How to determine the value of the company’s assets upon merger
The value of the assets of a limited liability company received by the acquiring company as at the date of the merger should be understood as the market value determined using an appropriate valuation method, for the purpose of which the assets should be understood as a set of assets and liabilities - according to individual interpretation no. 0111-KDIB1-3.4010.287.2021.1.JKU.
– This is yet another interpretation that confirms that when valuing the assets of an acquired company, not only its assets, but also its liabilities are important. Why? Because all liabilities are an economic burden, which translates into a reduction of the value of the assets of the acquired company. In their interpretations, the tax authorities indicate that in the event of a takeover, a type of exchange takes place, as a result of which the assets held by the acquired company are transferred in exchange for shares for the shareholders of that company. This means that the “subscription price” for the shares is the equivalent of the assets of the acquired company transferred to the acquiring company. This is how the definition of the issue value of shares should be understood – notes Łukasz Kupryjańczyk, tax adviser, partner at Thedy & Partners.
A similar approach to the valuation of assets when merging companies can also be found in the rulings of administrative courts.
– It is worth remembering these principles, especially now, when the postcovid reality may result in more frequent divisions or mergers of companies – adds Łukasz Kupryjańczyk.