A company with a clean balance sheet sells faster and for a higher price. Buyers do not want shareholder loans, non-operating assets or stale receivables on the books – each of these raises questions during due diligence and pushes the price down. The groundwork should start early, ideally a year ahead, and the detail differs between Slovakia and the Czech Republic.
Why does a clean balance sheet raise a company’s value?
Buyers value a company by what it really earns from its core activity. Anything unrelated to the business – a privately used car, a receivable from the owner, or stock that has not moved in years – has to be stripped out of the valuation and carries the risk of an inherited tax problem.
The rule is simple in both countries: the fewer question marks the balance sheet raises, the smoother due diligence runs and the stronger your negotiating position. For the buyer’s side of the process, see our guide on due diligence before selling a company.
How do you settle loans and receivables from shareholders?
Receivables from a shareholder or director are the first thing to clear. In both countries a shareholder and their company are related parties, so a loan between them is subject to the arm’s-length principle – § 17(5) of the Slovak Income Tax Act and § 23(7) in the Czech one – and must carry a market interest rate.
An interest-free loan is a risk: the tax authority can add an imputed market interest to the company’s tax base. Before a sale it is cleaner to repay, offset or settle such receivables against the profit share so the buyer never finds them on the books. The related topic of owner contributions is covered in our guide on putting money into your s.r.o.
What about non-operating assets?
Non-operating assets are everything the buyer does not need to run the business – a mostly private car, a holiday property, art or surplus inventory. Typically the shareholder takes these out of the company or buys them back before the sale.
The related-party rule applies here too: the transfer must happen at the market price, otherwise the difference may be taxed. The goal is to leave only the assets that genuinely create the value of the business, so the buyer sees the company without the owner’s private extras.
How do you clear old receivables?
Stale unpaid receivables inflate the balance sheet and distort the picture of the company’s health. Slovakia allows tax-deductible provisions of 20%, 50% and 100% after 360, 720 and 1,080 days past due. Czechia allows up to 50% after 18 months and 100% after 30 months, with a faster 100% route for small receivables up to CZK 50,000 after 12 months.
Once a receivable is clearly uncollectible, a tax-deductible write-off follows – under § 19 in Slovakia and § 24(2)(y) in Czechia – for cases such as a debtor in insolvency or an execution halted for lack of assets. Dissolving unnecessary provisions is equally part of the clean-up.
Should you pay out profit before the sale?
Retained profit left in the company raises its value, but the buyer pays for it in the share price – and a share sale is taxed more heavily than a dividend. This is where the two countries differ most. In Slovakia the withholding tax on dividends paid to an individual is back to 7% for 2025 profit onward, with no health contributions. In the Czech Republic the withholding tax on a profit share for an individual is 15%, also free of social and health insurance.
The share sale itself diverges too. A Slovak individual has no holding-period exemption and is taxed progressively from 19% to 35%, plus health contributions. A Czech individual is exempt after a five-year holding test, with no cap on the exempt amount for sales from 2026 – the CZK 40 million annual limit introduced in 2025 no longer applies to share sales; without the test it is other income under § 10. Paying out accumulated profit as a dividend is therefore often cheaper than leaving it in the price of the stake. The structural choice is explored in share deal vs asset deal.
Watch out for thin capitalisation and loan interest
If the company is financed by loans from a shareholder or another related party, mind the thin-capitalisation rules. Slovakia caps deductible net interest to related parties at 25% of EBITDA under § 21a. The Czech Republic combines a 4:1 debt-to-equity test under § 25(1)(w) with the ATAD limit of the higher of 30% of tax EBITDA or CZK 80 million under § 23e.
In both systems, non-deductible interest raises the tax base and signals that the relationship with the owner is not set up cleanly. Orderly financing and a clear interest structure are exactly what make a company credible to a buyer.
Planning to sell your company and want the balance sheet ready so due diligence raises no needless questions? We will help you clean it up well in advance.
FAQ
When should I start preparing my company for sale?
Ideally at least a year before the planned sale. Settling shareholder loans, creating receivable provisions and paying out profit are all tied to the accounting period, so the earlier you start, the cleaner the balance sheet you present. Last-minute preparation usually lowers the price.
Must I repay a loan I took from the company before selling?
It is strongly recommended. A receivable from the shareholder is a risk for the buyer and is subject to the arm’s-length principle in both countries – it must carry a market interest rate, or the tax base may be adjusted. The cleanest option is to repay, offset or settle it against the profit share before the sale.
Is it worth paying out retained profit before the sale?
In most cases, yes. A dividend is taxed at 7% in Slovakia (2025 profit onward) and 15% in Czechia, with no social or health contributions, while profit left in the share price is taxed more heavily on sale. The exact outcome depends on the acquisition cost of the stake and the amount of profit.