Selling your practice or business: How to save on tax

You’ve spent decades building up a practice or a business. Now it’s time to sell, and a buyer is offering €1.5 million. It’s a good moment. But it’s also the moment when the tax office wants to make as much money out of it as it rarely has before.

Without proper planning, nearly €700,000 in income tax could be due on €1.5 million. With the right steps, it’s significantly less. I’ll show you what options are available.

What is subject to tax when selling a practice or business

It is not the purchase price that is taxed, but the capital gain: the purchase price minus the book value of your practice or business, minus the costs of sale. In the case of a medical practice or a small business, the book value is often low. The capital gain is then close to the purchase price.

This profit is added to the rest of your income in a single year. As a result, almost all of it will be taxed at the top rate of 45 per cent.

All of this applies to sole traders, self-employed individuals and shares in partnerships. Different rules apply to the sale of shares in a GmbH.

Lever 1: the half tax rate

If you are aged 55 or over, or are permanently unable to work, you can apply for a reduced tax rate once in your lifetime. It amounts to 56 per cent of your average tax rate, subject to a minimum of 14 per cent. This applies to capital gains of up to €5 million.

To do this, you must sell the practice or business in its entirety and largely give up your previous activities in this field. The exact age at which the age limit is met is described, for example, in Haufe: The date of handover is the relevant date, not the date of the contract of sale.

Incidentally, the well-known tax-free allowance of €45,000 no longer applies to this amount. It is gradually reduced as soon as the profit exceeds €136,000, and disappears entirely at €181,000.

Leverage 2: the investment allowance (IAB)

The half tax rate makes a big difference. In addition, you can set up a new, small business in the year of sale, for example with a commercial solar panel system, a battery storage unit or another IAB-eligible project. In this case, you can claim an IAB of up to 50 per cent of the planned investment, up to a maximum of €200,000 per business. If your spouse also runs their own business, they can claim a further IAB.

The loss from this business reduces your income in the year of sale. It is first set off against your current income, which would otherwise be taxed in full, and then against the capital gain.

The calculation example

A dentist, aged 61 and married, sells her practice, realising a capital gain of €1.5 million. From the day-to-day running of the practice, she has a further €100,000 of taxable income in the same year; her husband has no income of his own. They are assessed jointly. Their income tax for the year of the sale:

• Excluding tax planning: €681,058
• At half the tax rate: €378,651
• At half the standard tax rate and with an IAB of €200,000: €330,992
• At half the standard tax rate and with two IABs of €200,000 each (investments totalling €800,000): €280,592

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

Compared with selling without any planning, the couple are therefore left with around €400,000 more. Two IABs are possible because each spouse runs their own business – for example, each has their own solar panel system.

Important to note: With the half tax rate, each IAB saves only around 24 cents per euro, as the profit is already taxed at a reduced rate. A third or fourth IAB in the sales year is therefore usually no longer worthwhile.

Pro tip: An IAB yields even more in the year prior to the sale. In that year, it is added to the normal practice profit, which is taxed at a rate of up to 42 per cent. With a practice profit of €250,000, an IAB of €200,000 in the previous year saves around €77,000, whereas in the year of sale it saves only around €48,000. This requires an additional practice, as the maximum amount per practice also covers the three preceding years. And even if the previous year is already over: as long as the tax return for that year has not yet been submitted, the IAB can often still be claimed retrospectively.

As always, the IAB defers part of the tax liability to later years. If your income remains high, you can make further use of the IAB in subsequent years. However, income is often significantly lower following the sale, and that is precisely when the returns from the IAB projects are realised. You have also created a source of income for your retirement. Under certain conditions, these projects can even be transferred to other people or passed on as an inheritance tax-free. Read more about this in my article Saving on gift and inheritance tax with photovoltaic systems.

What you need to bear in mind

• Date of handover: The 55th birthday must be before the handover date. A few weeks’ difference can cost a great deal of money here.
• Once in a lifetime: The half tax rate is available only once. Anyone selling several businesses should plan how they will use it.
• Full question: Anyone who continues to work in their old workplace after the sale may lose their benefits. Clarify the details before signing the purchase agreement.
• IAB at the business that has been sold: If you still have any outstanding IABs there that haven’t been invested, these will be closed retroactively. This needs to be taken into account in the planning.
• The IAB investment must pay off. Making an investment solely for tax reasons has never been a good decision.

Frequently Asked Questions

How much tax will I have to pay when I sell my practice? Capital gains are taxed alongside your other income. Without proper planning, this could amount to almost half: in the example, it comes to €681,058 on a profit of €1.5 million.

Who is eligible for the half tax rate? Anyone who is at least 55 years old at the time of the transfer, or who is permanently unable to work, and who sells the business in its entirety and is making use of the relief for the first time. It applies to profits of up to €5 million.

Does this also apply when selling a GmbH? No. Different rules apply to shares in a GmbH. This article concerns sole traders, self-employed professionals and shares in partnerships.

Can I still take the IAB exam if the sale has already taken place? Often, yes. As long as the tax return for the year in question has not yet been submitted, the IAB can still be claimed on it.

Conclusion

When selling a practice or a business, careful planning can make the difference between six-figure sums. The reduced tax rate is the most important factor, and the IAB adds significantly to this. You’ll get the most out of both if you start early – ideally a year before the sale.

I’ll guide you through the process, from assessing your personal situation to making decisions and putting them into practice. To this end, I’ll put you in touch with selected partners. Tax advice is best left to your tax adviser. You can find out more about the IAB in my free e-book.

Warm regards

Michael Rehberger

This article is for general information purposes only and does not constitute tax or legal advice. As at October 2026.