MDDP obtained a positive opinion from the Head of the National Revenue Administration for a cross-border conversion of a company

MDDP experts obtained a positive opinion from the Head of the National Revenue Administration regarding the cross-border conversion of a Polish limited liability company into a Luxembourg S.à r.l.

This is an important decision from the perspective of cross-border restructuring practice. The opinion of the Head of the National Revenue Administration is one of the key elements of the procedure enabling a cross-border conversion of a company to be carried out before the registry court. In practice, obtaining such an opinion requires a detailed presentation of the planned reorganisation, its tax consequences, its impact on business continuity, as well as the economic and business rationale for the adopted model.

The case concerned the conversion of a Polish capital company into a Luxembourg company, while maintaining continuity of business operations and succession of rights and obligations. In the analysed facts, the Head of the National Revenue Administration did not identify any tax benefit that would justify refusing to issue the opinion. The authority also found no grounds to conclude that the planned conversion could constitute an abuse of law for VAT purposes or be subject to a decision applying measures limiting benefits under international tax treaties.

Significant relevance for cross-border restructurings

Positive opinions of the Head of the National Revenue Administration in cases involving cross-border mergers, divisions and conversions remain rare. There are few examples of positive decisions in this area available on the market, and the existing practice shows that such proceedings require particularly careful preparation and do not always end with the issuance of an opinion enabling the planned reorganisation to be carried out.

This follows from the nature of the procedure itself. The Head of the National Revenue Administration does not limit the review to the formal assessment of the planned transaction, but also analyses its potential tax consequences and anti-abuse risks. In particular, the authority examines whether the planned reorganisation may involve tax avoidance, abuse of law for VAT purposes or the possible application of measures limiting benefits under international treaties.

In practice, this means that obtaining a positive opinion requires much broader preparation than simply describing the planned conversion. A consistent presentation of the business rationale, tax consequences, principles of business continuity and the impact of the reorganisation on the company’s operation after the conversion is of key importance. It is also important to demonstrate that the planned transaction does not lead to an impermissible tax benefit and is justified in the broader context of the group’s business activity.

Against this background, the opinion obtained by MDDP is one of the few positive examples of the practical application of the procedure for reviewing cross-border reorganisations. The decision shows that properly prepared documentation, consistent argumentation and a comprehensive presentation of the tax consequences may be of significant importance for the successful implementation of a cross-border conversion.

The Client was represented by: Justyna Bauta-Szostak, Marek Kończak and Justyna Adamska.

If you are planning a cross-border conversion, merger or division of a company, it is worth analysing the tax consequences of the planned reorganisation and preparing the relevant argumentation for proceedings before the Head of the National Revenue Administration at an early stage. MDDP experts support clients in designing and implementing cross-border restructurings, including preparing applications for opinions of the Head of the National Revenue Administration and the documentation required in the course of registry proceedings.