Insuring M&A tax risk

Tax insurance for M&A deals has been around for a while but is now becoming broader in scope and much more common.

 

For over a decade insurance has been used to deal with specific tax issues identified on transactions. Risks covered in this way include uncertainty around the substantial shareholdings exemption debt for equity exchanges and trading or residence status.

 

A more recent development is for general tax risk (not just specific identified matters but rather general exposure under tax warranties and the tax covenant) to be covered by a warranty and indemnity (W&I) insurance policy. Although W&I policies have been seen for many...