On an acquisition of shares, what is the process for effecting the transfer of the shares and are transfer taxes payable?

Private Equity (2nd edition)

Greece Small Flag Greece

There are two legal aspects in relation to a transfer of shares of a société anonyme: (a) the actual transfer; and (b) the recognition by the company of the transferee as the new shareholder. The actual transfer of non-listed shares is being effected by an agreement between the parties and delivery of the shares. Subsequently, the transfer is registered in the company’s books and signed by the parties (as per applicable legislation the Company recognizes as shareholder only the person registered in its books). Τhe above mentioned registration is not required if the company receives a copy of the transfer agreement or takes knowledge of the transfer by any other means. As a final step, the Company denotates the transfer to the transferred shares’ Share Certificates or issues new ones. As a matter of practice, the above steps are performed simultaneously on a predetermined closing day and time. Listed shares may be transferred either through trading in the market they are listed to, or over the counter, in which case a transfer agreement is required. Transfer of non-listed shares in a dematerialized form, or listed shares is registered to the Dematerialized Securities System.

A 15% capital gains tax is imposed to the transfer of shares (such tax not being applicable to any transfer of listed shares, originally acquired by the transferor after January 1st 2009, provided that the transferor’s shareholding to the company is less than 0,5%). Tax is not paid on the time of the transaction; instead it is declared by the transferor in its annual tax return.

Luxembourg Small Flag Luxembourg

The process for effecting the transfer of shares depends on the type of corporate entity involved and the form of shares.

In Luxembourg public limited liability companies (sociétés anonymes), partnerships limited by shares (sociétés en commandite par actions) and private limited liability companies (sociétés à responsabilité limitée), shares are typically in registered form with ownership being recorded in a share register maintained at the registered office of the company.

For private limited liability companies (sociétés à responsabilité limitée), the shareholders are also registered with the Luxembourg Trade and Companies Register (Registre de Commerce et des Sociétés) and any change in ownership must be notified to and published with such register.

Bearer shares are limited in application due to the requirements to deposit same with a recognised depositary.

Transfers of registered shares are recorded by way of private share transfer agreements and there is no requirement for such share transfers to be notarised.

In private limited liability companies (sociétés à responsabilité limitée), share transfers to non-shareholders must first be approved by shareholders holding at least 75% of the shares in the capital of the company (which threshold can be lowered to 50% in the articles of association of the company). There is no such mandatory prior shareholder approval required by law for share transfers in other corporate entities.

There are no transfer taxes (stamp duty or otherwise) payable on the sale of shares in a Luxembourg company.

The Netherlands Small Flag The Netherlands

Process for effecting the transfer of the shares

The transfer of registered shares in the capital of a Dutch limited liability company or a public company (unless such shares are listed on an official stock market) requires the execution of a deed of transfer between the transferor and the transferee before a Dutch civil law notary. Unless the company itself is party to the notarial deed of transfer for acknowledgement of the transfer (which is usually the case), the rights pertaining to such shares can only be exercised after the company has acknowledged the transfer of the shares or the notarial deed of transfer has been formally served to the company by a court bailiff.

To avoid the necessity for parties to travel to the Netherlands, the deed of transfer can be executed on the basis of powers of attorney. The civil law notary executing the deed will require certain specific signing and KYC requirements to be met. The notary will require the power of attorney to be provided with a legalization (notarization) statement and furnished with an apostille of the Hague Convention of October 5th, 1961 or a similar procedure if the country involved is not a member of the Hague Convention. Subsequently an apostille can be obtained from the Secretary of State where such notary is registered (note that in certain states, an intermediate confirmation through the County Clerk must be obtained).

In addition, in case foreign entities are a party to the deed of transfer, the notary will require a statement of a notary practicing in the relevant jurisdiction or a lawyer admitted to the relevant bar confirming the authority of the signatories to the power of attorney to represent such legal entity.

In the Netherlands, it is common practice that the purchase price for the shares is paid into the third party account of the notary who will execute the deed of transfer. Such notary will hold the purchase price on behalf of the buyer until the execution of the deed of transfer (which is the moment that the legal title to the shares passes to the buyer) and following execution of the deed of transfer it will hold the purchase price on behalf of the seller(s). In case a refinancing of the target will take place on completion this funds flow will normally also run through the third party notary account. The notary, the buyer, the seller(s), the existing lenders and the new lenders mostly enter into a notary letter in which the arrangements with respect to the flow of funds and release and vesting of security are laid down.

No transfer taxes payable

The acquisition of shares in a company is in principle not subject to Dutch value added tax or Dutch transfer taxes. However, Dutch real estate transfer tax at a rate of 6% (or 2% if it concerns residential real estate) is levied on the acquisition of shares or similar rights in a ‘real estate company’ (i.e., a company the assets of which consist of more than 50% of real estate, whether Dutch or foreign, and at least 30% of those assets is Dutch real estate, provided such real estate is or was mainly used at that time for the acquisition, sale or exploitation of such real estate), if the buyer, together with its affiliates, acquires or extends an interest of one-third or more in such company.

Certain exemptions are available. The Netherlands does not levy stamp duty or similar taxes of a documentary nature.

Norway Small Flag Norway

Upon completion of an acquisition of shares, the title to and ownership of the shares are transferred from the seller to the buyer by way of entering the buyer into the target company's shareholders' register as owner of such shares. Such register is held by the target company itself and no public registration is required.

If the target company's shares are electronically registered in the VPS (the Norwegian Central Securities Depository), the title to and ownership of the shares are transferred from the seller to the buyer by way of transferring such shares from the seller's VPS account to the buyer's VPS account.

There are no stamp duties or other transfer taxes payable in Norway in connection with transfer of shares in a Norwegian private limited company or a Norwegian public limited company. Further, there is no requirement to notarize the transfer of the shares.

Poland Small Flag Poland

For a limited liability company, a transfer of shares must be effected in writing with signatures certified by a notary.

In addition, the articles of association may stipulate that a transfer of shares is subject to the consent of the company or otherwise restricted. In these cases a relevant consent must be obtained.

The transfer of shares must also be notified to the company concerned by the parties involved and proof of the transfer must be presented to the company.

The transfer of shares must also be reported to the registry court by the management board of the company concerned.

In case of a joint-stock company, the requirements regarding the transfer of shares depend on the type of shares being transferred, i.e. if they are registered shares or bearer shares.
In case of registered shares, their transfer must be effected by way of a written declaration either in the share certificates or in a separate instrument, and must require the transfer of possession of the shares.

In case of bearer shares, the transfer of rights related to them requires the hand-over of the share instrument.

A tax on civil law transactions in case of the sale of shares amounts to 1% of the market value of the shares.

The obligation to pay arises at the time of performance of a civil law transaction, i.e. at the time of entering into the sale agreement – unless certain exceptions apply (for example sale of the shares effected through brokers is exempted from tax on civil law transactions).

South Korea Small Flag South Korea

Transfer of shares are effected as follows:

(i) If no share certificates have been issued: by (i) the seller’s written notice of the share transfer to the target company with a fixed-date stamp (sometimes accompanied by the target company’s written consent with a fixed-date stamp, if desired) and (ii) an updated shareholders’ register reflecting the purchaser as the holder of the transferred shares

(ii) If share certificates have been issued: by (i) delivery of the share certificates and (ii) an updated shareholders’ register reflecting the purchaser as the holder of the transferred shares

(iii) If shares are electronically registered: by updating (i) shareholders’ account managed by the relevant securities companies and (ii) shareholders’ account managed by the Korea Securities Depository.

In a share sale, securities transaction tax (normally at 0.5% of the transfer price) is imposed on the seller. If the seller is a foreign entity with no permanent establishment in Korea, the buyer must withhold and pay the securities transaction tax on behalf of the seller.

Sweden Small Flag Sweden

The transfer is effective (i.e. the buyer obtains the right in rem in relation to the shares and is able to exercise all rights pertaining to the shares) when the buyer is entered in the target company’s share register as owner of the shares. In those cases where share certificates representing the shares have been issued, the transfer is fully effected when the certificates have been endorsed and transferred to the buyer.

There are no Swedish transfer taxes applicable to a transfer of shares.

Switzerland Small Flag Switzerland

To transfer the shares of a (private) Swiss company limited by shares, a share purchase agreement between seller and buyer setting out the obligations to sell and purchase as well as further contractual terms of the transfer is required. In order to effect the transfer of the ownership in such shares at the closing of the share purchase agreement the following additional steps are required: In case no physical shares or share certificates are issued, a written assignment agreement between seller and buyer as well as a board resolution approving the transfer (if articles of association contain a transfer restriction regarding the registered shares) is required. In case physical shares or share certificates are issued, it is required that seller delivers to buyer such shares or share certificates, duly endorsed to buyer, together with a board resolution approving the transfer (in case of a transfer restriction). Securities transfer tax is payable on the sale of (Swiss or foreign) shares if a Swiss securities dealer is party to the agreement or is involved as intermediary and amounts to up to 0.15% for Swiss shares and 0.3% for foreign shares (if no exemption applies).

Belgium Small Flag Belgium

Process for effecting the transfer of the shares

The formalities for effecting the transfer of shares under Belgian law are limited, and depend on the type of shares.

Shares in a Belgian limited liability company (BV/SRL or NV/SA) are usually registered, and the ownership of these shares must be recorded in the company’s share register. Title to registered shares is evidenced by their registration in the company’s share register. Consequently, at closing, the transfer of registered shares is perfected by recording such transfer in the company’s share register. Usually parties grant a power of attorney to their local counsel to effectuate this.

Shares in a Belgian NV/SA or a listed Belgian BV/SRL can also be issued in dematerialized form, although we almost never encounter dematerialized shares in M&A transactions involving a financial sponsor.

No transfer taxes payable

As a matter of principle, there is no transfer tax, registration duty or stamp duty due on the sale of shares in a Belgian company, even if the company’s sole assets consist of real estate. In principle, stock exchange tax may be due in respect of listed securities (normally at a rate of 0.35 percent). This tax is only due following the intervention of a professional financial intermediary, which is typically not the case in a M&A context.

Canada Small Flag Canada

Financial sponsors selling a company are seeking a “clean break” at time of closing in order to accelerate return on investment payable to their stakeholders. The use of R&W Insurance with limited recourse available by the buyer beyond the scope of the policy is therefore common practice. The structure of the purchase price is also affected by this priority to receive consideration upfront; as such, mechanisms of deferred consideration, earn outs and rolled equity are less frequent where the seller is a financial sponsor.

China Small Flag China

The transfer of shares by foreign investors will become effective once parties file with the Ministry of Commerce (“MOFCOM”) and register with the State Administration for Market Regulation (“SAMR”), as long as the target business does not fall under a list specified in the Special Administrative Measures for Foreign Investment Access by MOFCOM and the National Development and Reform Commission (as amended from time to time, the “ Negative List”). Otherwise, pre-approval or special permit from the MOFCOM shall be obtained before any transaction taking place. On the other hand, acquiring shares from public listed company through secondary market involves registration with the China Securities Depository and Clearing Corporation.

After the completion of private company’s share transfer, parties will submit the agreements to the Chinese tax authority and pay applicable taxes in accordance with Chinese tax law. The most relevant taxes relating to the transfer of shares are income taxes and stamp duties. Stamp duties need to be paid by both parties upon execution of the legal documents. Income taxes are determined based on the type of sellers in the transaction. If the seller is a PRC corporate tax payer, 25% income tax on profits are payable and such tax could apply to worldwide profits in connection with the company pursuant to the Enterprise Income Tax Law of the PRC. Special rates may apply to small-scale enterprises engaging in encouraged business activities including but not limited to high-technology companies. If the seller is an individual, 20% tax rate applies to income such as interest, dividends and transfers of property that derives from such individual investor. In addition, none PRC tax resident is subject to 10% or lower withholding tax on capital gains arising from the transfer. Moreover, value added tax applies when acquiring shares from a public listed company.

France Small Flag France

The process for effecting the transfer of the shares differs from one legal form of company to another. In the vast majority of cases, the transfer of the shares only requires an update of the share ledger and shareholders accounts of the target company. In such a case, the shares are recorded in the share register as owned by the purchaser. In other situations, which are very rare in practice, the transfer of the target’s shares will require an update of the articles of association of the company.

Any transfer of shares in a French company (or any transfer of shares evidenced by an instrument executed in France) will trigger registration or stamp duties the amount of which depends on (i) the business and the legal form of the target company and (ii) the value of the transaction.

The simplified joint stock company (société par actions simplifiée) is the most common vehicle on the French market. Subject to certain exceptions, the transfer of its shares should trigger a tax registration fee equal to 0.1% of the fair market value.

Germany Small Flag Germany

The share transfer requirements are determined by the legal nature of the target entity, whether a private or publically listed stock corporation (Aktiengesellschaft) or limited liability company (Gesellschaft mit beschränkter Haftung) or certain forms of partnerships (Personengesellschaften).

The German Securities Takeover Act (WpÜG) governs publically listed stock corporations and provides an official takeover procedure requiring the buyer and seller to publish relevant transaction documents. This includes an offer to acquire all shareholdings in the target company, within a narrow time frame. In principle, shares in a private German stock corporation are easily transferrable. If share certificates are issued, the transfer is subject to applicable securities laws. If not, transfers are generally made by way of assignment. Registered share transfers require an agreement between the seller and buyer by way of endorsement. German limited liability company shares are transferred upon execution of a share purchase agreement that requires notarisation by a German notary. Generally, share transfers are VAT exempt unless the seller selects otherwise, albeit very uncommon for share deals. If the target entity owns German real property, or by German law is treated as real property, real estate transfer tax provisions may come into force. This depends on the buyer's acquisition structure and is a cost typically assumed by the buyer.

Mexico Small Flag Mexico

As a first step, a stock purchase agreement is recommended to be executed between buyer and seller in order to define, among others, the stock to be transferred, the purchase price, and the reps regarding the target and the indemnity obligations thereto.

Once the agreement is signed and upon satisfaction of the agreed conditions to closing (if any), the stock certificates representing the transferred shares must be endorsed (endoso en propiedad) by seller to buyer. Likewise, seller must cause the target company to register the transfer in its stock registry book (libro de registro de acciones) – this last requirement is essential given that the Mexican General Law of Business Organizations (Ley General de Sociedades Mercantiles) sets forth that business organizations incorporated in Mexico will consider the persons registered in the aforementioned registry book as the shareholders thereof.

There are no transfer taxes payable in the context of the acquisition of shares. That said, seller will likely be required to pay income tax on the capital gains from the sale. The tax rate will apply on a case-by-case basis depending on the particular characteristics of seller (e.g. being a non-tax resident, double taxation treaties, etc.).

In addition to the foregoing, potential investors may also acquire shares of target companies via a direct subscription of stock. This is a typical structure where one or more investors decide to participate in the equity of a Mexican company without a transfer of stock by the current shareholders, only their dilution. This type of acquisition is generally more efficient from a tax perspective as certain tax attributes of the target under Mexican law can be used.

United Kingdom Small Flag United Kingdom

Shares in certificated form (which is usually the case for private limited companies) are transferred by an instrument of transfer, most commonly a stock transfer form. On the sale of a UK company, unless the transfer value is less than £1,000 or certain exemptions apply, the signed stock transfer form will need to be stamped by HMRC (which usually takes around 6 weeks) in order for the transfer to be written up in the shareholders’ register. HMRC will charge stamp duty of 0.5% of the total consideration attributable to the shares being transferred and this duty is customarily for the buyer’s account. Until a stamped form is returned and the shareholders’ register is updated to reflect the new ownership, legal title of the shares does not pass to the buyer. Accordingly, the buyer will require voting powers of attorney from the selling shareholders to enable it to vote the purchased shares prior to the register being updated.

Public listed company shares typically take the form of uncertificated shares and may be transferred without a written instrument of transfer through an electronic clearance system. Such transfers generally attract stamp duty reserve tax (at a rate of 0.5% of the consideration payable by the buyer).

Vietnam Small Flag Vietnam

When acquiring an equity interest in a Vietnamese company, a foreign investor is required to obtain an approval of the local Department of Planning and Investment (DPI) where the target operates in certain sectors having conditions applicable to foreign investors or where the foreign investor acquires a controlling stake in the target. The target will need to apply for an amendment to its “enterprise registration certificate” from the DPI to record changes in its charter capital arising from the foreign invested capital. To the extent that the target company is issued with an “investment registration certificate” for an investment project, then it will often be necessary for it to amend this certificate to reflect the change of investors and capital, among other information it conveys. After completion, the target will also need to file a report to the DPI regarding the change in the foreign shareholders resulting from the acquisition by the foreign investor.

If the target is a Vietnamese company with foreign invested capital (FDI enterprise) then for the purposes of the State Bank of Vietnam’s regulations on exchange control of foreign direct investments, payment of the purchase price by a foreign buyer to a local seller must be made through a “direct investment capital account” (DICA), which is a bank account that the target company must open in Vietnam to process the payment to the local seller. Where the acquisition is between non-residents, the purchase price can be denominated and paid in foreign currency and will not be required to go through the DICA. If the target is not a FDI enterprise, the foreign buyer is required to effect payment through, instead of the DICA, an “indirect investment capital account” (IICA), which is a bank account that the foreign investor must open in Vietnam in order to effect payment to the local seller.

Gains arising from any sale of an interest in a Vietnamese private company are generally subject to a standard CIT rate of 20%. Gains earned by a foreign investor from the sale of an interest in a public company are subject to a deemed rate of 0.1% of the total sales proceeds.

India Small Flag India

Shares can be transferred either through a physical process or through a dematerialized process. To transfer shares in physical form, a share transfer deed needs to be executed in the prescribed format, i.e., Form SH-4, and accordingly, the deed is required to be stamped as per the applicable stamp duty (currently, at the rate of 0.015% of the sale consideration). For the transfer of dematerialized shares, only a notification through a delivery instruction slip to the depository is enough, along with a stamp duty at the rate of 0.015% of the sale consideration. Further, to give effect to any transfer of shares between a person residing in India and a person not residing in India, a form referred to as the single master form and, within it, Form FC-TRS, is to be filed with the Reserve Bank of India through an online portal known as the Foreign Investment Reporting and Management System (FIRMS).

In India, transfers are effected in public listed companies through the stock exchange, and are recorded in real-time, once the dematerialized shares are credited to the transferee’s dematerialization account, through a transfer agent. In private unlisted companies, transfers occur by way of share transfer deeds, in Form SH-4, and are said to be effected once they are taken on record by the company’s board of directors and recorded in the register of members (if it is a physical transfer of shares) of such company, although the date of the transfer is usually recorded as the date on which the share transfer deed is signed.

Taxes in the nature of capital gains are imposed on the transfer of shares since shares are considered as capital assets. Applicable treaty benefits may reduce the tax implications for a non-resident seller who is from a jurisdiction with whom India has such favorable tax treatment under their double taxation avoidance treaties.

Ireland Small Flag Ireland

The transfer of shares in an Irish company must be (i) evidenced in writing by executing a share transform form and (ii) signed by the transferor and, in the case of shares which are not fully paid, or an unlimited company, the transferee.

Where the target is an Irish incorporated company, an Irish stamp duty cost will generally arise upon the acquisition, at a rate of 1% on the consideration paid (or market value, if higher), depending on how the investment is structured. For certain real estate holding companies, a higher stamp duty rate of 7.5% may apply.

Finland Small Flag Finland

Hannes Snellman: Under Finnish law, the following steps are required to transfer title to shares in a private limited liability company: (i) corporate resolutions by the vendor and the acquirer to approve and enter into the relevant share transfer agreements; (ii) agreement between the vendor and the acquirer regarding the transfer of the shares; (iii) if share certificates have been issued, the share certificates must be physically transferred (duly endorsed) into the possession of the acquirer to perfect the relevant share transfer; and (iv) update of the shareholder register of the target company. There is no public register of shareholdings in private companies and, thus, there are not as such any related perfection requirements in Finland.

If at least one of the transaction parties is a Finnish resident for tax purposes, a transfer tax of 1.6% of the purchase price is levied on the purchase of shares in a Finnish limited liability company. If the target company is treated as a ‘real estate company’ for tax purposes, i.e. more than 50% of its business activity comprises owning and managing real estate, the transfer tax is 2% of the purchase price. The buyer customarily pays transfer taxes. According to recent case law from Supreme Administrative Court, an acquisition of shareholder loans is not captured in the transfer tax base. This has made it more common place that shareholder loans are acquired separately with the shares.

Brazil Small Flag Brazil

Brazilian tax legislation does not provide for a transfer taxes to be levied over the transfer of shares transaction. Notwithstanding, it is important to mention that seller may be required to pay capital gains tax over the difference between the tax cost and the realized amount in connection with the sales event.

Austria Small Flag Austria

The transfer of, and every offer to transfer, title to shares in a limited liability company (GmbH) requires a purchase or other transfer agreement drawn up in the form of an Austrian (or German; for other jurisdictions a case-by-case analysis is required) notarial deed. The registration of the new shareholder in the companies register has only declaratory effect. The transfer of title to registered shares in a stock corporation (AG) requires handing over of the duly endorsed share certificates. Where no share certificates are issued, an assignment agreement is sufficient. To be recognised as a shareholder and be able to exercise shareholder rights in a stock corporation, registration in the share ledger (Aktienbuch) (which is effected by the management board on application of the purchaser) is required. Bearer shares can only be issued where the issuer is listed (or is to be listed pursuant to the articles of association). The transfer of title to bearer shares requires matching purchase and sell orders and book order entry. Consent requirements and transfer restrictions may apply.

There are no transfer taxes levied in Austria.


The transfer of shares is exempt from VAT.

Real estate transfer tax

Austrian real estate transfer tax is triggered if at least 95% of the shares of a company that directly holds Austrian real estate (or similar rights) are consolidated in the hands of one shareholder (Anteilsvereinigung), which could be the case by purchasing at least 95% of the shares or by purchasing a smaller stake that together with shares already held by the purchaser add up to 95% or more. Furthermore, if within a period of five years, 95% or more of the partnership interests of a partnership that directly holds real estate (or similar rights) are transferred, this triggers real estate transfer tax (this can include several transactions with different purchasers). In each case the real estate transfer tax amounts to 0.5% of the real estate value (Grundstückswert) of the real estate. Shares held by trustees are to be attributed to the trustor for purposes of calculating the 95% threshold. If Austrian real estate is transferred by way of a reorganisation (Umgründung) that qualifies for the benefits of the Reorganisation Tax Act (UmgrStG), the real estate transfer tax will likewise be 0.5% of the real estate value of the real estate. The real estate value has to be calculated either (i) under a certain formula taking into account the proportional ground and building value or (ii) in reference to an appropriate real estate price index.

Until a recent tax reform, real estate transfer tax could be avoided by transferring a minority interest to a third party to avoid consolidation of all shares. Austrian tax authorities sometimes challenged this structure as being abusive where the size of the minority interest was notional, trust or similar arrangements were in place or other comparable circumstances justifying a "look through" for tax purposes. Under the new regime, the minority interest must exceed 5% and it is not possible anymore to use a trustee for such purposes.

Reorganisation Tax Act

Certain share purchases can be structured as a merger, a spin-off or a contribution in kind, in which case the transaction may be eligible for the benefits available under the Reorganisation Tax Act (UmgrStG), in particular a roll-over treatment. In general, such roll-over treatment may be applied with retroactive effect for tax purposes of up to nine month (typically with respect to a balance sheet day in the past). If the transaction qualifies under the UmgrStG, transfer taxes can also under certain conditions be avoided or reduced. These conditions depend on the type of reorganisation. For domestic reorganisations, they include, among others:

  • A proper documentation including the required balance sheets.
  • Timely filing of the reorganisation (in some cases with the companies register, in others with the competent tax office).
  • In case of a contribution in kind or a spin-off also the transfer of qualified assets (for example a business unit or a qualified stake of shares representing at least 25% of the share capital or ensuring together with shares already held by the acquiring company a majority in the share capital of the company that shares of which are being transferred).
  • Minimum holding periods for certain items.
  • Various other formal requirements.

For cross-border or foreign reorganisations further requirements apply, for example, the comparability of the foreign corporation and of the foreign reorganisation.

Income tax

Capital gains resulting from a sale of shares in a corporation generally are subject to tax in Austria. The rate of applicable income tax is 25% if the seller is a corporate entity and 27.5% if the seller is an individual. Capital gains from a sale of shares in a company that is not resident in Austria for tax purposes do not increase the tax base for corporate income tax purposes if the shareholding qualifies for the Austrian international participation exemption and the seller has not opted out of tax neutral treatment of capital gains. There is no comparable exemption for capital gains from a sale of shares in a corporation that is resident in Austria. On the other hand, dividends distributed by the Austrian target will be tax exempt for the recipient in the legal form of a corporation. Accordingly, it is common to distribute any accrued profits before the sale.

At the shareholder level capital gains taxation will depend on whether the sellers are domestic or foreign residents. In case of foreign resident shareholders such capital gains taxation only applies if their participation in the Austrian target amounted to at least 1% in the last five years. However, tax treaties usually restrict the right of Austria to tax such capital gains, as Article 13(5) of the OECD Model Tax Convention, which is followed by most treaties concluded by Austria, assigns the right to tax such capital gains to the state of residence of the shareholder (unless a special provision for real estate companies applies).

The exemption from corporate income tax is denied if a structure is considered generally abusive, or certain criteria under statutory tests indicating that they are abusive are met.

Austria levies stamp duty on certain transactions, including:

  • Leases (at a rate of 1%);
  • Assignments (at a rate of 0.8%);
  • Settlements (at a rate of 1% or 2%);
  • Easements (at a rate of 2%);
  • Sureties (at a rate of 1%);
  • Mortgages (at a rate of 1%).

Stamp duty is generally only triggered if a written deed (Urkunde) on the transaction or referring to the transaction is signed in Austria. Under certain limited circumstances stamp duty is also triggered if the deed is signed outside of Austria. If stamp duty was avoided by signing a written deed outside of Austria, the later import of that deed (or a certified copy) into Austria as well as any documentary proof (rechtsbezeugende Urkunde) like correspondence from an to Austria referring to the transaction (including emails) may trigger stamp duty. The Austrian tax authorities take a broad view of what constitutes a "deed" and accordingly triggers stamp duty and therefore avoidance schemes must be carefully structured.

United States Small Flag United States

The buyer and the seller typically sign a purchase agreement and, upon the closing, the seller delivers either (i) in the case of a corporation, an original stock certificate (endorsed to the buyer or accompanied by stock power endorsed to the buyer) as evidence for the transfer of stock, or (ii) in the case of a limited liability company, a form of assignment of interests as evidence for the transfer of membership interests. Private company equity transfers are not filed in any public registers in the US.

There is no transfer tax on transfers of stock of a corporation or interests of a limited liability company.

Japan Small Flag Japan

The process for effecting the share transfer differs depending on whether the target is a listed or unlisted company, and, if it is an unlisted company, whether the target issues share certificates or not. An unlisted company will not issue share certificates unless it elects to issue them in its articles of incorporation.

With respect to a target unlisted company that does not issue share certificates, the share transfer of shares in the target becomes effective pursuant to the agreement between a seller and a buyer without any mandatory actions under law, provided that the share transfer becomes perfected against the target and third parties only when the buyer is recorded as the shareholder in the target’s shareholder registry. The shareholder registry can be updated by the joint request of the buyer and seller to the target, and such written request executed by the seller will be typically part of the closing deliverables for the share transfer.

With respect to a target unlisted company that does issue share certificates, the transfer of shares in the target becomes effective only if and when the share certificates representing the transferred shares of the target are delivered from the seller to the buyer. In order to perfect the share transfer, the shareholder registry of the target must also be updated as in the case for an unlisted company that does not issue share certificates, but the request to update the shareholder registry of the target can be made by the sole request of the buyer in which the buyer presents to the target the share certificates delivered from the seller. Therefore, the share certificates representing the transferred shares must be part of the closing deliverables for the share transfer.

In addition, a transfer of shares in an unlisted company (regardless of whether it issues share certificates) is usually subject to certain transfer restrictions set out in the company’s articles of incorporation, and approval by a resolution of a meeting of the company’s shareholders or board will be required.

With respect to a listed company, all of its shares are managed under the book-entry transfer system. The share transfer only becomes effective when the transfer is recorded in the book entry account of the buyer. Such transfer will be registered at the buyer’s account by the seller’s request to the account management institution (e.g., securities company) where the seller’s account is maintained.

No transfer tax is applicable to any transfer of shares in a Japanese company.

Updated: January 16, 2020