A merger of companies is a transformation in which one company ceases to exist without liquidation and its entire assets and liabilities pass to another company — either an existing one (merger by acquisition) or a newly formed one (merger by formation). Both Slovakia and the Czech Republic allow mergers, but the governing statutes differ: Slovakia applies Act No. 309/2023 Coll. on Transformations (effective from 1 March 2024), while the Czech Republic uses Act No. 125/2008 Coll., substantially amended in 2024. In both countries a merger is tax-neutral if the successor carries over the original tax values of the assets.
What is the difference between the two merger types?
In a merger by acquisition (zlúčenie / sloučení) the dissolving company passes into another, already existing company that becomes its legal successor. In a merger by formation (splynutie / splynutí) all participating firms dissolve and their assets pass to a company created for that purpose. Both jurisdictions rely on universal succession: assets, liabilities, employees and contracts transfer to the successor by operation of law, without individual transfers.
This makes a merger a practical way to simplify a group of companies. Example: an owner runs an operating company alongside a separate firm that holds real estate and leases it to the first one. Merging them into a single entity removes the intra-group lease invoicing and the related transfer-pricing obligations.
Which laws govern mergers in each country?
Slovakia moved the rules out of the Commercial Code into a dedicated Act No. 309/2023 Coll., effective 1 March 2024, which also transposed EU Directive 2019/2121 on cross-border transformations. The Czech Republic relies on Act No. 125/2008 Coll., amended in 2024 to reflect the same directive. Both frameworks build the process around a single core document — the transformation project.
If you are weighing a merger against other ways to restructure a group, it helps to compare the outcomes. We covered related angles in our comparison of a share deal versus an asset deal and in the guide to shareholder contributions to an s.r.o.
What does the transformation project contain?
The transformation project replaced the older merger agreement and is the heart of the process. It identifies the participating companies, sets out the form of the successor, the exchange ratio and the shareholders’ stakes, and defines the reference (decisive) day. In Slovakia the project must be delivered to the tax administrator at least 60 days before the general meeting, and a notice must be published in the Commercial Journal at least a month ahead.
In the Czech Republic the project is approved by the general meeting of each company; for an s.r.o. this requires at least a three-quarters majority and the resolution is recorded in a notarial deed. Creditors are protected in both countries — they may demand security for their claims if the merger worsens their recoverability.
What is the reference day and why does it matter?
The reference day (rozhodný deň / rozhodný den) is the date from which the dissolving company’s transactions are, for accounting purposes, treated as the successor’s. Slovakia allows it to be set no earlier than the first day of the accounting period. The 2024 Czech amendment refined and relaxed the rules for the reference day — for instance, a company may now expressly take part in several transformations with the same reference day — giving companies more room to plan.
Closing and opening accounts are drawn up as at this day, and it is here that the valuation of the transferred assets is decided — which in turn drives the tax outcome.
What are the tax consequences?
In Slovakia, income tax law distinguishes valuation at original prices (Section 17e), which is tax-neutral, from valuation at fair values (Section 17c), where revaluation differences enter the tax base and may be spread over time. In the Czech Republic, Sections 23a to 23d of the Income Tax Act make a merger tax-neutral when the successor takes over the assets’ tax values and continues depreciation; under set conditions it may also carry over the dissolving company’s tax loss.
The practical takeaway is the same in both countries: the choice of valuation and the carry-over of losses should be assessed with an adviser before the project is approved, because the wrong setup can forfeit the neutral regime.
When is a merger not permitted?
Both jurisdictions bar a merger where a company is in liquidation, bankruptcy or an equivalent insolvency procedure. In every case the merger becomes effective only upon registration in the Commercial Register — that is when the dissolving companies cease to exist and their assets pass to the successor. Before starting, verify the legal standing of both firms and whether the chosen scenario is admissible at all.
Beyond the accounting and tax side, a merger has a demanding legal dimension — from the transformation project through creditor protection to the registration. The law firm STEINIGER | law firm can help prepare and review it.
Considering a merger of two companies or the takeover of another business, and want to be sure the tax and accounting outcome holds no surprises? We will walk you through the whole process, from the transformation project to the registration.
FAQ
What is the difference between a merger by acquisition and by formation?
In a merger by acquisition the dissolving company passes into another, existing company that becomes its legal successor. In a merger by formation all participating firms dissolve and their assets pass to a newly created company. In both cases the assets and liabilities transfer to the successor by operation of law through universal succession.
Is a merger taxed?
In both Slovakia and the Czech Republic a merger is tax-neutral when the successor carries over the original tax values of the assets and continues depreciation, so no taxable income arises from the merger itself. Slovakia additionally allows valuation at fair values, in which case revaluation differences enter the tax base.
When does a merger take effect?
In both countries a domestic merger takes effect only upon registration in the Commercial Register. That is the moment the dissolving companies cease to exist and their assets pass to the successor. The reference day, from which transactions are booked at the successor, is set separately.