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. 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. The guarantees and assurances provided by the seller are intended to ensure that the company has, in general, fulfilled its tax obligations in accordance with the rules in force. In theory, it may seem sufficient for the buyer to prove that the seller does not respect the general guarantee that the company has calculated and paid, as required by tax rules. First, this portion of a tax allowance is not included in gross income if the taxpayer pays more tax on federal income than he should have because of the actions of a third party only; This is because the payment only puts the taxpayer back in position if he had surrendered if this had not been the case for the acts of the third party.
A tax file provides for situations in which the seller`s liability for the company`s underpaid tax can be triggered, for example. B in the case of a tax check with the company that covers certain taxes or tax matters, or the 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. Sometimes a person or company is compensated for the payment of the tax debt of the former. An agreement for this agreement is called a tax compensation agreement. For example, the company compensates #1 #2 for taxes collected against the company`s #2. Companies #1 could do this because the two companies are active together (for example.
B, one company can sell the other`s products). How is the company treated tax #2 if it is compensated by the #1 of the company – if it receives tax compensation? Where the share purchase agreement contains a compensation clause, the occurrence of a specific event leading to the seller`s liability provides a sufficient basis for the buyer`s claim.