First published in International Tax Review, 07 March 2017
In our daily M&A tax practice it is common that a share purchase agreement (SPA) for the acquisition of Dutch taxpaying corporates is concluded under Dutch law, whereas the parties involved are not all familiar with Dutch civil law or Dutch tax law. As a result the parties can have opposing ideas on the required content and meaning of the tax clauses. It can, in such a situation, be a challenge to explain the necessity and the impact of the wording in the process of negotiations and it shows that working with a standard SPA template is neither sufficient nor efficient.
In this article we will first highlight the aspects of interpretation of an SPA under Dutch law. We will continue by exploring the main considerations for tax clauses in a SPA that is drafted for the acquisition of Dutch taxpaying corporates (regardless of whether the SPA is governed by Dutch law).
In international transactions, parties may be accustomed to different market practices regarding tax clauses in an SPA. An SPA drafted for the acquisition of Dutch taxpaying entities requires however specific considerations and it will therefore not be sufficient or efficient to use a standard SPA template. In cases where the SPA is governed by Dutch civil law, the due diligence performed and the understanding of all parties involved will furthermore impact the explanation of the wording of the SPA.