Asset Deal

An asset deal is a business acquisition in which the buyer purchases specific assets and assumes specific liabilities of the target company, rather than acquiring the company’s shares. The legal subject of the transaction is the assets themselves — machinery, inventory, intellectual property, contracts, customer lists, goodwill — not the target company as a legal entity.

Tax treatment for the seller

In an asset deal, the seller (the target company) recognises a taxable gain on each asset sold: the difference between the sale price allocated to that asset and its tax basis (original cost minus accumulated tax depreciation). This gain is subject to Spanish Corporate Income Tax (IS) at 25%. If the seller is an individual, the gain is subject to IRPF at the progressive general scale (for assets held for less than one year) or the savings rate (19–28%, for assets held for more than one year and classified as capital gains).

Tax treatment for the buyer

Goodwill: the excess of the purchase price over the fair value of identifiable net assets — goodwill — is amortisable for IS purposes over 10 years under Article 12.2 LIS, generating an annual IS deduction. This is a significant advantage of the asset deal over the share deal, where no goodwill is amortisable.

Stepped-up basis: each acquired asset is recorded at its fair value (Purchase Price Allocation — PPA), providing a higher depreciation charge than the historical cost that would have applied in a share deal.

No inherited liabilities: the buyer does not assume the target’s historic tax position. Open AEAT years, disputed assessments and undisclosed contingencies remain with the selling entity. No tax due diligence on the target’s prior returns is required (though due diligence on asset title and condition still applies).

VAT and Transfer Tax (ITP/AJD)

Where the transferred assets constitute an autonomous going concern (a complete business or business branch that continues operating under the buyer), the transfer falls outside the scope of VAT under Article 7.1 LIVA. Transfer Tax (ITP) typically applies instead, at the regional rate on movable assets (generally 1%) and at the real estate rate on any property transferred. Where the assets do not constitute a going concern, standard VAT applies (21% on most assets, 10% on residential property).

Related terms: Share Deal | Due Diligence

Related service: Tax Due Diligence in Spain