Meaning
Corporate tax declarations require a standardized accounting process to establish the taxable portion of revenue derived from the transfer of equity or assets by a non-resident seller. The net taxable gain calculation subtracts the original investment cost of the equity from the total income earned from the transfer. This calculation determines the tax liability that the non-resident seller must settle before the transaction can be finalized.
Deduction Rule
Only specific, legally documented expenses and the original equity contribution can be deducted from the gross transfer price. The tax bureau requires original tax payment receipts or foreign exchange registration certificates to prove the initial investment amount. Unofficial fees or undocumented promotional expenses cannot be used to reduce the taxable gain.
Exchange Conversion
Since equity transfers often involve foreign currencies, the transaction values must be converted into local currency using the exchange rate on the day of the transaction. This conversion applies to both the historical investment cost and the current transfer price. Exchange rate fluctuations can significantly affect the final tax liability.
In cases where the initial investment was made in multiple tranches over several years, each tranche must be converted using the historical rate applicable at the time of that specific capital contribution.
Filing Requirement
The withholding agent or the non-resident seller must submit the calculation worksheet to the tax bureau. This submission must occur within the statutory filing window.
