The earnings value is the future success value of a company with which the Company valuation deals. The future success is to be understood as the sustainable future net profit of the company. Its determination causes problems, since the future can only be taken into account by means of an estimate.

## Determination of the earnings value

**The following applies to the determination of the earnings value:**

Performing future net income discounting requires the existence of a rate of interest known as the capitalization rate. It represents the interest rate of the effective rate of return that can be expected from investments of the same type under the current circumstances.

The level of the capitalization interest rate is essentially dependent on the current capital market conditions, which are expressed in the customary interest rate, which denotes the average net income to be expected from a risk-free investment in the relevant period, e.g. B. a government bond.

### Risk premium

Taking into account the risk, a risk premium can be added in two ways:

- It is possible to add a risk premium. In addition to the customary interest rate, a risk premium is set in the z. B. Shape, size and branch of the company are taken into account.
- The industry rate can be used. In doing so, the arithmetic mean of the customary interest rate and the industry interest rate is determined as the basis.

**In the context of tax law, the earnings value is determined when determining the unit value of land.**

## Original evaluation standard

(1)Original valuation standard of the valuation law in addition to the partial value and the common value. Scale for the valuation of agricultural and forestry assets within the framework of the unit valuation. Based on the earning capacity, the earning power is codified in § 36 II BewG as a multiple of an average sustainable net income.

This represents the gross profit minus the usual objectified management costs for self-management. A capitalization factor of 18 is assumed, which corresponds to an interest rate of 5.5 %. The net income should generally be achievable and take future developments into account. A debt-free management with remunerated external workers is to be assumed. The earnings value is determined according to §§ 38-41 BewG by a comparative procedure or a Individual income value method determined.

## Future success value as part of the company valuation

(2)In business terms, the earnings value represents the future earnings value in the context of company valuation. It is disputed whether the earnings value is to be understood as the present value of capitalized earnings or as a generic term that also takes into account the discounting of future surplus income (discounted cash flow).