What country taxes the most ?
Very often when we talk about taxes, we tend to think that developed countries are the most taxed country in the world. This is often true, but we wanted to verify it in a very concrete way in terms of business transfer.
Some of the people listening to us are entrepreneurs or dream of becoming one, and it is important to know where they will be eaten, the day they decide to sell the fruit of their labor, to sell their business.
So it is true that the best way to create a professional asset is to create a company and for those who have not found original ideas for creation there is still the takeover of a company.
In both cases, an individual is going to invest money that he will have to pay back at one time or another but also time that will have to be monetized one day!
The best time to get a return on your investment is when you resell your stake in the company.
This decision to sell one’s stake is a difficult one because the entrepreneur is never sure of the amount he will get back from the sale.
It may be tempting for the entrepreneur to avoid the question of the resale value by having a serious financial appraisal carried out, but he always wonders what tax sauce he will be eaten with.
In developed countries, it is very rare that there is not what tax experts euphemistically call “tax friction” at some point, either in terms of capital gains, income tax or wealth tax.
What is the best system of taxation of business transfers in the developed countries today? Which countries tax the most and which tax the least?
From the point of view of fairness, is there a fairer tax system than others?
For example, let’s take the case of an entrepreneur who sells his stake in his company for $10 million
Depending on the country he is in, he will not have the same amount left:
- UNITED STATES: $8,500,000
- CANADA: $7,800,000
- LUXEMBOURG : 7 820 000
- AUSTRALIA: 7 800 000
- JAPAN: 5 300 000
- GERMANY: 7 150 000
- ITALY: 7,750,000
- FRANCE (> 6 years): 6 000 000
- SPAIN: 7 300 000
- PORTUGAL: 8 000 000
- THE NETHERLANDS: 7 500 000
- CHINA: 6 500 000
- RUSSIA: 8 700 000
- INDIA: 8,000,000
- BRAZIL: 8 500 000
- UNITED KINGDOM: 7 200 000
- FINLAND : 6 800 000
- SWEDEN: 7 000 000
Conclusion: no developed country taxes as much as Japan and France.
With this in mind, and from the point of view of fairness, what would be the ideal tax system?
We believe that the issue is linked to the more global taxation of individuals and companies.
In most developed countries, corporate and personal income is heavily taxed, including income in the form of dividends.
In terms of fairness, it is reasonable to ask on what basis an entrepreneur should be taxed when selling his or her business then:
- that he has worked all his life in the company he created
- that he took all the financial risks
- sometimes being underpaid or unpaid,
- that he was taxed on all wages received
- he was taxed on all dividends received
Very often, the sale of the company constitutes even the only retirement asset of the manager and to tax the fruit of the sale when he has taken a small salary all his life is deeply unfair from the point of view of equity.
Moreover, if we compare investing in a company with investing in dormant assets such as real estate or works of art, it is better to invest in art or real estate rather than in a company in which you can lose your entire stake and if you win you will often be taxed more in the sale of a company than for a work of art or real estate.
But mentalities are changing…
On the right as well as on the left, many people consider today that it is necessary to encourage investment in companies, especially at the time of the sale of one’s company or one’s shareholding.
For example, last February in France, Manuel Valls announced at the Salon des Entrepreneurs, his intention to create what he calls “an entrepreneur investor account” which aims to encourage individual investors who reinvest their holdings once their company is sold.
In June of this year, Emmanuel Macron confirmed that the entrepreneur investor account will be introduced in the fall as part of the 2017 Finance Bill.
More recently, Michel Sapin confirmed that this would be on the agenda of the 2017 Finance Law.
Who will this device be aimed at?
This scheme will be aimed at individual investors and not at professionals.
The distinction is not always clear because many investors are grouped into investment companies.
What types of companies are covered by the scheme?
It is primarily aimed at innovative companies and startups.
Investing in start-ups is indeed investing in the future, but today’s economy, today’s jobs depend on existing companies and it is they who must be helped in the short term. It should not be limited to innovative companies but opened to all SMEs.
In concrete terms, what are the tax benefits of the scheme?
From a tax point of view, this investment vehicle allows SME shareholders to reinvest the proceeds of their sold shareholding without any tax friction, with security on income tax and wealth tax.
The investor eligible for this scheme will no longer pay ISF or capital gains tax.
The percentage of ownership has not yet been decided and is under discussion in the Government.
However, for a very long time, an incentive has been proposed for investors.
This is a step in the right direction because one day everyone should understand that if we want to keep a market economy we should stop hitting those who produce wealth for the country and who create jobs but also stop thinking that the State can do better than individuals and more globally than the private sector to develop the economy
FAQ
What services does Actoria provide?
Actoria specializes in mergers and acquisitions advisory for small and mid-sized businesses. Our services include company sales, succession planning, buy-side and sell-side mandates, business valuation, financial diagnostics, investor sourcing, negotiation support and full transaction execution until closing.
Who does Actoria work with?
We support SME owners, family-business leaders, shareholders, entrepreneurs, private investors, and corporate groups seeking to acquire or divest businesses in Europe and North Africa.
In which countries does Actoria operate?
Actoria has local teams in Switzerland, France, Belgium, Luxembourg, Morocco and Tunisia, and manages cross-border deals across Europe, Africa and the Middle East through an international buyer network.
How many potential buyers are in Actoria’s network?
Our proprietary network includes more than 6,500 qualified industrial buyers, strategic acquirers and financial investors, allowing us to match sellers with high-quality counterparties.
Does Actoria support confidential business sales?
Yes. Confidentiality is fundamental to our process. All discussions, documentation and buyer approaches are handled discreetly to protect the interests of the seller and the business.
What industries does Actoria cover?
We advise companies across multiple sectors, including industrial production, manufacturing, services, IT and digital, healthcare, logistics and distribution, construction, and specialized B2B services.
What is the typical size of businesses Actoria represents?
We primarily advise SMEs with revenues generally ranging from CHF/EUR 2 million to 100 million, depending on jurisdiction and market.
How does Actoria determine the value of a business?
We perform detailed financial and strategic analysis using multiple valuation methods, including discounted cash flows, market multiples, asset-based methods, and sector benchmarking.
How long does a business sale process take?
A standard transaction typically takes 6 to 12 months depending on market conditions, buyer interest, company complexity and diligence requirements.
Why choose Actoria as an M&A advisor?
With over 20 years of experience, a senior advisory team, a structured methodology, and an extensive network of qualified buyers, Actoria delivers independent advice, tailored execution and strong transaction results for SME owners.
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Actoria has swiftly identified the inefficiencies in our company’s processes, proposed optimizations, and implemented them effectively. Furthermore, Actoria has provided outstanding support throughout all stages of our company’s transfer to a group within our industry. This includes preparing our company, identifying potential buyer partners, and negotiating up to the point of the partner’s capital entry. Actoria delivered expert negotiation skills and secured a valuable partner for us.
We were quite anxious to find a solution, as my health was deteriorating rapidly. Actoria’s consultant played a crucial role in the successful completion of my company’s sale. Their involvement was essential in executing this delicate project, as it impacted our daily operations. This project, which was close to my heart and increasingly necessary, was made possible thanks to the decisive momentum provided by Actoria.
First, Actoria conducted a thorough assessment of our company’s strengths and weaknesses, and then suggested incorporating these insights into our management approach to enhance our company’s value. Actoria led this project alongside my entire management team, enabling the involvement of all key personnel, and swiftly implementing a solution that allowed an investor to enter our capital. This was complemented by the inclusion of some of my company’s executives and a bank.
I couldn’t be happier with the result, but I am especially pleased with my decision to work with Actoria. The success of this mission was the direct result of Actoria’s hard work and sophisticated professionalism on my business. From our first meeting through the reasonable preparation process, all phases of the transfer, legal and financial operations were managed by the Actoria team. Their skills were even more evident when the complexities of this transaction were at its peak.
Hiring Actoria made the difference to achieve my original goal and move on to my next professional challenge. Selling a company like AMR in this market has not been an easy task. Actoria has demonstrated perseverance in identifying good buyers with knowledge of my industry in order to continue the development of my business, and has provided professional advice throughout the process.
The company’s sales process was a lengthy and challenging journey. The professional support from Actoria made this endeavor much more manageable. I would like to extend special thanks to the consultants from Switzerland and France for their highly effective collaboration. Your consultants proposed creative solutions during the negotiations, which effectively overcame significant obstacles in order to finalize the agreement. Their experience, knowledge, and professionalism played a crucial role in the success of this transaction.
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