Abstract

This article is devoted to the analysis of selected downstream merger tax implications. When deciding on the use of this variant of merger, the key issue besides business and legal aspects is to consider its consequences for the acquiring company and for the shareholders of the acquired company in terms of tax succession, legal persons’ income tax, value added tax and tax on civil law transactions. Taking into account the necessity of economic justification of the restructuring, it can be argued that the downstream merger not only allows the tax losses in a subsidiary to be settled, but additionally it is neutral for subsidiary and shareholders of the parent company. This position is confirmed by issued interpretations of tax law provisions, and - with regard to tax on civil law transactions - some guidelines are also derived from the case law of the ECJ. We recommend to follow closely the legislative changes and practice in the area under consideration due to the increased interest of legislator and tax authorities in the taxpayers’ strategies using downstream merger.