Goodwill in Business Transfer: What Is It and How Does It Work?

What makes up goodwill?

• Customer relationships: recurring clients, long-term contracts, retention rates
• Brand value: reputation, market position, online presence
• Processes and systems: scalable operations, trained team, proprietary technology
• Location: strategic location for retail or logistics businesses
• Licences and permits: hard-to-obtain regulatory approvals

How is goodwill valued?

Goodwill is usually valued with EBITDA multiples. The multiple depends on sector, stability and growth. Goodwill is the sale price minus the net asset value. For example, a business has €200,000 EBITDA and is sold for €700,000 (3.5x). Its net assets are €150,000, so its goodwill is €550,000.

Tax treatment of goodwill

In a share sale: the entire sale price, including goodwill, is part of the capital gain. If you sell personally, this is taxed in box 2 (the tax bracket for a 5% or larger shareholding). If you sell via a holding company, it is exempt under the participation exemption.

In an asset sale: the selling company pays corporate tax on the goodwill it receives (19% or 25.8%). The buyer can then write off (amortise) the purchased goodwill over 10 years for tax purposes.

See the Dutch holding structure for what you save with a holding above the operating company, and what it involves each year. To keep both companies in good standing, see corporate secretarial services in the Netherlands.

Related questions

You can read more in Selling a Business via a BV and Selling Your Business. See also Transferring a Business to Your Child.