The International Tax Due Diligence Report


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The presentation describes the structure and contents of a tax due diligence report for an international M&A transaction. It covers the typical tax issues of a cross-border transaction as well as some additional legal matters which are connected with the tax planning.

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  • The International Tax Due Diligence Report

    1. 1. The Tax Due Diligence Report for International M&A TransactionsScope and Purpose• Scope of Tax Due Diligence ✓ Pre-Due Diligence ✓ Full Due Diligence ✓ Vendor Due Diligence ✓ Special Due Diligence• Purpose ✓ Acquisition decision („deal breaker“) ✓ Determination of the purchase price, allocation of tax risks to seller or buyer ✓ Negotiation of contractual clauses (representations, tax clauses, etc.) ✓ Other purposes
    2. 2. Acquisition framework• Type of acquisition ✓ Asset deal / share deal / partnership ✓ Joint Venture Structure ✓ IPO ✓ Venture capital investment• Acquisition strategy ✓ Absorption ✓ Integration ✓ Strategic purchase ✓ Portfolio purchaseInformation Source• Documents ✓ Trade and land register excerpts ✓ Articles of Association ✓ Tax papers and auditor‘s reports ✓ Loans, licenses, royalties ✓ Transfer and service agreements ✓ Cost allocation agreements and management agreements ✓ Completeness statement• Data room conditions ✓ Contents ✓ Accessibility ✓ Documentations• Missing information
    3. 3. Legal and Economic Basis of Target• Company Structure ✓ Legal entities and branches ✓ Places of business• Group Structure ✓ Group entities ✓ Inter-group sales, services and financings• Important contracts ✓ Directors‘ agreements, stock options, etc ✓ Subordination agreements ✓ Royalty and interest payments• Shareholders‘ Resolutions ✓ Dividend distributions and resolutions ✓ Minutes of shareholder meetingTax Situation of the Target• Tax Status ✓ Tax entity and tax residencies ✓ Tax groups ✓ VAT Status• Tax history ✓ Tax losses carried forward ✓ Special depreciations and other tax incentives and benefits ✓ Previous reorganizations• Tax effects of acquisition ✓ Survival of tax group status ✓ Implications on VAT status ✓ Survival of tax losses and tax credits• Unidentified implications
    4. 4. Tax Bullet Points• Valuation of major shareholdings• Pension reserves and relief funds• Reserves for brownfields / contaminated sites and re- culturing• Investment subsidies• Special depreciation schemes• Input VAT deductionsIntra-Group Transactions• Allowances, waivers, hidden contributions• Guarantees, comfort letters, letter of credit• Management fees, royalties, service fees, risk of service fee being deemed royalty• Arm‘s length principle for deliveries and services and other transfer pricing issues• Cross-border tax issues• Deemed agent under double tax treaty regulations
    5. 5. Please see the complete and latest version of this document at
    6. 6. PPUGNATORIUS Ltd. Company Profile29th Floor, Central World Tower PUGNATORIUS is an independent law office based in Bangkok,999/9 Rama I Road, Pathumwan Thailand. We provide international corporations, investorsBangkok 10330, Thailand and law firms with premium legal and tax services relatingTel: 0066 22072647 to Thailand, Southeast Asia and offshore jurisdictions. WeFax: 0066 22072657 are specialized to guide foreign clients through the red-tapeE-mail: requirements, legal hurdles and international tax structuringWebsite: of their foreign investments, trade operations, real estate developments or other business in Thailand and Southeast Asia. EABC Representative Products & Services Dr. Ulrich Eder Expert advice in foreign direct investments in Thai manufacturing Rechtsanwalt, Steuerberater, and service sectors and real estate developments. Gateway Managing Director to investments in Myanmar and utilization of Thailand as investment hub for the ASEAN region. Implementation of cross- border tax planning strategies for overall tax mitigation and risk management. International tax advice and individually tailored tax planning solutions for corporate and private clients with the inclusion of offshore jurisdictions. Corporate asset protection and advanced financing solutions. Senior Management 1. Dr. Ulrich Eder, German lawyer and tax counsel, Managing Director European ASEAN Business Centre (EABC) 69