Anticipate VAT issues in M&A

VAT & mergers and acquisitions: let our indirect tax experts do it

Corporate mergers and acquisitions (or M&A for Mergers and Acquisition) are complex strategic transactions, particularly in terms of taxation. VAT is one of the major elements to take into account at the outset. Rely on our experience in terms of tax transactions for optimal management of value added tax, or even exemption during mergers and acquisitions.

Value Added Tax in the context of mergers and acquisitions of businesses

In the business world, mergers and acquisitions are key strategies for companies seeking growth and competitiveness.

By allowing two companies to combine forces to create a new company, or by facilitating the purchase of one company by another, merger-acquisition creates a synergy where the two entities complement each other and become more competitive in the market.

However, these complex transactions involve significant financial, legal, and fiscal considerations, especially with regard to Value Added Tax (VAT).

In France, implementing effective VAT management is crucial for the success of these transactions, requiring thorough due diligence (*) to minimize risks and optimize tax benefits. From design to implementation, understanding the impact of VAT is critical to successfully navigating the M&A landscape. And successfully complete a strategic transaction while minimizing fees.

This is why our law firm has specialized in the somewhat particular field of businesses and VAT, and logically in its impact on mergers and acquisitions.

The importance of VAT in these transactions

Controlling Value Added Tax in mergers and acquisitions is crucial and should not be underestimated, regardless of the field of activity and the importance of your company. VAT can have a significant impact on the financial structure and the total cost of these transactions for several reasons:

1. Recovery of VAT on transaction fees: The costs associated with M&A transactions can be considerable, including fees for consultants, lawyers and auditors. The possibility of recovering VAT on these amounts significantly reduces the costs for the companies involved.

2. Due diligence: Due diligence concerning VAT makes it possible to identify and minimize the tax risks associated with the transaction. This includes examining the structure of the transaction, compatibility with current regulations, and identifying opportunities for tax optimization. But also the particularities of each society.

3. VAT group regime: The VAT group regime in France allows companies in the same conglomerate to simplify its management by consolidating payments and deductions. In the context of M&A, this can facilitate post-transaction reorganization and optimize the tax burden (see our dedicated page).

4. Impact on the structuring of transactions: The way in which a mergers and acquisitions is structured (for example, acquisition of assets versus acquisition of securities) will have different implications in this area. An optimized structure from a VAT perspective can generate significant savings.

5. Compliance and specific regulations: Each type of transaction (horizontal, vertical, or conglomeration) is subject to specific VAT regulations. Compliance with these regulations is essential to avoid possible sanctions and to carry out mergers and acquisitions in an effective manner.

In short, the optimal management of VAT in mergers and acquisitions contributes to maximizing the value created by the transaction and minimizing tax costs. It is therefore strategically important to integrate specialized VAT expertise at the early stages of the process.

Why do you need VAT lawyers during mergers and acquisitions?

The complexity of tax regulations requires the intervention of specialized professionals, which makes VAT lawyers key players in this type of transaction. Here's why their role is so critical:

Assistance in structuring transactions

VAT lawyers help design mergers and acquisitions schemes in a way that optimizes tax obligations. Their expertise ensures that the structure chosen is not only legally sound but also fiscally advantageous.

Minimization of tax risks

Tax due diligence, conducted by VAT specialists, is essential to identify possible tax liabilities and suggest mitigation strategies. These experts help navigate the complexity of VAT regulations, reducing the risks of non-compliance and tax penalties.

VAT recovery

Effective management of VAT can make it possible to recover it from transaction fees, which can represent significant savings. VAT lawyers will guide businesses through the recovery process, optimizing the financial return of the M&A transaction.

Negotiations and agreements

During the negotiation phase, hiring a lawyer specializing in VAT makes it possible to anticipate tax issues and to integrate them into discussions, ensuring that all aspects of the transaction are covered contractually from a fiscal point of view.

Regulatory compliance

Tax laws are constantly evolving, especially in a framework as complex as M&A. VAT specialists are up to date with the latest changes in laws, ensuring that the transaction remains in compliance with current regulations.

Advice on the VAT group regime (single taxable person)

In jurisdictions such as France, where a VAT group regime may be applicable, specialized lawyers help businesses understand and navigate this arrangement, simplifying post-acquisition or merger VAT management.

Post-acquisition support

The role of VAT lawyers does not end with the conclusion of the transaction. They continue to provide support to ensure effective VAT management in the new business structure.

In summary, the engagement of VAT lawyers in mergers and acquisitions transactions is essential. They provide added value by ensuring tax compliance, optimizing costs and securing the success of the operation legally and financially.

As long as you choose effective and expert lawyers.

Why choose our law firm?

A personalized solution

With two lawyers specializing in the arcana of VAT in mergers and acquisitions, you are sure to find an effective and personalized solution... More than in a generalist firm. Your file will not be “lost” among others but studied with all our attention. We will offer you optimized solutions that respond to your operational problems.

In addition, we can develop customizable technological tools to help you have better VAT management in general.

We see our relationships with client companies as a partnership. From thinking about the merger or acquisition to completing it, you will be involved in every step of the process. Until the success of M&A.

And, of course, our lawyers are available at any time to answer your questions.

Expertise at the top level

Our lawyer duo has chosen to specialize in Value Added Tax and the business world to offer our clients top-level expertise.

Every business is different, so is every merger and every acquisition.

Between our legislative and legal monitoring and our use of the most recent and effective technological tools, you will benefit from a high level of expertise, rare in the field of VAT management during mergers and acquisitions.

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(*) due diligence: procedure where a thorough investigation is carried out by a company or a professional before engaging in a commercial transaction, such as a merger-acquisition or a financial investment. Its aim is to carefully examine the financial, legal, operational and commercial aspects of the target company in order to fully understand its risks, opportunities and value. In summary, due diligence reveals potential problems and assesses whether a transaction is viable and prudent.

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