IDW Standard 13 (IDW S 13) plays a decisive role in the valuation practice for compensation claims in property disputes in family and inheritance law. This article highlights the significance of IDW S 13, its integration in legal regulations and its concretization of IDW S 1.
In addition to the general statement IDW S 1 “Principles for Conducting Company Valuations”, the IDW S 13 Standard “Special Features of Business Valuations for Determining Claims in Family and Inheritance Law” also provides requirements for the issuer of appraisals in the context of family and inheritance law disputes and in particular reflects the principles developed in case law.
Compared to the originally published draft by IDW, three facts in particular were specified in the final version.
- It was clarified that the amount of the imputed entrepreneurial wage is determined by the usual market remuneration of an uninvolved company management, which takes into account the amount of time spent working and individual knowledge. In contrast, the personal benefits of an owner, which are not transferable to an acquirer, are not included in the imputed entrepreneurial wage, but reduce the transferable components of the company's earning power.
- In addition, as regards the question of fictitious capital gains taxation of final and initial assets, it was added that direct fictitious taxation of the net increase in value may also be appropriate in individual cases.
- Finally, IDW S 13 makes it mandatory for the first time to take into account a Tax Amortization Benefit (TAB). TAB is the present value of tax savings from the depreciation of revealed hidden reserves.
The information on taking into account a tax advantage due to depreciation was specified in IDW S 13. On the basis of the fiction of sale assumed for the valuation reason for compensation of gains, it is necessary to assess in individual cases whether, in the case of a fictitious acquisition, the discovery of hidden reserves results in additional depreciation potential for the acquirer. If this is the case, a depreciation-related tax advantage must be taken into account in the acquirer to increase the value. In addition to the question of “whether” a depreciation-related tax advantage should be recognized, explanations were added to the calculation of such an advantage.