The general rule of payment of tax compensation is that payments of a taxpayer`s tax debt, directly or indirectly, are taxable as income for the recipient at treas. But there are two exceptions. Both the compensation clause and the seller`s guarantees are time-limited and should not last longer than the expiry of the company`s tax commitments. 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. Given the pace of changes introduced in both Polish and international legislation, the evolution of judicial decisions and inconsistencies in the decisions of the tax authorities, appropriate guarantees and compensation clauses covering the company`s tax accounts should be among the buyer`s priorities when negotiating the SGT`s terms and conditions. Sub-taxes are real money and can seriously affect the profitability of the buyer`s investment. It is therefore advisable to include appropriate guarantees in share purchase contracts.
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. 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. There are also a number of significant tax allowances that should be included in the tax debt on behalf of a buyer, as they relate to debts incurred after the Commission concludes and would therefore not be covered by general compensation. These include tax obligations related to secondary debts – where the tax debt is primarily the responsibility of another person, but can be taken over by the company under the right of secondary liability after the fulfilment of the liability. Specific compensation may also be awarded to payE and AUX NIC on pre-completion options, which are exercised, released, eliminated or varied after closing, or if, in accordance with Part 7A ITEPA 2003, a “relevant step” is taken after the conclusion of a “relevant agreement” reached prior to the conclusion.