The main issues to be considered are the impact of the adjustment on the tax base for civil transaction tax purposes, as well as the tax point and method of recognition of the adjustment for corporate tax purposes. As regards the civil transaction tax, in current practice an adjustment should not affect the tax base, since the taxable amount is the market value set at the date of the transaction, i.e. on a date before the correction date. As regards corporation tax, such an adjustment should in general be an element affecting the share price of the transaction. Any adjustments that reduce or increase the price may be used in the case of the second mechanism. The correct determination of the final price under the closing book mechanism requires the calculation of the final price by one party to the transaction and the verification of the data by the other party to the transaction from an accounting and tax point of view (based on the procedures established in the share purchase agreement). From a tax point of view, it is necessary not only to ensure that the final price is based on correct balances of liabilities, but also to take into account the tax impact of such an adjustment. In the case of the price adjustment alternative, the value of the tax risk(s) is important, but also, and perhaps most importantly, the probability that the potential risk will occur. This option is clearly not as advantageous for the seller, as the selling price is reduced. However, it allows the seller to eliminate in advance the risk of litigation and payment under indemnification clauses.
The choice of measures to protect against tax risks depends on the nature of the transaction and the parties involved. Price adjustment is usually the preferred option when one of the parties is an investment fund, for example. B a private equity fund or venture capital fund interested in a full divestiture. For stock trading, price adjustments may also depend on when the transaction price is set. In this context, the mechanism contained in the share purchase agreement will be decisive and will determine whether, depending on the subject matter of the transaction, M&A transactions may include either the sale of shares (Share Deals), or the transfer of certain assets individually, or as an operational activity (under the name of asset or business agreements). ). As these two types of transactions are different, the tax aspects of purchase/sale price adjustments also vary. Our basic guidelines on price adjustment are included in the Technical Advisory (TA) “Development and Use of Price Adjustment Contract Commissions” T 5080.3 of 10 December 1980. Most of the state`s motorway authorities (ASAs) have developed provisions during previous periods of oil shortages. These States should review their provisions to ensure that they are still relevant and that previously used price indices remain available.. .