A key document in transactional practice is the share purchase agreement (or SPA). This document contains provisions that govern, among other things, the terms of the transaction, the payment of the price and the financial accounts between the parties, their obligations and responsibilities. This is the main document negotiated between the parties to cover tax issues. In recent years, particularly for transactions with certain countries, PSPs will be accompanied by taxes. A tax deed is a separate document dealing with the tax issues agreed between the buyer and the seller. At this stage, it is worth mentioning the increasingly popular and important endorsements, which are increasingly linked to share purchase contracts, i.e. tax offences already mentioned at the beginning of this article. A tax deed is a separate document signed by both parties at the same time as the OSG. This document is derived from English law and is a very practical instrument used by the parties to a transaction to plan the measures to be taken in the event of the appearance of certain circumstances and tax issues. Given that tax matters are currently a highly sensitive aspect of transactions due to significant changes in the legislation and practices of tax authorities, a tax deed generally provides that the seller is fully responsible for the company`s tax arrears relating to the period prior to the closing of the transaction.
Another method to protect the buyer`s interests is the so-called compensation clause, which is normally used in a share purchase agreement when the due diligence examination reveals irregularities in the company`s tax treatment. For the buyer, it is less difficult to make claims against the seller under an agreement with such a clause than on the basis of guarantees. In the case of a security application, the buyer must prove that the seller breached the warranty and prove that the buyer was not aware of the breach and that he suffered damage as a result of the breach. In this case, the success of the debt may depend on the establishment of specific provisions of the share purchase agreement. A basket is deductible from compensation obligations to prevent an compensated party from being liable for inaccuracies or breaches of certain insurances until the losses exceed a certain minimum amount. A tax notice provides for situations in which the seller`s liability for the company`s underpaid tax may be triggered, for example.B. in the event of a tax check with the company that covers certain taxes or tax matters or a challenge to the amount of tax not paid by a tax authority or the refusal of a tax authority to grant a refund of VAT to the company. Etc. When a SPA is accompanied by a tax deed, it is clearly indicated, in the event of a particular event, how it should be managed and how parties should cooperate when a tax dispute arises with the tax authorities, for example. B which of the parties will settle the dispute.
The other issues agreed in a tax deed may be to keep the other party informed of the status of any case that may influence its financial accounts related to tax guarantees, provisions relating to the acquisition and counting of the costs of these cases, or formal appeal decisions. In addition, the parties may decide to include a compensation clause in a tax notice and not the associated GSB.
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