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Judicial corporate split-up

23014027-winterskier.jpgThe judicial corporate split-up is either a complete or partial company split, whereby the capital of a corporation is transferred to one or more other corporations by universal succession of title, which means that there is no additional requirement to perform exceptional consignment proceedings in order to transmit assets or to take over the liabilities of the legal person. The presentation of a notarized document, stipulating a judicial company split-up, is sufficient. A valid distinction can be made between two forms of judicial corporate split-up: 1) demerger; and 2) spin-off.

In case of a demerger, the splitting corporation will seize to exist, which means that the entire capital of the splitting corporation will be transferred by notarized document to one or more other corporations. In the event of a spin-off, the splitting corporation will remain to exist, which means that either the entire capital or an essential part of the splitting corporation’s capital will be transferred by notarized document to one or more other corporations.

The transfer of capital (entirely or partially) from one corporation to one or more other legal person(s) as part of the judicial corporate split-up process, will have fiscal consequences concerning the corporate tax on the side of the splitting and acquiring corporations and the income tax on the side of the shareholders of the splitting corporation. The system of the judicial split-up is defined by law as a taxable fact for both the splitting corporation and its shareholders. Nevertheless, the splitting corporation and its stockholders can request the taxation authorities for the application of a fiscal facility that deters the taxation claim at the time of the demerger. The taxation claim will then be transmitted to the acquiring corporation and its acquiring shareholders.

“The world we see that seems so insane is the result of a belief system that is not working. To perceive the world differently, we must be willing to change our belief system, let the past slip away, expand our sense of now, and dissolve the fear in our minds.”

William James (11/01/1842 – 26/08/1910), American Philosopher

Van Clamsfield International Ltd. provides sound advice and a robust framework, following the below-mentioned:

  1. Insight into an organization’s optimal fiscal options in case of demerger or spin-off;
  2. Calculation of taxation benefits and taxable claims;
  3. Information about conditions, structures and the interdependency between the commercial and fiscal component of goodwill;
  4. Application of the request of fiscal facilities to the presiding tax authorities;
  5. Special fiscal proceeding to apply for tax exemption in case of generated profit at the time of demerger, in the event the initial application process is denied.

Van Clamsfield International Ltd. strives to assist organizations in optimizing its use of fiscal facilities and thus positioning the taxable claim to the parties who benefit most from the transaction. To ensure an effective negotiation process with the involved parties and the governing tax authorities, Van Clamsfield International Ltd. practices due diligence in its investigation of the fiscal consequences, the valuation of assets and liabilities as well as the implicit commercial ramifications of the shift in the balance of power.

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