Mergers & Acquisitions

Last reviewed 09 Mar 2023

Financing

Financial assistance by the subsidiary

N/A

Subordinated debt (mezzanine capital)

N/A

Interest expenses for acquisition financing

Interest in connection with third party financing of the acquisition of shares is basically tax deductible.

Interest expenses on subordinate debt

Interest expenses are generally tax deductible, to the extent that subordinated capital is to be treated as a liability for tax purposes and not as a (disguised) capital contribution.

EU interest barrier

N/A

Squeeze-out options

Buy-out of minority shareholders (“squeeze-out”)

Possible where there is an interest of at least 90% in the share capital (applicable to joint stock corporations), even if minority shareholders dissent.

Capital gains – corporations and partnerships

Sale of shares in a joint stock corporation (a.d.)

The gain of legal entities on the sale of shares in a joint stock corporation in general is taxable income.

Sale of shares in a limited liability company (d.o.o)

Sale of interest in a partnership

N/A

International participation exemption

N/A

Sale of business

Definition

Valuation

For the sale of individual assets, the acquisition cost principle is applicable. The total purchase price is allocated to individual assets and liabilities at fair value, the difference constitutes goodwill.

Goodwill

For tax purposes, goodwill is not subject to amortisation

Mergers and demergers

Types of mergers described by commercial law

Upstream merger (possibly down-stream), side- stream merger, takeover of the business by the main shareholder (not in case of a corporation), spin-off, demerger.

Valuation

For financial accounting purposes, as a rule valuation of assets and liabilities is always optional, and in accordance with IFRS and IAS.

Valuation in financial accounting

Goodwill amortisation

For tax purposes, goodwill is not subject to amortisation

Tax consequences

Revaluation of assets is as a rule not tax deductible

Contributions (transfer of assets into the capital of a company)

Contributions in kind

In general, the contribution of assets is allowed (services cannot be contributed).

Tax treatment

The exchange of individual assets against an interest in the company is subject to various taxes

Goodwill amortisation

For tax purposes, goodwill is not subject to amortisation