The choice between selling a business share (a share deal) and selling the business itself or part of it (an asset deal) decides who pays tax on the seller side, and how much. In a share deal the owner sells the share and is taxed personally; in an asset deal the company sells its assets, is taxed at company level, and the owner is taxed again on distribution. Slovakia and the Czech Republic follow the same logic but with different exemptions and time tests, and in both countries the sale of a whole business is outside VAT.
What is a share deal and what is an asset deal?
In a share deal the object of transfer is the share in the company (typically an s.r.o.). The seller is the shareholder – an individual or a company. The business itself does not change: it keeps the same assets, liabilities, contracts and tax history, only its owner changes.
In an asset deal the object is the business or an independent part of it – a set of tangible and intangible components (assets, inventory, receivables, liabilities, contracts, employees). Here the seller is not the shareholder but the operating company. Who the seller is drives the entire tax and accounting treatment in both jurisdictions.
How is a share sale taxed for individuals?
The two countries diverge here. In Slovakia, an individual’s income from selling a business share is other income under Section 8(1)(f) of Act No. 595/2003 and is taxed at 19 % (25 % on a higher base); it also enters the health-insurance base. There is no exemption – the exemption once planned from 2024 was repealed before it took effect.
In the Czech Republic, by contrast, an individual’s income from selling an s.r.o. share is exempt under Section 4(1)(s) of Act No. 586/1992 once more than five years have passed since acquisition. A CZK 40 million cap on such exempt income applied in 2025, but from 1 January 2026 it is removed for shares and securities, so a passed time test means an unlimited exemption. If you also operate in Slovakia, our Slovak tax advisory can model the seller’s position on both sides.
When is a share sale exempt for companies?
Both countries offer a participation exemption, but on different terms. In Slovakia, Section 13c of the Income Tax Act exempts the gain if the seller held a direct stake of at least 10 % continuously for at least 24 months and meets an economic-substance test. In the Czech Republic, Section 19(1)(ze) exempts a parent company’s gain on selling a subsidiary where it held at least 10 % of the capital for at least 12 months.
If the conditions are not met, the gain is taxed at the corporate income tax rate – a standard 21 % in both countries. The different holding periods (24 vs 12 months) mean the timing of a sale can produce a very different result depending on the jurisdiction.
How is an asset deal taxed?
In both countries an asset deal is taxed at the level of the selling company. The positive difference between the sale price and the book or tax value of the transferred assets and liabilities is the company’s taxable profit, taxed at 21 %. The cash first stays in the company, not with the owner.
To reach the owner, a second layer of tax follows on the profit distribution – a dividend in Slovakia, a 15 % withholding on the share of profit in the Czech Republic. An asset deal therefore usually means two levels of tax for the seller, while a well-structured share deal means one. This is why sellers tend to prefer share deals and buyers the opposite.
Why is selling the business outside VAT?
In both systems the sale of a whole business (or an independent part) is not a taxable supply. Slovakia treats it under Section 10(1) of Act No. 222/2004 as neither a supply of goods nor of services, provided the acquirer is or becomes a VAT payer. The Czech Republic reaches the same result under Act No. 235/2004 (Sections 13 and 14), where the transfer of a business is not a supply and the seller keeps the input VAT already deducted.
The caveat is identical too: selling individual assets rather than a functioning whole is an ordinary taxable supply, so VAT applies normally. What matters is whether the object of transfer can operate as an independent business.
What are the accounting differences for the seller?
In a share deal the seller accounts for the disposal of a financial investment (the share) and the income from its sale; the result is the difference between the sale price and the book value of the share. The company whose share is sold changes nothing in its own books – assets and liabilities stay at their original values.
An asset deal is more demanding. The selling company derecognises all transferred assets and liabilities and books the result of the sale, while the buyer records the difference between the purchase price and the fair value of the acquired assets as goodwill (or a valuation difference) that is then amortised. The asset deal is therefore heavier in both administration and accounting.
Both a share deal and an asset deal carry a significant legal dimension alongside tax – from the share transfer agreement to the sale-of-business contract, liability for debts and due diligence. The law firm STEINIGER | law firm can help prepare and review them.
Considering selling your company and unsure whether a share deal or an asset deal fits better? We are happy to model both routes and design the most tax-efficient, legally clean structure.
FAQ
When is a share sale exempt from tax?
For companies, Slovakia exempts the gain under Section 13c (a 10 % direct stake held for 24 months plus an economic-substance test), and the Czech Republic under Section 19(1)(ze) (10 % held for 12 months). For individuals, Slovakia gives no exemption, while the Czech Republic exempts the gain after a five-year holding test, with no upper cap from 2026.
Why is selling a business outside VAT?
Because both the Slovak and Czech VAT Acts treat the transfer of a business (or an independent part) as neither a supply of goods nor a supply of services, provided the acquirer is or becomes a VAT payer. The seller charges no VAT. Selling only individual assets, however, is an ordinary taxable supply.
Which is better for the seller – a share deal or an asset deal?
For the seller a share deal is usually more tax-efficient: the income is taxed once at the shareholder level and may be exempt if the participation conditions or time test are met. An asset deal means profit taxed in the company (21 %) plus a second tax on distribution to the owner. The final choice also depends on the buyer’s demands on liability and due diligence.