Table of Contents
Definition of goodwill
The goodwill is the difference between the future success value and the partial reproduction value. It is also known as goodwill and can be positive in nature.
Types of goodwill
the original goodwillthat arises in the course of the company's existence and development. The inclusion of the original goodwill under the asset items of the balance sheet is not permitted in accordance with Section 248 (2) of the German Commercial Code (HGB) and in accordance with Section 5 (2) of the EStG.
the derivative goodwillpaid by the buyer of a business as part of the total purchase price.
In contrast to the original goodwill, there is a right to capitalize the derivative goodwill under commercial law (Section 255, Paragraph 5, Clause 1 of the German Commercial Code). In this case, the amount must be shown separately and at least a quarter must be amortized in each subsequent financial year through depreciation (Section 255 (4) sentence 2 HGB). According to tax law, there is an obligation to capitalize derivative goodwill (Section 5 (2) EStG). It is to be amortized on a straight-line basis on the basis of a (fictitious) useful life of 15 years (Section 7, Paragraph 1, Clause 3 of the Income Tax Act).