Contract assessment and planning from a tax law perspective
A countless number of contracts are concluded during the everyday operation of a company. In many cases, even the lawing down of business relationships in a contract is difficult and often the adjustment of economic rationale and business and tax law aspects to the legal framework raises unexpected obstacles in the constantly changing market and legislative environment or comes with tax law risks that will only be realized later on. An increasing number of questions come up during the process of contract conclusion and the performance of contracts, which, due to their complexity, are not answered or are answered only partly.
In the planning of business processes, their tax implications (corporate tax, local business tax, VAT, personal income tax or other contributions) should not be neglected but an assessment of these may require exceptional resources. The compliance of contracts with tax and accounting aspects can be ensured by a compliance review, which serves the avoiding of potential later negative consequences.
The establishing of an appropriate legal framework and system of contractual terms and conditions may protect the company not only from later disputes but also from tax law risks. This way, companies can avoid the risk of a later reclassification of their contracts from a tax law perspective, a dispute of performance, the arising of non-precalculated tax liabilities and, in certain cases, failure to apply tax allowances available.
Our tax expert and lawyer colleagues have several years of extensive experience in tax, legal and business management consulting serving the review of proposed or already concluded transactions based on a complex system of aspects (covering multiple branches of law and tax types). In our tax representation practice, we ensure the harmony of economic and business considerations with the requirements of the intended application of law and compliance in terms of content along principles that crystallized in many tax audits and tax litigations and with a view also to available guidelines of HU TA and the Ministry of Finance.
In cooperation with our clients, joining at an early stage of the planning process preceding the conclusion of a contract we can provide effective assistance in determining the legal framework of the contractual terms and conditions.
During our work, we seek, identify and quantify the tax law consequences and tax risks of already concluded or proposed contracts, as well as allowances which may potentially be applied (e.g. development tax allowance, R&D incentives, contribution allowances) and we, make recommendations as to the appropriate contractual form and the establishing of optimal taxation within the limits of law or to supplementation in the case of potential deficiencies of the documentation. The specification of tax law terms ensure easier interpretation of the contract and improve transparency and control.
We review contracts from a tax law perspective and interpret relevant legal regulations to specific transactions among others in the following areas:
- Commercial contracts
- Service contracts
- Engagement and employment contracts
- Construction contracts
- Advertising service contracts
- Real estate transactions
- Use contracts
- Barter transactions
- Commission and agency contracts
- Corporate law transactions