Plot & Source: Target groups on sale

Water sources are a sought-after commodity, so that’s one advantage you have as a vendor.

Quality water as a raw material: marketing

Water is the raw material of the future. Already today, the scarcity of resources is so extreme that cities like Cape Town are without a steady water supply for weeks in summer. Countries in Europe and parts of the USA are also affected by water shortages. A good time to sell. Because at the same time, water is the ultimate food. Virtually every other form of food contains this basic ingredient. Water is available in every supermarket, every gas station, every restaurant.

Springs do not dry up. In contrast to other raw material sources, no matter whether iron ore, coal or crude oil, water sources regenerate relatively quickly through the mechanisms of nature. This also plays a role in the valuation, or value determination. But more about this later, in the example calculation.

Direct sale with us: flow rate information

You want to sell your source, discreetly and with expertise:

• Drinking water from 1 million liters / year – waiting list available
• Preferred: drinking water from 1 billion liters / year – waiting list available
• Purchase throughout Europe
• Purchase throughout USA
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Valuation: Determine value

First of all: we cannot describe the value of a water spring with a simple formula. However, we want to give you an insight into how the property itself, but more importantly, the potential of the spring is valued, for those who have inherited such a water source and came into possession quite unexpectedly (said inheritance, divorce, donation and other design options).

Also important: The expert opinion is prepared by an expert. More about this in a moment.

Now to the question, how to calculate the value of a water source?

How to calculate the value of a water source?

For a first approximation of the evaluation, should be used, as a rule, the yield of the source, in conjunction with the quality.

Yield of the source + quality of soil / water + transport accessibility.

Of course, many more factors play a role, for example the famous location, location! Location always plays a role in the real estate industry, of course also here when it comes to transport links, i.e. infrastructure and proximity to sales markets.

Due to high demand: This is the ideal value (source to delivery [bottling to shipping at port]).

Calculation: Determine potential (offer price)

A high-yield source is of course always a good selling point. That is why capacity is also considered a central value factor.

If a water source in the calculation example yields 1.2 billion liters per year, these are calculated with 2 cents per liter, one moves already with a predictable turnover 3.6 million.

Annual potential + development

Annual potential as a basis:

• Annual yield: 1.2 billion
• Price per liter: 2.0 cents (max)
• Turnover: 3.6 million

A quite realistic offer price now would be 3.6 million. This can be justified by the current evidence of the production volumes, as well as the water quality and the forecast for the development of the area.

Offer price maximum: 3.6 million

Water source buyers: Creditworthiness, experience

States, investment funds, but also the big food giants are looking for good sources of water. So the timing is just right! Expertise in sales and an exclusive, international buyer network are important. Therefore here again the reference:

Who can you sell water sources to?

As previously mentioned, the circle of buyers of such a special object, extremely small. Firstly, you need to find the person who brings the necessary capital and at the same time has an interest in being able to have access to fresh water itself.

Off Market: Discreet, anonymous and direct

Therefore, the sale of such sources usually takes place through specialized brokers in off market area. Here only personal, these contacts are informed.

Advantages: Confirmation of financing is available, personal network, discretion and anonymity, fast process to KV and notary.

This task is not performed by traditional brokers, but by very specialized ones with direct access to family offices, investment funds and other institutions.

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In this high price segment, even 5% fluctuation is a big gamble for you, the seller. If you go into the sale without expertise, you will probably be eaten up in the negotiations – simply put. Then we are no longer talking about 5%, but 10%, 15% or even 20%.

Selling procedure: broker, appraisal, negotiations

What is the procedure in the sale? The sales phase can best be compared with the sale of a plot of land.

When selling land, it is not the development that matters, but the possible development, i.e. the potential, as previously described in the valuation. At the same time, special investigations have a very special significance for buyers of water sources, for example, soil surveys.

But before we get to topics like soil surveys, you need to start with step 1.

Broadly speaking, the sale of a water source involves 3 phases: Preparation, “marketing” and the closing of the sale at the notary.

Step 1 is therefore the preparation in the sale. Step 2 is then the marketing phase of the source, although the word “marketing” should not be misunderstood here. After all, in 99% of cases you sell off market. Step 3 is then the sales processing.

Mistakes can be made in all three fields. The earlier a mistake is made in the process, the greater the impact. You are probably familiar with the famous quote about the “flapping of the butterfly’s wings”.

If you want to learn more about the subject of land sale, for example, because you have never dealt with the subject of sale of land, or land with sources, then here is the basic procedure, explained simply and in detail:

• Sell land expiry

Taxes on sale

As a rule, we also always give you information here about the taxes incurred when selling real estate. For example, if you want to sell a typical condominium in Berlin. Already knew: Profits are tax-free if you have lived in the ETW yourself for 2 years… but it is not that simple with a water source!

The parameters for the sale of a water source are clearly more individual. Here it is no longer “just” about a plot of land of 1,000 square meters that lies fallow. Therefore, we would like to refer you to our general article on the subject.

• Selling property / land: taxes

If you need accurate tax information, contact us.

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UG (limited liability company) – foundation, financing, liability & Co.

The UG was created in 2008 in the course of the Act to Modernise the Law on Private Limited Companies and Combat Abuses (MoMiG) and is thus one of the newer forms of corporations. With regard to the required start-up capital, the special character of an entrepreneurial company (haftungsbeschränkt) is reflected: The company can be founded with a cash contribution of as little as one euro, which is why this legal form variant is sometimes simply called a 1-euro GmbH.

By lowering the required share capital to a symbolic euro, the founding process has been considerably simplified for many start-ups: Instead of laboriously putting money aside and saving the 25,000 euros for the founding of a conventional GmbH, you can become self-employed as a corporation almost immediately. However, a UG (haftungsbeschränkt) is always founded with the prospect of later changing its legal form to a conventional GmbH. There are no time limits for this, but at some point an economically managed entrepreneurial company (haftungsbeschränkt) will inevitably become a limited liability company.

Other typical corporations:

• Limited liability company (GmbH)
• Stock corporation (AG)
• European Company (Societas Europaea, abbreviated to SE)
• Partnership limited by shares (KGaA)

Foundation & Company Name

You can found a UG (limited liability company) with just one person. This means that as a founder you also take on a managing position at the same time. To do this, you need a tax identification number – tax ID for short – from the tax office and must register your company with the trade office. In addition, you have to take care of the establishment of the partnership agreement aka articles of association and have it notarized. If you have a maximum of three founding members, you can also simply use a sample protocol, as it is available as an annex to the Law on Limited Liability Companies (GmbHG): In this way, you can complete the articles of association, appointment of managing directors and list of shareholders all in one!

In the next step you can register your company in the commercial register. Your company can consist of personal names, industry names, fantasy names or a mixture of these… It is important that the name contains either “Unternehmergesellschaft (haftungsbeschränkt)” or “UG (haftungsbeschränkt)” – in exactly one of these two variants: Brackets are a must and abbreviations are forbidden! Once you have reached the minimum share capital of 25,000 euros, you decide whether to change the name of your company to a GmbH or to continue it as a UG (haftungsbeschränkt).

Financing & profit distribution

Even if the contribution of only one euro may sound quite attractive at the beginning… Caution is required when determining the amount of the share capital for your company: If the capital is too low and the company’s specific needs cannot be met as a result, you can quickly slide into insolvency! Many UG founders therefore opt for a starting capital of around 500 to 1,000 euros. This way they can ensure that their entrepreneurial company (haftungsbeschränkt) does not go bankrupt after the first small purchases.

When founding a UG (limited liability company), you may only use cash contributions; contributions in kind are prohibited. If a share capital of more than 25,000 euros is set, you can no longer establish your company as an entrepreneurial company (haftungsbeschränkt) and will automatically be treated as a GmbH (limited liability company). Until your share capital reaches this limit, you are subject to the obligation to retain profits, which means that you are not allowed to distribute profits in full, and you must transfer 25 per cent of your profits to the statutory reserves.

Liability, accounting & taxes for UG shareholders

As an entrepreneurial company, you are limited by liability and – as with the GmbH – are usually liable for the amount of your capital contribution, i.e. at least one euro. As a UG shareholder, however, you are also subject to the obligation to file for insolvency: In the event of a breach of duty or other criminally relevant actions, you may also be held personally liable under certain circumstances.

The Unternehmergesellschaft (haftungsbeschränkt) is subject to the same taxes in Germany as its big sister, the Gesellschaft mit beschränkter Haftung. It is therefore subject to the obligation of double-entry bookkeeping – annual balance sheet plus profit and loss account – and, depending on the size of the company, may have to prepare regular management reports. Furthermore, it is fully burdened with corporation tax, trade tax and input tax or turnover tax as well as – with regard to the distribution of profits to shareholders – capital gains tax and other final withholding taxes. For all natural persons, income tax also applies as usual.

• Corporate income tax (KSt)
• Trade tax (GewSt)
• Value added tax (VAT)
• Income tax (ESt)
• Capital gains tax (KapESt)

Unternehmergesellschaft (haftungsbeschränkt) – For whom is it worthwhile?

A UG (limited liability company) is the perfect choice for solo founders who have few assets but still want to start their own business with limited liability. The mini-GmbH is particularly suitable for smaller companies in the service industry, as unlike the formation process of a GmbH, no large start-up capital is required for the company formation. Another major advantage is the limitation of liability, which protects the private assets of the UG shareholders.

So for whom is the formation of an entrepreneurial company (haftungsbeschränkt) worthwhile? The legal form always makes sense if the later change of form to a limited liability company is planned. In this way, the first profits can be made with the company at an early stage and business relationships can be established, even though the share capital of over 25,000 euros is not yet available. The UG (limited liability) forms a more favourable preliminary stage to the GmbH – the conversion from UG to GmbH itself is extremely simple, as it is basically only a change of name within the same legal form.

Comparison: Sole proprietorship, one-man GmbH, small AG or entrepreneurial company?

If you plan to set up your business on your own, you can choose between different legal forms of business: On the one hand, there is the classic sole proprietorship, in which you act as a freelancer or registered trader, or set up a small business. Alternatively, you can choose between the one-man limited liability company and the entrepreneurial company – often referred to as a “mini-GmbH” – or set up a small public limited company.

You can find out more about the different legal forms for solo founders here:

• One-man limited liability company – see GmbH
• Sole proprietorship (EU)
• Small public limited company – see AG

Sole proprietorship & one-person GmbH

Basically, there is not much difference between the two legal forms of a sole proprietorship and a single-member company, because in both cases you are the sole shareholder with sole power of management and sole power of representation. However, the decisive difference arises in the form of the liability issue: As a registered businessman (e. Kfm.) or registered businesswoman (e. Kff.) you are liable without limitation, directly and jointly and severally – as the sole shareholder of a one-person GmbH, on the other hand, you are liable exclusively for the business up to the amount of the capital contribution you have made.

Are you a sole proprietor yourself and no longer want to bear the enormous liability risk? Then you should think about converting your sole proprietorship into a one-person limited liability company. The change of form is easily accomplished, but can make a huge difference in case of losses! In order to avoid personal liability, as part of the registered traders (e. K.) you only need a notarial certificate confirming a value of at least 25,000 euros for your business and submit this to the commercial register together with the opening balance sheet. The sole proprietorship is practically brought into the GmbH as a contribution in kind.

Entrepreneurial company & small public limited company

Alternatively, you can consider setting up an entrepreneurial company (UG). Often referred to as a “small GmbH” or “mini-GmbH”, this legal form of company is a sub-form of the conventional limited liability company, but unlike the “normal” GmbH, it only requires a single euro as share capital. It is therefore particularly attractive for solo founders who do not have 25,500 euros in their bank account. Without the share capital of a GmbH, however, your image with the banks could be lower and your chances of getting a good loan could decrease.

The so-called “small AG” is primarily intended for individual shareholders who wish to keep their public limited company within a small group of people. Apart from the individual shareholder, who also equally assumes the role of the management board, only three other persons are required to be appointed as supervisory board members. However, the formation of a public limited company, regardless of its size, is very complex and more cost-intensive than the other common forms of corporate law. Therefore, a one-person limited liability company or an entrepreneurial company may be more suitable if you intend to found your company on your own. Alternatively, you might also consider setting up a sole proprietorship.

Alternatives to the UG: Legal forms in Germany

Legal forms – What types of company are there? If you want to start your first company, then choosing the ideal legal form is one of the first steps in the process of setting up a company. Whether it’s a special real estate company or a start-up, I’ve summarized all the types of companies in Germany for you here.

• Legal forms: List

Company types in detail:

• Sole proprietorship
• Registered businessman / registered businesswoman (e. K.)
• Civil law partnership (GbR)
• General partnership (OHG)
• Limited partnership (KG)
• GmbH: Limited liability company
• Real estate GmbH / Asset management GmbH
• Stock corporation (AG)
• Real estate stock corporation (REIT-AG)
• Societas Europaea (SE)
• Foundation / Family Foundation