All you need to know about selling your inventory.
There can be many reasons for selling a stock item from a company. It may be that you have some goods you know that you will not sell yourself but which others can get set aside. You may be closing your business down. It can also be in connection with a regular sale of business that you find out that the buyer is most interested in your inventory, inventory and other assets and not so much your company. In any case, there are some things you need to be aware of.
Should I pay VAT on inventories and other assets?
First of all, you must pay attention to the rules regarding VAT and tax. Where and if you have to pay any part depends on the situation in which you sell your inventory.
If you close your business and in that respect keep a stop sale, be sure to charge VAT on inventory and assets. However, this only applies to the things that you sell before the company closes as part of the settlement.
Transfer to a new owner
If you sell or transfer your inventory and other assets to a new owner, VAT must not be calculated on the inventory as long as the new owner is or becomes VAT registered. Within 8 days after inventory and operating assets have been transferred to the new owner, you must notify your goverment of who the new owner is, by name and address. In addition, you must state the selling price of the inventory and the operating assets you sell or transfer. If the new owner is not or will be registered for VAT, you must calculate VAT on the sales price anyway, if you do not deduct VAT, you will have to pay the VAT anyway. It is therefore important that you are aware of how the buyer’s VAT situation looks.
Sale for private use
If you keep your inventory or other assets for private use or for any other purpose which is not subject to VAT, you must pay VAT on the goods. VAT is calculated on the purchase or manufacturing price without VAT, However, before you calculate the VAT, you can reduce the price by 20% for each started financial year since the inventory was purchased or manufactured. If the transfer has cost more than EUR 15,000 during the acquisition, excluding VAT, in some cases you may be required to regulate the purchase VAT. Ask an accountant or other accountant for this.
Should I pay taxes on the assets I sell?
If you close your business and sell inventory, fixtures and other assets out of the company, be sure to calculate the taxable profit on the sale. This is true both if you sell to a new owner who must use the assets in an existing company and if you take out some of the inventory or furniture for private use. If you take something for private use, the government will check that the withdrawal has taken place at the trading value. the taxable profit or loss is calculated as the difference between the sales price excluding VAT and the taxable value in the company. Loss or gain on the sale of inventory is included in your personal income including AM contribution and is not source limited.
What is the inventory worth?
When you have to sell your inventory you must of course put a price on it. It will of course always end in a negotiation but it is important to have a place to start. The price can be set according to several different principles, but most determine it based on cost price + freight, customs and excise duties. Next, the quality of the inventory plays of course. The quality of the inventory is often assessed based on the merchantability of the goods. It can be difficult to determine and will always depend on a personal assessment. However, there are some scenarios that can make the inventory with certainty cannot be considered to be salable, for example if the goods have broken down. If the goods are difficult to sell due to incorrect purchases or changes in the market, this should of course also be taken into consideration. If the warehouse is considered to be obsolete for one of the above reasons, the value may be written down to a lower value.
If you do not have a better offer you can follow this model based on how long the goods have been in stock:
• 50 pct. value after the first year
• 25 pct. second year
• 0 pct. in the third year
Your accountant can often help you put a more accurate value on your inventory at first. Then, your industry knowledge can help assess the marketability of the warehouse.