(P) Doing M&A in Western Europe: Tax traps and structuring opportunities
In the context of global competition and integrated markets, many companies around the world are looking for growth opportunities outside their home country. By opening up new markets and connecting with new customers, businesses can…
In the context of global competition and integrated markets, many companies around the world are looking for growth opportunities outside their home country. By opening up new markets and connecting with new customers, businesses can increase sales and profits while spreading risk by not having to rely on any single market.
Pursuing transactions in Western Europe presents attractive opportunities to many investors, but it’s important to understand that acquisition and integration processes respond to local specificities. Mazars has published the report „Doing M&A in Western Europe: Tax traps and structuring opportunities”, with the scope of highlighting what businesses can expect from conducting deals in Western Europe and how they can avoid tax traps while making the most of structuring opportunities.
The report highlights M&A tax risks and opportunities in Western European countries, covering Belgium, Cyprus, Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom.
With the help of the Mazars’ study, businesses can now navigate complex, regulatory environments so that they can choose where their investment would be most beneficial. Within the report, Mazars offers insights based on its expertise that covers due diligence tax structuring in the region and the tax risks frequently encountered that can threaten the success of deal-making and subsequent integration processes in these fast-growing markets.
Top tax traps
- Financial expenses deduction
Switzerland - As in other countries, Switzerland has Swiss thin capitalisation rules. As opposed to other countries, Switzerland’s thin capitalisation rules have the following specific features: Swiss thin capitalisation rules apply only to ‘related party debt’ (including third party debt secured by a related party). Swiss thin capitalisation rules do not establish a fixed debt/equity ratio; rather, each Swiss company has its individual borrowing capacity, depending on the company’s assets. While interest expense – disallowed under Swiss thin capitalisation rules – is not tax deductible; it constitutes a Swiss company’s deemed dividend distribution, which is subject to a 35% Swiss dividend withholding tax.
- Transfer pricing documentation
