{"id":43961,"date":"2017-11-26T16:17:56","date_gmt":"2017-11-26T14:17:56","guid":{"rendered":"https:\/\/newserver.fyb.de\/produkt\/tax-aspects-of-post-acquisition-reorganization-of-shareholder-loans-through-dept-equity-swap\/"},"modified":"2017-11-26T16:17:56","modified_gmt":"2017-11-26T14:17:56","slug":"tax-aspects-of-post-acquisition-reorganization-of-corporate-loans-through-dept-equity-swap","status":"publish","type":"product","link":"https:\/\/www.fyb.de\/en\/produkt\/tax-aspects-of-post-acquisition-reorganization-of-corporate-loans-through-dept-equity-swap\/","title":{"rendered":"Tax aspects of post-acquisition reorganization of shareholder loans through dept-equity swap"},"content":{"rendered":"

Stefan Abele<\/strong> \u2014 Attor\u00adney at Law, Tax Advi\u00adsor and Part\u00adner Mazars, Munich<\/p>\n

 <\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

In the context of a company acqui\u00adsi\u00adtion, it often happens that the share\u00adhol\u00adder loans have to be taken over as well. If these share\u00adhol\u00adder loans are not taken over at nomi\u00adnal value \u2014 for exam\u00adple, because they are not fully reco\u00advera\u00adble \u2014 there is a risk of tax disad\u00advan\u00adta\u00adges when these loan items are repaid or rede\u00ade\u00admed. It must be weig\u00adhed up whether these tax disad\u00advan\u00adta\u00adges can be avoided post\u00adac\u00adqui\u00adsi\u00adtion by means of a dept equity swap or dept mezza\u00adnine swap.<\/strong><\/p>\n

For a variety of reasons, target compa\u00adnies are finan\u00adced by the share\u00adhol\u00adder not only with equity but also with share\u00adhol\u00adder loans. One reason for this may be that, in view of the entre\u00adpre\u00adneu\u00adrial risks, the share\u00adhol\u00adder prefers to finance his company with loans rather than equity capital.<\/p>\n

Loan finan\u00adcing is also often chosen by the share\u00adhol\u00adder because it is easier to repay. Thus, in the case of loan repay\u00adment, the capi\u00adtal main\u00adten\u00adance rules appli\u00adca\u00adble to the repay\u00adment of equity do not have to be obser\u00adved and the tax rules on the treat\u00adment of equity repay\u00adments also do not apply. In parti\u00adcu\u00adlar, the so-called \u201corder of utiliza\u00adtion for tax purpo\u00adses\u201d does not apply, accor\u00adding to which, for tax purpo\u00adses, in the case of equity repay\u00adments \u2014 irre\u00adspec\u00adtive of the quali\u00adfi\u00adca\u00adtion under commer\u00adcial law \u2014 profits are deemed to have been distri\u00adbu\u00adted first and the tax conse\u00adquen\u00adces of a divi\u00addend payment must ther\u00ade\u00adfore be drawn; i.e. with\u00adhol\u00adding and payment of capi\u00adtal gains tax and taxa\u00adtion of divi\u00addends by the shareholder.<\/p>\n

Initial situa\u00adtion: Acqui\u00adsi\u00adtion of shares and share\u00adhol\u00adder loans<\/strong><\/p>\n

From the perspec\u00adtive of a corpo\u00adrate acqui\u00adrer, the finan\u00adcing of the company by the share\u00adhol\u00adder with equity and share\u00adhol\u00adder loans repres\u00adents an econo\u00admic unit.<\/p>\n","protected":false},"featured_media":41045,"comment_status":"open","ping_status":"closed","template":"","meta":{"wp_typography_post_enhancements_disabled":false},"product_brand":[],"product_cat":[2452,2509,2522],"product_tag":[1842,1845,1847,1851,1854],"class_list":{"0":"post-43961","1":"product","2":"type-product","3":"status-publish","4":"has-post-thumbnail","6":"product_cat-ebook-en","7":"product_cat-fyb-2012-2","8":"product_cat-stefan-abele-en","9":"product_tag-stephan-abele-en","10":"product_tag-company-acquisition","11":"product_tag-dept-equity-swap-en","12":"product_tag-dept-mezzanine-swap-en","13":"product_tag-loan-financing","14":"pa_sprache-english-3","15":"pa_sprache-german","17":"first","18":"outofstock","19":"taxable","20":"shipping-taxable","21":"purchasable","22":"product-type-variable"},"yoast_head":"\nTax aspects of post-acquisition reorganization of shareholder loans through dept-equity swap - FYB Financial Yearbook<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.fyb.de\/en\/produkt\/tax-aspects-of-post-acquisition-reorganization-of-corporate-loans-through-dept-equity-swap\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Tax aspects of post-acquisition reorganization of shareholder loans through dept-equity swap - FYB Financial Yearbook\" \/>\n<meta property=\"og:description\" content=\"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. 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