Restructurings and reorganizations

What’s going to change?

The current regulations provide under certain conditions for the neutrality of reorganizations of companies EU based companies such as exchanges of shares, mergers and divisions.

Starting from 2022 the conditions of recognizing these operations as tax neutral will be significantly stricter and, what is more, in order to confirm the neutrality of the reorganization it may be necessary to analyze the history of the reorganizations undertaken so far.

The changes will introduce, among others:

restriction of the neutrality of share exchange, merger or division for shareholders in a situation where the shares being exchanged or the shares in the acquired or divided company were previously acquired (allocated) by means of another share exchange, merger or division (neutrality rule for the first reorganization only)
continuation of the tax valuation of the assets as well as the shares will also be required to benefit from neutrality of reorganizations. In the case of the exchange of shares – the acquisition of a majority stake of shares (stocks) from the same shareholder within a maximum of 6 months will be required to maintain the tax neutrality.
obligation to continue the valuation of assets constituting organized part of the enterprise or enterprise by the company receiving the contribution in order to maintain the neutrality of the contribution in-kind for the contributor
Extension of the scope of so-called “exit tax” to certain cross-border transformations

What does it mean?

A number of changes introduced by the Polish New Deal in the area of company reorganizations will negatively impact the certainty regarding tax consequences of such operations. In particular in order to ensure their neutrality, it may be necessary to analyse the history of operations performed on the shares held.

New regulations on taxation of exchanges of shares, mergers and demergers – new definition of income and conditions of tax neutrality.

Exchange of shares

neutrality for shareholder when shares disposed were not previously acquired by means of another share exchange, merger or demerger (neutrality rule for the first reorganization only)
tax value of shares in acquiring company acquired by shareholder is not higher than tax value of shares in the company contributed if the contribution had not been made
acquisition from the same shareholder within maximum 6 months (contrary to MF’s general advance ruling and administrative courts)

Mergers

Shareholders of acquired companies:

Neutrality when shares of acquired / divided company were not previously acquired by means of another share exchange, merger or demerger (neutrality rule for the first reorganization only)
tax value of shares of acquiring company is not higher than tax value of shares in acquired company if the merger / demerger had not taken place

Acquiring companies:

obligation to continue tax valuation of acquired assets
obligation to allocate acquired assets to business activity in Poland
cross-borders mergers with non-Polish acquiring company – neutrality when assets are allocated to business activity outside Poland.

How can we help?

Within our scope of services we can:

identify risks and indicate possible ways of managing them in the area of planned and ongoing reorganizations
analyze planned investments in Poland and abroad in terms of the new “exit tax” regulations

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