Notification of the Ministry of Finance with respect to the time test for company transformations
22.11.2010Company: Amcham
In order to ensure tax neutrality, a successor company’s period for holding a share is not interrupted if its parent company or subsidiary is transformed.
On 19 October 2010, the Ministry of Finance published a notification on its website regarding the time test for holding a share in a subsidiary in the circumstance of company transformations. In order to ensure tax neutrality in the case of company transformations, the period of twelve months shall not be interrupted for a successor company, pursuant to Section 19 (3) (b) and (c) of the Income Tax Act.
Therefore, if a parent company is dissolved in a merger while holding a share in a subsidiary, the successor company’s time test does not run again from the beginning. This holding period includes the time during which the share was held by the dissolving parent company before the merger.
Although the notification is not legally binding, it is an opinion provided by the Ministry of Finance and has, therefore, a substantial effect on the interpretation of the provisions of Section 19 (3) (b) and (c).
If you have any questions regarding the issues mentioned above, please do not hesitate to contact us.
Jaromír ZBROJ, Head of TACOMA Tax
Mobile: +420 731 411 268
E-mail: jaromir.zbroj@tacoma.eu
www.tacoma.eu
