Japanese Tax Blog in English

日本の税務情報を英語で書くブログ by みなと国際会計事務所

Why you need to know your company valuation for its succession

time 2018/05/05


If you own a business and you want to pass it to your children, you probably want to know how much tax you will have to pay for the transfer. It can be either a capital gain tax (if you take the form of selling), gift tax or inheritance tax.

Forms of succession

Some people just sell shares to her successor at market price. Some people set up a company with very little capital and borrow money from a bank to buy the shares. The successor (who can be her children or her relatives) will own the shares of the new company (holding company). If the existing business is profitable enough, banks will be willing to lend money to the new company.

Some people set up a trust that leaves its voting right to the current owner and gives benefits of dividends to her children etc.

How you maneuver the valuation of the shares

Once you decide when to transfer the shares, you will have some options to lower its share price such as:

  • Retirement pay
  • Realize losses by writing off non-performing assets

The point is to book as much as losses possible to lower the corporate income to lower the valuation. The valuation depends on its income, dividends, and its net assets (marked to market). I will write it more in details later in this blog.

I would like to provide a free consultation in a brief form as to how much the shares of your company is and how to reduce the cost of the transfer. There should be several options to transfer the ownership.


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