Financial and Tax Due Diligence

Before acquiring a specific company or part of its business, both Lithuanian and foreign investors often seek to find out what financial, tax, and legal risks may exist due to the company’s “history”. TaxLink has extensive experience in reviewing companies engaged in various activities (services, manufacturing, trade).

Special mention should be made of the exceptional situation when the client approached us in one of the last stages of the transaction when the essential terms of the transaction were discussed and the transaction price was agreed – he intended to acquire two real estate objects for rent – one in Vilnius and the other in Kaunas. The seller developed each of the real estate objects under separate special purpose vehicles (SPVs). After reviewing the tax liabilities of both companies for 3-5 years (VAT, corporate income tax (PIT), personal income tax (PIT), real estate tax (RET), and social security contributions) we assessed the situations and clearly defined the number of tax risks, their level and the most likely outcome of a tax dispute with the STI. Taking into account the insights and recommendations provided by us, the investor renegotiated the price paid for the shares of one SPV, and in general, refused to buy the shares of another SPV – agreed on direct purchase of the real estate object (asset deal vs. share deal).

Other experience