Common use of Tax Clause Clause in Contracts

Tax Clause. The executive organs of the company must respect the trading and tax law principles of orderly business management and shall maintain the care in business transactions that would be taken by an orderly and conscientious businessman. The management shall in particular not be authorized to grant advantages to the partners or persons and companies close to them beyond the profit distribution resolution duly adopted, neither to violate the prohibition of additional or retroactive payments, nor to breach other acknowledged tax law principles which, when disregarded, cause covert profit distribution. In case of non compliance, the amount of the imbalance shall be covered by the partner to whom the advantage was credited and the usual bank interests paid from the time the advantage was granted until the payment is settled. Transactions in breach of the above stipulations are void ab initio. Insofar as the tax administration or tax courts recognize the payment received as income received by the partner concerned despite the above tax clause, without considering the repayment as negative income, the partner will only have to repay the advantage remaining after deducting the additional income tax payable by him plus the usual bank interest.