BackIn the Ruling of February 28, 2023, the National Audience examines whether the tax benefit related to the financial goodwill tax deduction set forth in Article 12.5 of the TRLIS, which the taxpayer used in its corporate income tax returns for the years 2008 and 2009, is applicable to the current case. This arises as a result of the acquisition of the shares of the Turkish company ASTEL.
The appellant entity argues that it is included in the exceptions established by the regulations, therefore, it considers that the application of the tax benefit according to article 12.5 of the TRLIS in its corporate tax returns for the years 2008 and 2009 is legal. In relation to the exception established in Article 1, paragraph 1 of the 2011 Decision, it is based on the fact that it acquired the shares of the Turkish company before December 21, 2007. Furthermore, it argues that the exception provided for in Article 1(4) of the 2011 Decision is fulfilled because there are explicit legal obstacles in Turkey for cross-border mergers of companies.
The Chamber concludes that Article 147 of the Turkish Commercial Code can be considered as an administrative burden or a technical and legal formality for company mergers, but in this case it is not relevant to determine its meaning beyond the terms of the procedural debate. In relation to the matter at hand, it is concluded that the said provision does not meet the three necessary requirements: to be an obstacle, to be legal and to be explicit. This conclusion is based on the examination of the content of Article 147 of the Turkish Commercial Code, invoked by the appellant entity as an “explicit legal obstacle” for cross-border mergers of companies, and is not modified despite the expert reports submitted by the appellant.
Therefore, the Chamber agrees with the contested decision that, according to the applicable commercial law, the Appellant acquired full ownership of the non-cash contribution, which consisted of the shares of the Turkish company ASTEL, on December 28, 2007. The Chamber considers that the Appellant’s argument that this conclusion is invalidated due to the fact that this is an acquisition of movable property to be governed by Turkish law cannot be accepted. In summary, the Chamber confirms the date of acquisition established by the Administration, so that it has not been proved that the appellant entity acquired the shares in the Turkish company prior to 21 December 2007.In the Hearing’s examination of the presence of possible explicit legal obstacles to cross-border company mergers in the Turkish context, the Chamber concludes that Article 147 of the Turkish Commercial Code may be considered as an administrative burden or a technical and legal formality for company mergers, but in this case it is not relevant to determine its meaning beyond the terms of the procedural debate. In relation to the question being prosecuted, it is concluded that said provision does not meet the three requirements mentioned: to be an obstacle, to be legal and to be explicit. This conclusion is based on the examination of the content of Article 147 of the Turkish Commercial Code, which was invoked by the appellant entity as an “explicit legal obstacle” to cross-border mergers of companies, and the expert reports submitted by the appellant do not change such conclusion reached by the Chamber.
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