Glossary
Valuation of goodwill tax scale
Definition: Tax scale
When valuing a business, many people believe that there is a tax scale that specifies the method of calculation for the valuation of a business, taking into account the nature of the business and its turnover.
The use of the tax scaleÂ
However, an official tax schedule does not exist. The established scales circulating among professionals such as lawyers and experts are unofficial scales based on industry trends. The stock of goods is not included in the calculation.
To use the scale, you must first establish the nature of the business (real estate agency, stationery store, pizzeria,...) to determine the famous percentage to retain. Once the sector is established, the average turnover of the last three years must be known. Once all the criteria are met, the percentage can be applied to the average turnover.
This single valuation method cannot be satisfactory in the context of the valuation of a business and must be used with caution and weighted with other valuation methods.Â
If you want to know more about the use of the tax scale, please contact one of our experts: contact a XVAL consultant.
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