Goodwill
Goodwill is the intangible excess value of an undertaking, consisting of factors such as reputation, customer base and brand name that enhance its profitability.
Goodwill represents the intangible assets of an enterprise that exceed the book value of its tangible assets. It encompasses elements such as customer loyalty, reputation and business relationships that contribute to future revenues.
Under Dutch law, goodwill is relevant in the transfer of an enterprise, for instance upon a sale, merger or division. It influences the purchase price and may give rise to tax consequences, for example in the valuation for income tax or corporate tax purposes.
In practice, goodwill is frequently valued by accountants or valuers in the context of business acquisitions or in proceedings concerning compensation for loss, with the actual economic value being the central consideration.
“Upon the acquisition of the practice, the purchaser paid an additional amount for the goodwill built up through many years of client relationships.”
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