Legal Q&A · 05

Company sale & M&A — questions and answers.

7 answered questions on a subject we handle every day. Find related services in the catalogue: Company sale & M&A.

Answered by , Czech and Slovak attorney, admitted to the Slovak and Czech Bars (SAK 300422 · ČAK 19654).

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Questions about Company sale & M&A

  1. Can I, as a customer, be liable for VAT my supplier has not paid? Yes. A VAT payer receiving goods or services is liable for tax at the preceding stage if the supplier has not paid it and, when the tax liability arose, the customer knew or should and could have known that it would remain unpaid. The Act lists three sufficient grounds for such knowledge: an unreasonable price, shared personnel or ownership between the parties, and payment to a bank account other than the supplier's published account.
  2. Is VAT payable on the sale of an enterprise or part of one? Generally not. The sale of an enterprise, or part forming an independent organisational unit, is not treated as a supply of goods or services if the buyer is a VAT payer or becomes one by law. However, the buyer becomes the seller's legal successor for the assets transferred. If the seller does not provide information about VAT deducted on capital goods, the Act presumes a full deduction.
  3. Does a new company created by a merger pay minimum tax in its first year? Yes. The minimum tax exemption for a newly formed taxpayer expressly excludes a taxpayer that is the legal successor of one dissolved without liquidation. A successor company created by a merger into a new company or a division therefore pays minimum tax for the period covered by its first tax return. For a period shorter than twelve months, the amount is calculated proportionately.
  4. A company that owns real estate has been deleted from the Commercial Register. Can anything still be done? Yes, but only through the court. If assets that should have been dealt with in liquidation or bankruptcy are discovered after a company is deleted without a legal successor, the court, on an application by a person with a legal interest, orders supplementary liquidation, appoints a liquidator and restores the company's Commercial Register entry. Timing matters: if nobody applies within four years of deletion, the company's assets pass into state ownership.
  5. We are merging companies. Is the property automatically registered in the successor's name? Ownership passes automatically, but the land register entry does not change automatically. On the effective date of a merger, meaning the date the transformation is entered in the Commercial Register, the disappearing company's entire assets and liabilities pass to the successor by law. The land register does not learn of this itself and makes no automatic amendment. The change must be pursued through a separate application for a declaratory entry. Until then, the title deed names a company that no longer exists.
  6. We are buying property from a joint-stock company. What additional checks are needed? In addition to ordinary property due diligence, check whether the transfer falls under a special Commercial Code regime. If a joint-stock company transfers assets to a board member, a procuration holder, another person authorised to act for it or persons close to them, prior supervisory board consent is required. Conversely, if the company acquires assets from a founder or member for at least 10% of its registered capital, an expert valuation and filing of the agreement in the Collection of Deeds are required before the land registration application is submitted.
  7. How does lawyer escrow protect the purchase price when a company is sold? The buyer deposits the purchase price in a separate account held by the lawyer, and the seller receives it only once the agreed conditions are met, usually after the change of member is entered in the Commercial Register. Escrow money is separate from the lawyer's assets. The lawyer may not use it and is professionally obliged to release it to the entitled person. Release conditions should be drafted so they can be verified by documents, rather than interpretation.

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