When planning the division of the Capital Company carried out by the transfer of part of the enterprise constituting an organized group of assets, assets and intangible assets and liabilities, the organised part of the enterprise (hereinafter: ZCP) in a manner Article 529(1) k.s.h., an important issue affecting the proper conduct of the division will be the identification of the place of settlement of taxed sales – tax due, carried out by the Company divided during the division. It is often very important whether the tax due on the sales carried out by the ZCP is still settled by the Divided Company or by the acquiring Company.
Against the background of the provisions of the VAT Act, the main issue is which of the companies involved in the division will be required to recognise the tax due in relation to invoices relating to the ZCP issued before the date of division on which the tax obligation arises on or after the date of division.
It is possible that before the day of division the Company will issue invoices on which the tax obligation will arise on the day of division or after the day of division. Will it then be important to issue an invoice made by the Company or other events?
As expressed in Tax Ordinance the principle of succession, rights and tax obligations, on or after the day of separation shall be transferred to the acquiring Company.
Under the rules of the VAT Act, this principle should be interpreted as meaning that in the case of the division of a capital company with attribution to the Shared Company and the Company with the obligation to recognise the tax due will be determined by the date on which this obligation was established and the date on which it was separated.
In the case of companies active on the market, it is often the case that they carry out certain supplies of goods and services on which the tax liability in the tax on goods and services (hereinafter ‘VAT’) arises at a different time from invoicing i.e. on the day of division or in subsequent periods.
In the case of sales activity of the Divided Company, from which ZCP will be separated, there will certainly be a situation where, even before the day of the division, the Company will be divided in respect of the sale made before the day of division, on which the tax obligation will arise on or after the day of division.
There may also be situations where, on or after the day of the division, sales invoices are to be issued for sales made before the division.
According to Article 93c(1) Act Tax Ordinance, the legal persons acquiring or legal persons resulting from the division enter, on the date of division or on the date of division, into any rights and obligations of the legal person sharing in connection with the assets assigned to them in the distribution plan. Provision section 1 if the assets acquired as a result of the division and the division by the division, also the assets of the divided legal person, are an organised part of the undertaking (Article 93c(2) Tax Ordinance).
Under Article 529(1) k.s.h. awarded four how to divide capital companies. one of them is, according to point 4 that provision, division by transfer of part of the assets of a company divided into an existing company or a newly established company (division by division).
The principle of succession of rights and obligations is also enshrined in commercial law.
According to Article 531(1) k.s.h., the acquiring companies or companies newly established in connection with the division enter on the date of division or on the date of division into the rights and obligations of the divided company as defined in the distribution plan.
The recipient company or newly established company resulting from the division shall, either on the date of the division, or on the date of the division, in particular, the authorisation, concessions and reductions in relation to the assets assigned to it in the plan for the division of the assets of the divided company which were granted to the divided company, unless the law or decision granting the authorisation, concession or concession provides otherwise (Article 531(2) k.s.h.).
The scope of succession is associated with the assets assigned in the plan. The condition for succession is that the assets taken over as a result of the division and, when separated by separation, the assets of the divided legal person should be an organized part of the enterprise.
For tax purposes, it will be important, in addition to defining the scope of the tax succession laid down in the legislation, to identify the moment of settlement of the tax due. Tax Ordinance, appropriate identification of the tax consequences of the activities (sale of goods or provision of services) undertaken by the Shared Company.
As for billing operations, the split company operates according to Article 106b(1) the VAT Act, under which an invoice is to be issued documenting:
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- the sale and supply of goods and services in question under Article 106a(2), to another taxable person, to a value added tax or to a similar tax or to a non-taxable legal person;
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- dispatch sales from the territory of the country and dispatch sales in the territory of the country to a non-designated entity Under point 1;
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- intra-Community supply of goods to an entity other than the designated Under point 1;
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- receipt by him of all or part of the payment before the operations in question Under points 1 and 2, except where the payment relates to the intra-Community supply of goods or operations for which the tax obligation arises in accordance with Article 19a(5)(4).
According to Article 106i(1) VAT Act invoices shall be issued no later than 15. the day of the month following the month in which the goods were delivered or the service was made, subject to section 2-8. The procedures described above relating to the activity of issuing invoices are separate from the question of the moment of the tax obligation. There may be situations where shared entities are required to issue invoices for transactions that do not constitute a tax obligation.
Regarding the key issue of when the tax obligation arises, under Article 19a of the Act the tax obligation arises when the goods are supplied or the service is performed, subject to sections 5 and 7–11, Article 14(6), Article 20 and Article 21(1).
The Act contains several exceptions that give rise to the tax obligation at a different time. These differences will be important when determining whether output tax must be accounted for by the Divided Company or the Acquiring Company.
Under the current Article 19a(2) of the Act, where services are accepted in stages, a service is also deemed to have been performed when a part of the service for which payment was specified has been completed.
This rule will also be important in identifying the transactions—supplies of goods or services—that should be accounted for by the Divided Company.
Where all or part of the payment has been received prior to the delivery of the goods or the performance of the service, in particular: prepayment, advance payment, advance payment, payment, instalment, construction or residential contribution before the establishment of a cooperative right to a residential or other purpose accommodation, the tax liability shall arise on receipt of the amount received, subject to the section 5 point 4 (Article 19a(8)).
Against the background of the provisions of the VAT Act, the main issue is which of the companies involved in the division will be required to recognise the tax due in relation to invoices relating to the ZCP issued before the date of division on which the tax obligation arises on or after the date of division.
Since the point of gravity was on the point of origin of the tax obligation and not on the invoicing of the sale of goods or services, if the obligation to recognise the tax due by the date of the division, which must be included in the VAT settlements, will be the Shared Company.
On the other hand, if this obligation arises on or after the date of division, it will be included in the accounts of the acquiring Company. The moment of invoicing or the execution of individual sales transactions should remain meaningless.