Transfer agreement: assets, IP and contracts

What is a transfer agreement?

A transfer agreement is a written agreement documenting that the ownership of an asset, a right or a contract position is transferred from one party to another. The agreement sets out what is transferred, at what price, on what terms, and when the transfer takes effect.

The term "transfer agreement" is broad. It is used for anything from the sale of a single machine to the transfer of a business's entire trademark portfolio. What all variants have in common is that a written agreement is decisive for avoiding disputes about what was actually sold, when ownership passed, and what obligations came with it.

This guide is about the three most typical forms of transfer agreement in business:

1. Transfer of tangible assets: machinery, fixtures, vehicles, inventory
2. Transfer of intellectual property (IP): trademarks, patents, copyright, domain names, software
3. Transfer of contracts and claims: rights under existing agreements, receivables, licence rights

Transfer agreement vs. share sale vs. business transfer: if you sell shares in a company, it is a share sale. If you transfer a whole business as a going concern, it is a business transfer. This guide is about transferring specific assets, rights or contract positions, whether it happens as part of a larger transaction or as an isolated deal.

When do you need a transfer agreement?

You should draw up a written transfer agreement when you:

• Sell or buy commercial equipment, for example a restaurant winding down its kitchen equipment
• Transfer intellectual property, for example a software agency selling source code, or an entrepreneur transferring their domain name and trademark to a company
• Transfer a contract position, for example a consultant transferring a customer contract to a new owner of their practice
• Wind down part of a business, for example the divestment of a product area or a portfolio of receivables
• Transfer assets on formation, for example a contribution in kind of existing assets to a newly formed company

An oral agreement is legally binding in Denmark, but practically impossible to enforce if the parties disagree about the details. The more valuable the asset, the more important a precise, written agreement.

The three types of transfer agreement

1. Transfer of tangible assets

Tangible assets are physical objects with a real market value: machinery, vehicles, production equipment, inventory, fixtures and servers.

Key questions in an asset transfer:

• Is the asset encumbered? Check whether there is a charge, lease or reservation of title on the asset. A machine that is leased or charged cannot be freely transferred without the creditor's consent.
• Is the asset transferred with or without a warranty? If the asset is sold "as seen", the seller typically disclaims liability for hidden faults. If sold with a warranty, the seller warrants the asset's condition at the time of transfer.
• Who bears the risk? The risk typically passes to the buyer at the time of transfer, for example on delivery or collection.

2. Transfer of intellectual property (IP)

Intellectual property is a growing asset for many businesses. Transferring IP requires special attention, because the rights can have a complex origin and registration history.

Typical IP transfers:

• Trademarks: the transfer of a registered or unregistered trademark, possibly including domain names and social media profiles
• Patents and utility models: the transfer of the right to exploit the invention
• Copyright: the transfer of rights to software, design, text, music or images
• Domain names: technically a registration right, but the transfer should be documented in writing
• Know-how and trade secrets: the transfer of documented know-how, databases and proprietary processes

Important: the economic copyright can be transferred, but the author's moral rights (for example the right to be credited) can under section 3(3) of the Copyright Act only be waived for a use limited in nature and scope. Seek legal advice for larger IP transfers.

Registration: the transfer of registered trademarks and patents should be registered with the Danish Patent and Trademark Office so the transfer has full legal effect against third parties.

3. Transfer of contracts and claims

It is possible to transfer your position in a contract to a new owner, but it typically requires the other party's consent. A contract involves not only rights but also obligations, and the counterparty is entitled to know its contract partner.

• Transfer of receivables (invoices): can as a rule take place without the debtor's consent, but the debtor must be notified
• Transfer of a tenancy: typically requires the landlord's consent
• Transfer of a supply contract: requires the supplier's acceptance, unless the contract expressly allows transfer
• Transfer of a licence agreement: depends on the terms of the licence, and many licence agreements bind the licensee personally

What should a transfer agreement contain?

A well-functioning transfer agreement contains at least:

1. The parties

Full names, addresses and CVR or civil registration numbers of the seller and buyer. If a party is a company, state the company name, CVR number and the authorised signatory.

2. A precise description of what is transferred

This is the most important point. The asset, right or contract position must be described so precisely that no doubt can arise:

• For tangible assets: make, model, serial number, condition and any registration plate
• For IP rights: registration number, registration date, territory and the scope of the transfer
• For contracts: the contract's parties, date and subject, and which rights and obligations are transferred

3. Purchase price and payment terms

• The total purchase price (with VAT stated)
• The payment date and method
• Any instalment arrangements or a payment conditional on future circumstances (earn-out)

4. Transfer date and passing of risk

When does ownership pass to the buyer, and when does the risk pass? The two do not have to coincide. It is normal that:

• Ownership passes on payment (reservation of title)
• The risk passes on delivery

State both times explicitly.

5. The seller's warranties

The seller should give warranties for the basic matters the buyer bases its decision on:

• That the seller has full and unencumbered ownership of what is transferred
• That there is no charge, lease, reservation of title or other encumbrance on the asset
• That what is transferred is not the subject of litigation or authority orders
• For IP: that the seller is the rightful holder and the right does not infringe third-party rights
• For contracts: that there is no breach on the seller's side

The scope of the warranties is negotiated. If the asset is sold "as seen", warranties about condition and function are excluded, but not warranties about ownership and encumbrances.

6. Breach and damages

What happens if the seller has given incorrect warranties? Define:

• The complaint deadline
• Any liability cap, for example a limit to the purchase price
• What is excluded from damages (indirect loss, operating loss and so on)

7. Confidentiality

The terms of the deal should as a rule be confidential. State a confidentiality clause prohibiting the parties from disclosing the price and other terms.

8. Any appendices

• A condition report for tangible assets
• A copy of the registration certificate for IP rights
• Consent from third parties (for example a bank, landlord or licensor)
• A receipt for payment

Third-party consent and notification

Some transfers require active approval or notification of a third party:

Type	Requirement
Charged asset	The chargeholder (bank or creditor) must consent and release the charge
Leased asset	The lessor must consent to the transfer
Contract position	The counterparty must typically consent to the transfer of obligations
Receivable	The debtor must be notified (but need not consent)
Registered IP	The transfer should be registered with the Danish Patent and Trademark Office

Remember to obtain the necessary consents before signing, not after.

Tax and duty considerations

Capital gains tax

The seller is typically taxed on the gain (the sale price minus the acquisition price). For commercial assets, the rules in the Depreciation Act and the State Tax Act apply.

VAT

The transfer of assets is as a rule subject to VAT if the seller is VAT-registered and the assets are part of the VAT-liable business. There is, however, an exception for the transfer of a business as a whole (section 8 of the VAT Act) if the transfer constitutes an independent functional unit and the buyer continues the business.

Registration duty and registration

The transfer of real property triggers a registration duty. Vehicles must have the change of ownership registered with the Motor Agency.

IP and royalties

If IP rights are transferred for consideration, the payment is taxed. If the transfer is instead structured as an ongoing royalty agreement (a licence), it can have different tax and VAT consequences.

Always obtain tax advice for larger transfers, especially if assets are transferred within a group or in connection with a business wind-down.

Practical tips

1. Always describe the asset more precisely than you think necessary. "A printer" is not enough. "HP LaserJet Pro M404dn, serial number VNC3L00001, including toner cartridge and power cable" is better. Disputes almost always arise from imprecise descriptions.

2. Check encumbrances and rights before you sign. The seller's word is not enough. Check the Car Register for vehicles and the Land Register for real property.

3. Explicitly agree what is not included. Spare parts? Documentation? Software licences? Product warranties? State what is excluded.

4. Comply with registration requirements immediately. Do not postpone registering an IP transfer or a vehicle change of ownership. Your ownership against the outside world is at stake.

5. Obtain consents before you sign. Does the bank have a charge on the asset? Does the supplier have a clause against transfer? Resolve it before you sign.

6. Archive the agreement securely. A transfer agreement is your documentation of ownership. Keep it digitally with a backup and possibly with a digital signature.

Transfer agreement vs. purchase agreement

The terms are often used interchangeably, but there is a nuance:

• A purchase agreement focuses on the deal itself: price, payment terms and delivery
• A transfer agreement focuses on the transfer of ownership and the associated rights

In practice, the two are often combined in one document. For physical assets and IP rights, it is fully sufficient to have one combined document covering both the purchase and the transfer elements.

Frequently asked questions about transfer agreements

What is the difference between a transfer agreement and a share sale?

A transfer agreement covers the transfer of specific assets, rights or contract positions. A share sale is about the sale of shares in a company. In a share sale the company remains unchanged; it is the ownership of the company that changes.

Does a transfer agreement require notarisation in Denmark?

No. Transfer agreements do not require notarisation in Denmark; they just need to be signed by both parties. A digital signature has full legal validity under the eIDAS Regulation. The transfer of real property must, however, be registered.

Can a contract be transferred without the counterparty's consent?

It depends on the contract and on what is transferred. Pure monetary claims (receivables) can be transferred without consent, but the debtor must be notified. Contract positions involving obligations as a rule require the counterparty's consent, unless the contract expressly allows transfer.

When does the risk pass on a transfer of assets?

The risk passes to the buyer when the asset is delivered. It can be agreed otherwise, for example that the risk first passes on full payment. Always state the time explicitly in the agreement.

Is a transfer agreement subject to VAT?

The transfer of assets is as a rule subject to VAT if the seller is VAT-registered and the assets are used in a VAT-liable business. There is an exception for the transfer of a business as a whole (going concern) under section 8 of the VAT Act. Seek tax advice for the specific transaction.

Conclusion

A transfer agreement ensures that the ownership of an asset, a right or a contract position is transferred clearly and with documentation. The key is a precise description of what is transferred, clear warranties from the seller, a clear time for the passing of ownership and risk, and the necessary consents and registrations. For larger transfers, involve legal and tax advice.

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This guide is informative and does not constitute legal advice. For transfers of larger value, registered IP rights or complex contract positions, seek advice from a lawyer with commercial-law expertise.