Tax Due Diligence in the Czech Republic

Tax due diligence is intended mainly for investors who are planning to acquire a company, part of it or to merge with another entity. The due diligence is carried out with the consent of and in cooperation with the reviewed entity. The primary focus of this tax due diligence is to identify potential tax risks related to tax compliance.

Since the acquisition of another company is a complex matter and the potential investor does not know all the details of the company's activities, tax due diligence provides the investor with insight into the company and its tax situation.

Tax due diligence – lower transaction risk

Tax due diligence is an audit aimed, among other things, at verifying the correctness of a company's settlements. This examination reveals a number of risks and allows them to be minimised. During tax due diligence, it is possible, inter alia, to identify irregularities concerning the application of tax rates, the performance of intra-Community supplies of goods, as well as in the transfer pricing documentation. Moreover, the audit makes it possible to check whether the entity is subject to tax or customs inspections.

A well-planned and conducted tax due diligence determines the success of a transaction. It is an invaluable tool when it comes to making investment decisions, both in the short and long term. In addition, tax due diligence will allow for the correction of tax irregularities and help avoid unforeseen sanctions by the tax authorities.