Act No. 246/2012 Coll. on Amendment to Act No. 222/2004 Coll. on Value Added Tax as amended and amending certain other acts (the “Amendment”) amends the provisions of Act No. 513/1991 Coll. Commercial Code as amended (the “Commercial Code”), and tax regulations. The Amendment’s provisions, effective as of October 1, 2012 will touch on the process of establishment of a limited liability company (the “Company”), and the transfer of ownership interest in the Company.
Under transitional provisions relating to the amended provisions of the Commercial Code, the registration procedures for registering, in the Commercial Register, the Company and a change in the identity of its shareholder initiated prior to effective date of the Amendment will be completed in accordance with provisions effective up to September 30, 2012.
As of October, 1, 2012 no person that has underpayments on taxes will have the right to establish the Company. It can be inferred from the provisions of Act No. 563/2009 Coll. on Tax Administration (Tax Code) and Amending Certain Other Acts that the absence of such underpayments is proven by tax administrator’s consent with the registration of the Company in the Commercial Register (the „Consent“). Such Consent will be granted to each founder separately and must be annexed to the application for the Company registration with the Commercial Register.
Condition for Consent is that underpayments on all taxes must not exceed EUR 170 in total. The relevant tax administration authority, i.e. tax authority, or customs authority for excise duties, grants the Consent within three (3) working days of application. The amount of fee for Consent has not been set by List of Administrative Fees annexed to Act No. 145/1995 Coll. on Administrative Fees as amended, and so, for the moment, the tax authority will grant the Consent free of charge.
According to the amended provisions of the Commercial Code, an application to register a change in identity of a Company shareholder in connection with a transfer or split, by contract, of an ownership interest (the „Registration“) must be accompanied by the Consent in respect of both the transferor shareholder and the transferee. As a result, compliance with tax obligations owed by the parties to such ownership interest transfer or split will be a requirement for executing such transfer or split.
The amended provisions of the Commercial Code provide a set of exceptions when the Consent is not required. First of all, it will be in a situation where the transfer or split does not concern a majority ownership interest. The ‘majority ownership interest’ means, under the Commercial Code, an ownership interest to which at least one half (1/2) of votes of all shareholders are attached under the Commercial Code or Memorandum of Association. The Consent is neither required where the Company acquires / transfers its own ownership interest in accordance with the Commercial Code, nor where the ownership interest transfer or split occurs within a merger, consolidation, demerger or other winding-up of the Company without liquidation. Provisions on the Consent do not apply to a foreign person, whether as a transferor shareholder or transferee. Where the Consent obligation does not apply, the transferor shareholder and transferee must produce a written statement on absence of such Consent obligation.
Changes regarding transfer or split of a majority ownership interest will only take effect on the date of Registration. Transfer of minor ownership interest will take effect against the Company on the date of delivery of the ownership interest transfer or split agreement to the Company, but not earlier than after a prior consent with such transfer or split was obtained from the General Meeting of the Company, where the Memorandum of Association requires such consent.
Related to Commercial Code amendment are those provisions of the Amendment that introduce an obligation for the taxable person who applied for value added tax registration to deposit a tax bond in specific cases. These are primarily where:
• a natural person as an executive or a shareholder of the taxable person has, as at the date of application, underpayments on tax of EUR 1,000 or more (the “Underpayment”);
• an executive or a shareholder of the taxable person is an executive or a shareholder in another legal person that has Underpayment as at the date of application;
• the taxable person is a natural person who is an executive or a shareholder in a legal person that has Underpayment as the date of application;
• as at the date of application, the taxable person carries out only preparation for its business.
The changes introduced under the Amendment mean that time required for incorporation of the Company, and for effecting major ownership interest transfer or split, will be extended by such time as is required to obtain the Consent and to meet the obligation, where applicable, to deposit a tax bond during the value added tax registration process.
© JNC Legal s.r.o. 2012
The content of this notice does not constitute legal advice and should not be relied on as such. We suggest that specific advice be sought about your specific circumstances.