Selling your sole proprietorship: goodwill, cessation profit and a clean handover
Written by Ilias Aarrass6 min read · Last reviewed on 
Written by Ilias Aarrass6 min read · Last reviewed on A web shop you want to pass on, a salon with regular clients, a bookkeeping or trades practice a colleague wants to take over: even without a company there is something to sell. The buyer pays not just for equipment and stock but mainly for what surrounds it: the client base, the name, the running contracts. For tax, such a sale is a cessation of your business, with its own settlement. This article walks through valuation, the tax side and the practical handover.
What you sell and what it is worth
With a sole proprietorship you sell no shares but the business itself: assets, stock, trade name, phone number, website, client base and perhaps the lease. The price consists of those visible items plus goodwill: payment for the profit capacity the buyer takes over. A common starting point for small businesses is a factor of two to four times normalised annual profit, after deducting a realistic owner's wage; the exact factor depends on how much the profit depends on you personally. The more transferable the revenue, with contracts, subscriptions and a team or method that runs without you, the higher the goodwill.
The tax settlement: cessation profit
For income tax you cease your business. You settle on the difference between the sale price and book values, including the goodwill received that never sat on your balance sheet. Against it stands the € 3,630 cessation deduction, once in a lifetime. Tax on a large cessation profit can under conditions be spread by converting it into an annuity; have that calculated in time, as the choice must be settled at filing. The full cessation mechanics, including the VAT side and divestments, are in stopping or pausing your business. Good to know: no VAT is due on transferring an entire business; the buyer steps into your VAT position.
Worked example: practice sold for € 60,000
- Book value of fixtures and stock
- € 15,000
- Sale price including goodwill
- € 60,000
- Cessation profit
- € 45,000
- Less: cessation deduction
- € 3,630
Result: You pay box 1 tax on € 41,370 in the sale year, unless you convert (part) into an annuity and spread the levy
The handover itself: what belongs in the contract
A takeover contract for a small business need not be a tome, but covers at least:
- What exactly transfers: assets, stock, name, domain and phone number, and what does not, such as outstanding receivables and debts.
- The price, the payment method and any earn-out depending on how many clients actually come along.
- A transition period in which you hand clients over warmly, and non-compete and non-solicitation clauses so you do not restart next door.
- Staff and lease: employees transfer by law with the business, and the lease requires the landlord's cooperation.
- Client data handling: inform clients about the transfer and respect privacy law when handing over files and mailing lists.
Frequently asked questions
How do I find a buyer for a small sole proprietorship?
The best buyers are usually close: an employee, a fellow freelancer in the same trade or a competitor wanting to grow. Takeover platforms for small businesses exist besides. Start well in time; six to twelve months is a normal process.
Must the buyer take over my receivables and debts?
No, that is negotiable, and in small takeovers receivables and debts usually stay with the seller: you collect your old invoices and pay your own creditors. Fix the cut precisely in the contract, including prepayments from clients.
What happens to my registration and VAT number?
They do not transfer: the buyer runs the business on their own registration and numbers, and you deregister after the handover. Keep filing until the tax authority formally ends your VAT duty; see the nil return.
Can I transfer the business to my child or a relative?
Yes, but keep the price at arm's length: too low a price can count as a gift, with gift tax as a result. Roll-over and business succession facilities exist to soften family transfers; that is a moment for tailored advice par excellence.
This article provides general information based on the rules known for 2026 and does not replace personal tax advice. For your specific situation, we're happy to take a look with you.
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Ilias
