Non-cash contribution

What it means

A non-cash contribution adds to registered capital in something other than money: property, machinery, a vehicle, a receivable, a trademark or a whole business.

It must be measurable in money and usable by the company in its business. An expert values it, and the valuation accompanies the application to the commercial register.

A non-cash contribution cannot consist of a promise to perform work or provide a service. A member who brings only their skills into the company must therefore contribute money or a specific asset, such as a licence or finished software. In return they receive an ownership interest, not a purchase price, and that is what distinguishes a contribution from selling an asset to the company.

How it works in practice

The receiving company books an asset at the valuation and starts depreciating it. For the contributor it is a transfer with tax consequences depending on what was contributed.

It is used to put technology into a new company, to reorganise a group, or when a partner brings assets instead of cash. The alternative is selling the asset to the company plus a loan.

A non-cash contribution must be paid up before the application for entry in the commercial register is filed. For real estate this means a written declaration by the contributor, physical handover and an application to record the change of owner in the land register. We line up the steps with the client and the notary so the registration is not held up.

What to watch out for

Overvaluing carries risk: the member is liable for the difference between the valuation and the real value. The expert report is therefore protection for both sides rather than a formality.

For a VAT payer, contributing an individual asset such as a machine or a car is usually treated as a supply of goods, and the contributor has to account for VAT on it. Contributing a business or part of one is different. Anyone who misses the distinction finds out only at an audit of the contributor, when the tax is assessed with interest.