Glossary

Tax scale for business valuation

In the business world, the question of business goodwilland more rigorously its value, is an essential element to define with precision the budget which will be associated with it before considering any transaction.

To understand this value, the method known as scale method is one of the most commonly used valuation methods.

What is the scale method of business valuation?

Consisting in applying a multiplying coefficient to the sales turnover of a business, the scale method has the advantage of giving a quick idea of the value of the business. The formula applied for the calculation is generally applied in the following way:

Average sales including VAT for the last 3 years X coefficient

With a coefficient that can vary according to the sector of activity, note that this method of scales does not take into account certain elements of the company that could however prove to be essential to the valuation of a business.

Which tax scale for the valuation of a business ?

Please note that the following tax schedule is not official character. It is therefore only an unofficial scale circulating between professionals but which is in no way confirmed by the tax authorities. It must therefore be interpreted with caution.

Moreover, the results obtained will often have to be corrected to take into account the criteria specific to the business (evolution or importance of the turnover, competitive arrival, rent, commercial lease, operating rights, location, price of equipment and premises, etc.).

Tax scale for the valuation of food businesses

Activity labels	Percentage to be applied on annual turnover including VAT
General food Butchery Bakery - Pastry - Viennese pastry Wine cellar Delicatessen Chocolate - Confectionery Creamery Dietetics-Natural products Delicatessen Self-service spice Cheese shop Fruit and vegetables Pastry shop Fish shop Frozen food Convenience store Supermarket	60/145% 25/60% 50/120% 20/60% 40/90% 80/110% 60/230% 20/50% 100/400% 50/150% 25/60% 15/70% 50/110% 30/50% 15/35% 10/30% 10/40%

Tax assessment scale for trade and auto repair

Activity labels	Percentage to be applied on annual turnover including VAT
Car accessories Garage Repair shop Garage service station Electricity Garage VN sales Garage VO sales Service station	15/35% 35/50 % 35/50% 30/60% 10/35% 5/30% 15/50%

Tax scale for the valuation of restaurant and hotel businesses

Activity labels	Percentage to be applied on annual turnover including VAT
Discotheque Restaurant Fast food Creperie Pizzeria Tearoom	180/310% 60/190 % 40/110% 60/110 % 45/120% 55/165 %

Tax scale for the valuation of retail businesses

Activity labels	Percentage to be applied on annual turnover including VAT
Furnishing - Household equipment Pet shop - Aquarium - Bird shop Antiques Medical devices - Orthopedics Armourer Office supplies Bazaar Costume Jewelry Jewelry - Watches Hosiery - Lingerie - Haberdashery Brocante Gifts - Tableware - Articles de Paris Cardboard - Gadgets Shoes (retail) Cycles - Motorcycles (sale and repair) Leather - Furs Records (sale of) Household appliances - Hifi - TV - Video - Radio Earthenware - Porcelain - Glassware Traditional flowers Self-service flowers Art gallery Herbalism Musical instruments (sale) Games - Toys Bookstore - Stationery Lingerie Hosiery Lighting Marble - Funeral articles Leather goods - Travel goods Furniture (sale of) Haberdashery - Lingerie - Hosiery Optics Stationery Perfumery - Beauty products Pharmacy Photo Press Ready-to-wear clothing Ready-to-wear luxury Hardware - Do-it-yourself - Drugstore Repair of household appliances Reprography - Drawing of plans Locksmithing - Minute stub Sale of goods Tobacco - Tableware Fabrics Furnishing fabrics Video store Wine to go	30/50 % 50/90 % 45/100 % 15/40 % 35/55% 30/60 % 15/50 % 40/120 % 30/70 % 40/80 % 40/70 % 30/70 % 40/90 % 40/90 % 15/40 % 25/50 % 15/60 % 10/60 % 45/75 % 45/90 % 30/60 % 50/200 % 30/90 % 5/40 % 20/60 % 30/130 % 40/80 % 10/40 % 35/120 % 60/200 % 20/80 % 20/100 % 50/120 % 45/100 % 45/95 % 70/110 % 40/115 % 25/60 % 35/90 % 60/170 % 20/60 % 20/60 % 15/60 % 40/100 % 25/45 % 80/160 % 10/110 % 20/80 % 30/100 % 100/400 %

Activity labels

Percentage to be applied on annual turnover including VAT

Furnishing - Household equipment

Pet shop - Aquarium - Bird shop

Antiques

Medical devices - Orthopedics

Armourer

Office supplies

Bazaar

Costume Jewelry

Jewelry - Watches

Hosiery - Lingerie - Haberdashery

Brocante

Gifts - Tableware - Articles de Paris

Cardboard - Gadgets

Shoes (retail)

Cycles - Motorcycles (sale and repair)

Leather - Furs

Records (sale of)

Household appliances - Hifi - TV - Video - Radio

Earthenware - Porcelain - Glassware

Traditional flowers

Self-service flowers

Art gallery

Herbalism

Musical instruments (sale)

Games - Toys

Bookstore - Stationery

Lingerie Hosiery

Lighting

Marble - Funeral articles

Leather goods - Travel goods

Furniture (sale of)

Haberdashery - Lingerie - Hosiery

Optics

Stationery

Perfumery - Beauty products

Pharmacy

Photo

Press

Ready-to-wear clothing

Ready-to-wear luxury

Hardware - Do-it-yourself - Drugstore

Repair of household appliances

Reprography - Drawing of plans

Locksmithing - Minute stub

Sale of goods

Tobacco - Tableware

Fabrics

Furnishing fabrics

Video store

Wine to go

30/50 %

50/90 %

45/100 %

15/40 %

35/55%

30/60 %

15/50 %

40/120 %

30/70 %

40/80 %

40/70 %

30/70 %

40/90 %

40/90 %

15/40 %

25/50 %

15/60 %

10/60 %

45/75 %

45/90 %

30/60 %

50/200 %

30/90 %

5/40 %

20/60 %

30/130 %

40/80 %

10/40 %

35/120 %

60/200 %

20/80 %

20/100 %

50/120 %

45/100 %

45/95 %

70/110 %

40/115 %

25/60 %

35/90 %

60/170 %

20/60 %

20/60 %

15/60 %

40/100 %

25/45 %

80/160 %

10/110 %

20/80 %

30/100 %

100/400 %

Tax scale for the valuation of recreational businesses

Activity labels	Percentage to be applied on annual turnover including VAT
Travel agency	25/100 %

Tax scale for the valuation of business services

Activity labels	Percentage to be applied on annual turnover including VAT
Cleaning - Guarding	25/90 %

Tax scale for the valuation of health-related businesses

Activity labels	Percentage to be applied on annual turnover including VAT
Ambulances	55/85 %

Tax scale for the valuation of business assets related to personal services

Activity labels	Percentage to be applied on annual turnover including VAT
Marriage agency Retail Laundry Hairdressing Beauty salon Car rental Dry cleaning - Laundromat Laundromat Retirement home Animal care - Dog grooming	40/60 % 40/70% 50/120% 50/80 % 30/60% 70/130 % 80/130 % 90/110 % 50/90 %

Tax scale for the valuation of small and medium-sized businesses

Activity labels	Percentage to be applied on annual turnover including VAT
Industrial laundry Fireplaces (sale and installation) Kitchens (sale and installation) Cabinet making - Carpentry General Electricity Printing Gardening - Landscaping Masonry - Roofing Plumbing - Heating - Sanitary Protection - Security - Alarm Locksmithing - Electricity Road transport of goods & removals	40/80 % 15/30 % 15/40% 15/60 % 10/30 % 5/40 % 10/60 % 10/25 % 10/40 % 25/75 % 20/50 % 50/90 %

Although the scale method is the most commonly used for the valuation of a business, other types of indicators can be taken into account for certain sectors of activity:

Activity labels	Indicator
Coffee Bar - liquor license Hotel Tourism Hotel furnished Café - Tobacco shop / Net tobacco shop Insurance (Brokerage) Wine bar Real Estate Agency Property manager and syndic Cinema Self-service grocery store Delicatessen Theater	300 to 1000 X daily revenue including VAT From 6.000 to 50.000 euros depending on the transfer possibilities 200 to 800 X daily revenue including VAT 250 to 900 x daily revenue including VAT 2 to 4 years of net tobacco discount 0.7 to 1.8 annual commissions 100 to 300 X daily revenue including VAT 0.5 to 1.5 annual net profit 50 to 220 % fees incl. tax/year 40 to 100 X taxable revenue/week 50 to 150 X daily revenue including tax 100 to 400 X daily revenue including tax 900 to 2 000 € the chair

Activity labels

Indicator

Coffee

Bar - liquor license

Hotel Tourism
Hotel furnished

Café - Tobacco shop / Net tobacco shop

Insurance (Brokerage)

Wine bar

Real Estate Agency

Property manager and syndic

Cinema

Self-service grocery store

Delicatessen

Theater

300 to 1000 X daily revenue including VAT

From 6.000 to 50.000 euros depending on the transfer possibilities

200 to 800 X daily revenue including VAT
250 to 900 x daily revenue including VAT

2 to 4 years of net tobacco discount

0.7 to 1.8 annual commissions

100 to 300 X daily revenue including VAT

0.5 to 1.5 annual net profit

50 to 220 % fees incl. tax/year

40 to 100 X taxable revenue/week

50 to 150 X daily revenue including tax

100 to 400 X daily revenue including tax

900 to 2 000 € the chair

As you will have noticed, to evaluate a business requires valuation and negotiation skills as well as the consideration of a number of criteria.

Thus, when it comes to transfer of a businessit is strongly recommended to call upon specialists.

As the objectives of the seller of the business and the buyer may be diametrically opposed, demonstrating impartiality can sometimes prove complex.

By entrusting the management of of your business to the experts XVALexperts, you will benefit from a professional and legal expertise that will prove essential for both parties and you will ensure an optimal transaction.

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