In the context of a company acquisition, it often happens that the shareholder loans have to be taken over as well. If these shareholder loans are not taken over at nominal value - for example, because they are not fully recoverable - there is a risk of tax disadvantages when these loan items are repaid or redeemed. It must be weighed up whether these tax disadvantages can be avoided postacquisition by means of a dept equity swap or dept mezzanine swap.

For a variety of reasons, target companies are financed by the shareholder not only with equity but also with shareholder loans. One reason for this may be that, in view of the entrepreneurial risks, the shareholder prefers to finance his company with loans rather than equity capital.

Loan financing is also often chosen by the shareholder because it is easier to repay. Thus, in the case of loan repayment, the capital maintenance rules applicable to the repayment of equity do not have to be observed and the tax rules on the treatment of equity repayments also do not apply. In particular, the so-called "order of utilization for tax purposes" does not apply, according to which, for tax purposes, in the case of equity repayments - irrespective of the qualification under commercial law - profits are deemed to have been distributed first and the tax consequences of a dividend payment must therefore be drawn; i.e. withholding and payment of capital gains tax and taxation of dividends by the shareholder.

Initial situation: Acquisition of shares and shareholder loans

From the perspective of a corporate acquirer, the financing of the company by the shareholder with equity and shareholder loans represents an economic unit.