Asset Deal - Swiss VAT - Reporting as a going concern

Clause in Asset purchase agreement - Clause [.] Swiss VAT
The consideration given under this Transfer Agreement in respect of the sale of the Local Business is exclusive of any VAT in respect of which the provisions of Schedule 4 (VAT) shall apply. To the extent that VAT is chargeable, the Transferee shall, against delivery of a valid VAT invoice (or equivalent, if any), in addition to any amount expressed under this Transfer Agreement to be payable by the Transferee, pay to the Transferor such VAT in accordance with Schedule 4 (VAT), except in case the reverse charge mechanism for VAT purposes applies.

Schedule 4 VAT

2 VAT: Going Concern - Switzerland
(a) Subject to Paragraph 3 of this Schedule 4 (VAT), to the extent that Switzerland provides for relief or exemption from VAT on the transfer of the Local Business or treats such a transaction as being non-taxable for VAT purposes under Article 38 of the Swiss VAT Act, the Transferor shall and the Transferee shall use all reasonable efforts (including, for the avoidance of doubt, the making of an election or application in respect of VAT to any Tax Authority or entering into a written agreement) to procure such treatment as regards the sale of the Local Business (insofar as the Local Business is carried on in the relevant state) under this Transfer Agreement and agrees, solely to the extent required by Laws in order to procure that the sale of the Local Business is a non-taxable transaction for VAT, that the Transferee will use the assets acquired in carrying on the same kind of business, whether or not as part of its existing business, as the Transferor.

(b) The Transferor shall have the right to obtain a ruling from the relevant Swiss VAT Authority as to whether the sale of the Local Business so far as the Local Business is carried on in the relevant state is eligible for a relief or exemption or are otherwise non-taxable for the purposes of the Laws governing VAT in that state and to charge (or not to charge) VAT to the Transferee in accordance with that ruling. The Transferee shall have the right to review the ruling request in this respect prior to such ruling request being filed with the relevant Tax Authority and the Transferor shall include all reasonable comments the Transferee may have on such ruling request and file the amended ruling request with the relevant Tax Authority. The Transferor shall not be obliged to challenge that ruling. If the Transferee wishes to challenge any ruling, it may do so at its own cost, and the Transferee shall, at the reasonable cost of the Transferee take such action as the Transferee reasonably request from the Transferor in challenging such ruling, but any such challenge shall not affect the date on which VAT must be paid to the Transferor under Paragraph 4 of this Schedule 4 (VAT).

3 VAT: election
If:
(a) a sale, transfer or supply of one or more assets in accordance with Paragraphs 1(a) or 2(a) of this Schedule 4 (VAT) would result in a VAT disadvantage for the Transferor, including a repayment or recharge of input VAT credited or deducted; and
(b) the Transferor can make an election as to whether or not the sale, transfer or supply of such asset is subject to VAT; and
(c) the Transferee would be entitled to recover (by way of credit or repayment) the total amount of VAT charged,
then:
(d) the Transferor shall be entitled to elect for the sale, transfer or supply of the asset to be subject to VAT; and
(e) the Transferee shall make any election that may be necessary in order to give effect to the election made by the Transferor, provided that the Transferor notifies the Transferee in writing no later than ten (10) Business Days prior to the last date upon which such election can be made under the applicable VAT legislation.

If a sale, transfer or supply of one or more assets in accordance with Paragraphs 1(a) or 2(a) of this Schedule 4 (VAT) would be exempt from a stamp, transfer, registration or other similar Tax if such sale, transfer or supply were subject to VAT, then the Transferee shall be entitled to elect for the sale, transfer or supply of the asset to be subject to VAT and the Transferor shall, to the extent such election does not result in a disadvantage for the Transferor, make any election that may be necessary in order to give effect to the election made by the Transferee, provided that the Transferee notifies the Transferor in writing no later than ten (10) Business Days prior to the last date upon which such election can be made under the applicable VAT legislation.

4 VAT: time, manner and currency of payment
(a) If a ruling has been obtained in accordance with Paragraphs 1(b) or 2(b) of this Schedule 4 (VAT) stating that the sale of the Local Business is taxable with VAT, any such VAT shall either be paid by the Transferee to the Transferor at the Closing Date against production of a valid VAT invoice (or equivalent, if any) or shall be paid by the Transferee to the relevant Tax Authority in case the reverse charge mechanism applies.

(b) If no ruling has been obtained in accordance with Paragraphs 1(b) or 2(b) of this Schedule 4 (VAT) in respect of the sale of the Local Business, the Transferor and the Transferee shall in good faith determine the correct VAT treatment thereof in accordance with Paragraphs 1(a) and 2(a) of this Schedule 4 (VAT).
(c) If at any date after the Closing Date any Tax Authority indicates in a binding determination that the sale of the Local Business will be treated as a supply of goods or a supply of services for VAT purposes, or does not qualify for relief or exemption from VAT or is otherwise chargeable to VAT, while no VAT was paid at the Closing Date in respect of such sale, the Transferor shall notify the Transferee, and to the extent that the Transferee decides not to challenge the Tax Authority’s determination or that a final ruling has been rendered by a court of law confirming the Tax Authority’s determination, the Transferee shall, (against production of a valid VAT invoice or equivalent, if any), in addition to any amounts expressed in this Transfer Agreement payable by the Transferee, promptly upon receiving notice thereof from the Transferor or the relevant Tax Authorities pay the amount of any such VAT (including any penalties and interest, other than penalties or interest arising solely from a failure of the Transferor to timely notify the Transferee) to the Transferor, as the Transferor may direct, and the Transferor shall procure that such VAT shall be paid promptly to the relevant Tax Authority following the Transferor having been placed in the appropriate amount of funds for that purpose by the Transferee which as a result of that indication may be chargeable on any sale carried out pursuant to this Transfer Agreement. Any such amounts shall be paid in cleared funds not later than three (3) Business Days prior to the date on which the Transferor is obliged to account for such amounts to the relevant Tax Authority. This Paragraph 4(c) does not apply in case the reverse charge mechanism for VAT purposes applies as a result of which the Transferee is obliged to account for such amounts to the relevant Tax Authority.

(d) The Transferee shall procure that any amounts of VAT which the Transferee is obliged to pay to the Transferor, shall be paid to the Transferor. Such amounts shall be paid in the currency in which the VAT in question must be accounted for to the relevant Tax Authority.

5 VAT: Records
(a) The Transferor shall have the right to obtain a direction from the relevant Tax Authority for the retention and preservation by it of any VAT records relating to its period of ownership of the Local Business and where such directions are obtained the Transferor shall preserve any such records in such a manner and for such period as may be required by applicable Laws and will allow the Transferee, upon the Transferee giving reasonable notice, reasonable access to and copies of such records where reasonably required by the Transferee for Taxation purposes.
(b) If no such direction is obtained and any documents are required by Laws to be preserved by the Transferee, the Transferor shall, as soon as reasonably practicable, deliver such documents to the Transferee.

6 VAT: Miscellaneous
This Schedule 4 (VAT) governs the procedure if any VAT is chargeable in connection with the sale and transfer of the Local Business. In case of a conflict between this Schedule 4 (VAT) and the SPA, the SPA will take precedence.


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