary of €150,000 is included in his taxable income. Both spouses are assessed jointly.

Income tax in the year of sale:

• Excluding tax planning: around €551,000
• With an IAB of €200,000 (investment of €400,000): approximately €461,000
• With two IAB grants of €200,000 each (total investment €800,000): approximately €371,000

Calculated using the 2026 tax splitting rate, excluding the solidarity surcharge and church tax.

For every euro of IAB, 45 cents in tax is saved. It is possible to claim two IABs if both spouses run their own businesses, such as a commercial photovoltaic system or a battery storage unit each. This leaves around €180,000 more in the year of sale.

By way of comparison: when selling a medical practice at half the standard tax rate, an IAB saves only around 24 cents per euro. When selling a GmbH, the impact is almost twice as great.

How the IAB works

With the investment allowance, you can deduct up to 50 per cent of a planned investment in advance as a business expense. To do this, you need to run your own small business, such as a commercial solar PV system, a battery storage system, a composting facility or a tiny house. Up to €200,000 is available per business.

The loss from this business reduces your income in the same year – and thus precisely the profit from the sale of shares, which would otherwise be taxed at 45 per cent. If one business is not sufficient, the IAB can be topped up through other independent businesses, for example those run by your spouse.

The IAB defers part of the tax to later years. Anyone who continues to have a high taxable income can make use of the IAB several times in future, thereby permanently reducing their taxable income. After the sale, however, income is usually lower, and that is precisely when the returns on the new investment start to come in. What’s more, you’ve created a source of income for the time after you leave the business.

Sale in 2026 or 2027?

The German Government is planning an income tax reform for 2027. The Cabinet has approved the draft; the Bundestag and Bundesrat still have to give their approval. One point in particular is important for sellers: from €280,000 of taxable income, the rate will be 47 per cent instead of 45 per cent.

In the example above, a sale in 2027 would, according to the draft, result in roughly €17,000 more in tax. Anyone who can influence the outcome should work out the figures for both years. Incidentally, an IAB would then save a correspondingly higher amount – up to 47 cents per euro.

And what about the holding company?

The term ‘holding company’ often comes up when discussing the sale of a GmbH. If a holding company GmbH sells its shares, around 95 per cent of the profit is tax-free. However, the money then remains within the holding company and does not go into your personal account. Anyone who transfers their shares to a holding company only shortly before the sale must also, as a rule, observe a seven-year lock-up period.

A holding company is therefore best suited to long-term planning and for sellers who wish to reinvest the money in business ventures. Anyone wishing to use the proceeds for personal purposes will ultimately end up under the partial income scheme. This is where your tax adviser comes in.

What you need to bear in mind

• Start early: An IAB project needs time to get off the ground. Plan it in parallel with the sales negotiations, not just after the contract has been signed.
• That same year: For tax purposes, the IAB and the capital gain must fall within the same tax year. The transfer of the shares is usually the decisive factor.
• The investment must go ahead. You must redeem the IAB within three years by making an actual purchase. Otherwise, it will be cancelled with retroactive effect and interest will be charged.
• Purchase price payable in instalments or with an earn-out: In that case, the profit can be spread over several years. That changes the planning.
• The project must be profitable. Making an investment purely for tax reasons has never been a good decision.

Frequently Asked Questions

Is the tax rate halved when a GmbH is sold? No. The half tax rate applicable from the age of 55 applies only to the sale of a sole trader’s business, a medical practice or a share in a partnership; it does not apply to shares in a GmbH.

How much tax will I have to pay on the sale of my GmbH shares? 60 per cent of the capital gain is taxable and will be taxed at your personal rate – which, for large gains, is 45 per cent. Roughly speaking, this amounts to around 27 per cent of the gain, plus the solidarity surcharge and, where applicable, church tax.

As a shareholder in a GmbH, can I use an IAB at all? Yes, through a separate business outside the GmbH, such as a commercial solar panel installation. Any loss from this is set off against the profit from the sale of the shares.

Does this also apply to a medical centre (MVZ) or a GP practice limited company (GmbH)? Yes. Anyone who sells shares in an MVZ-GmbH or any other practice-based GmbH is taxed in exactly the same way as any other GmbH shareholder.

Conclusion

When selling a GmbH, the tax benefits that practice owners and sole traders can rely on are not available. The taxable portion of the profit is taxed in full at a rate of up to 45 per cent. This is precisely what makes the IAB so effective in this context: every euro saves up to 45 cents. In the example, with two businesses, this leaves around €180,000 more.

I’ll guide you through the process, from assessing your personal situation right through to decision-making and implementation. To this end, I’ll put you in touch with selected partners. Tax advice should be sought from your tax adviser. You can find out more about the IAB in my free e-book.

This article is for general information purposes only and does not constitute tax or legal advice. Last updated: October 2026.